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 28, 1996
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. [X]
The aggregate market value of the Common Stock, $.75 par value, held by
non-affiliates as of March 3, 1997, was $1,070,462,405. 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 3, 1997, there were 42,308,693 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 12, 1997.
Exhibit Index on Page: 52
<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 1996 were $2,958 million, an
increase of 15.2% over last year's sales and other revenues of $2,568
million. Comparable same store sales were up 3.2% for fiscal year 1996 as
compared to an increase of 2.5% in 1995.
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 2.2% of total sales in 1996. 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 139 supermarkets
located throughout Maine, New Hampshire and Vermont, and in parts of New
York, Massachusetts, Virginia, North Carolina and South Carolina. Its
stores are operated primarily under the names Shop 'n Save(R), Hannaford(R)
and Wilson's(SM). The Registrant offers consumers comprehensive product
variety and outstanding freshness and quality in perishables, at competitive
prices, from modern and convenient facilities. The Registrant also operates
82 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 74 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 other services and
expanded lines of general merchandise.
The Registrant operates 39 supermarkets located in Virginia, North Carolina
and South Carolina. Eighteen of these stores were acquired by the
Registrant in July 1994, six were acquired in September 1995 and fifteen
were newly constructed during 1995 and 1996. These stores range in size
from 16,300 to 48,700 square feet of selling area.
In 1997, the Registrant expects to open several new stores in New York,
North Carolina, South 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 1992 1993 1994 1995 1996
Beginning 88 93 93 118 134
Opened 7 4 10 13 13
Closed (2) (4) (5) (3) (7)
Sold 0 0 0 0 (1)
Acquired 0 0 20 6 0
Ending 93 93 118 134 139
AVERAGE SQUARE FEET
OF SELLING AREA
PER STORE 28,200 29,800 30,100 31,100 32,300
TOTAL SQUARE FEET
OF SELLING AREA 2,619,000 2,771,000 3,547,000 4,166,000 4,490,000
<PAGE>
As illustrated by the foregoing tables, the Registrant has continued to
expand its food store operations.
During 1996, net selling square footage increased 7.8%. The Registrant
opened ten new food stores with selling areas ranging from 33,300 square
feet to 46,800 square feet, relocated three existing stores to larger, new
facilities, sold one small store to an independent customer and closed four
stores.
During 1997, the Registrant expects to open eleven new food stores, one of
which will be located in the northeastern market area and ten in the
Southeast. The new stores will range from 33,000 square feet to 41,000
square feet of selling area. The Registrant will also relocate two of its
existing stores in the Northeast and three in the Southeast to new
facilities. It is expected that net retail selling area will increase
approximately 11% in 1997.
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 primarily
services certain store locations in Maine, New Hampshire and Massachusetts.
This facility warehouses grocery, fresh fruits and vegetables, frozen foods,
meat, and dairy products in approximately 521,000 square feet of floor area,
and has dock facilities for 89 highway trailers. This distribution center,
as well as the others, 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 facilities also has been
enhanced through the use of employee incentive payment programs.
2. An owned distribution center and office facility in Schodack, New York,
which primarily services certain store locations in New York, Vermont, New
Hampshire and Massachusetts. This facility warehouses grocery, fresh fruits
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.
<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.
4. An owned distribution center in Butner, North Carolina, which services
all of the Registrant's store locations in North Carolina, South Carolina
and Virginia. This facility warehouses grocery, fresh fruits and
vegetables, frozen foods, meat and dairy products in approximately 431,000
square feet of floor area and has dock facilities for 112 highway trailers.
This facility was opened in November 1996 and incorporates increased staging
areas for crossdocking, a mezzanine for slower moving items and other modern
distribution techniques. The site on which this distribution center is
located includes land for additional expansion of the distribution center to
approximately 750,000 square feet.
Hannaford Trucking Company, a wholly-owned subsidiary, transports
merchandise to and from the Registrant's distribution facilities and 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.
During 1996, the Registrant completed the conversion of its primary private
brand from "Shop 'n Save(R)" to "Hannaford(R)". The Registrant continues to
sell a few items under the Shop n Save(R) brand name.
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.)
<PAGE>
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,
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 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 1994, 1995 or 1996 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 28, 1996, the Registrant had approximately 7,400 full-time
and 14,600 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 58 of its 139 food stores and leases the remaining 81
locations. It owns all 4 of its current distribution facilities and leases
its general office facility in Scarborough, Maine. The Registrant's
properties are located in Maine, New Hampshire, Vermont, northern
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 28, 1996, consisted of:
SQUARE SQUARE FOOTAGE
FOOTAGE SELLING
UNITS GROSS AREA AREA
(in thousands)
Stores 139 6,320 4,490
Distribution and
administrative facilities 5 1,860 --
Total 144 8,180 4,490
The following table sets forth expiration dates of leased facilities,
assuming exercise of all renewal options:
LEASE ADMINISTRATIVE
EXPIRATION FOOD STORES FACILITIES
1997-2006 4
2007-2016 7
2017-thereafter 70 1
81 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 1996.
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. 65 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 52 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.
<PAGE>
SERVED AS AN EXECU-
NAME AGE POSITION TIVE OFFICER SINCE:
RICHARD A. ANICETTI 39 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.
PAUL A. FRITZSON 43 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.
ANDREW P. GEOGHEGAN, ESQ. 46 Senior Vice President, 09/14/87
Secretary & General Counsel
Mr. Geoghegan was elected Senior Vice President, Secretary and General
Counsel in May 1996. He 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.
RONALD C. HODGE 49 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.
<PAGE>
SERVED AS AN EXECU-
NAME AGE POSITION TIVE OFFICER SINCE:
BLYTHE J. MCGARVIE 40 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 46 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.
MICHAEL J. STROUT 42 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 Tops Markets,
Inc., Buffalo, New York. From 1985 to 1990 Mr. Strout had been employed by
the Registrant in various Human Resource management positions.
ANDREW N. WESTLUND 44 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 38 Vice President, 08/10/94
Merchandising - Southeast
Operations
Mr. Wilson was elected Vice President, Merchandising - Southeast Operations
in July 1996. From August 1994 to May 1996 he served as Vice President -
Wilson's and from May 1996, to July 1996, as Vice President, Retail
Operations. 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 1995 and 1996.
QUARTERLY
SALE PRICE DIVIDENDS
HIGH LOW PER SHARE
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
1st Quarter, 1996 $29.375 $23.000 .120
2nd Quarter, 1996 33.125 27.000 .120
3rd Quarter, 1996 34.250 30.000 .120
4th Quarter, 1996 34.000 29.875 .120
There are approximately 18,000 record holders of the Common Stock. Fiscal
1996 was the forty-eighth consecutive year that dividends were paid on the
Common Stock and the thirty-fourth consecutive year that the aggregate
dividend paid per share (after adjusting for stock splits) has increased.
On February 11, 1997, the Board of Directors voted to increase the quarterly
dividend to $.135 per share for the dividend due to be paid on March 27,
1997. Future dividends will depend on the Registrant's earnings and
financial condition.
<PAGE>
Item 6. Selected Financial Data
<TABLE>
<CAPTION> Fiscal Year
1996 1995 1994 1993 1992
(In thousands except per share amounts)
EARNINGS STATEMENT DATA:
<S> <C> <C> <C> <C> <C>
Sales and other revenues................................. $2,957,559 $2,568,061 $2,291,755 $2,054,889 $2,066,023
Cost of sales............................................ 2,242,784 1,951,248 1,728,499 1,543,932 1,552,155
Gross margin............................................. 714,775 616,813 563,256 510,957 513,868
Selling, general and administrative expense.............. 568,033 481,017 437,548 399,437 411,487
Operating profit......................................... 146,742 135,796 125,708 111,520 102,381
Interest expense, net.................................... 22,204 19,368 21,360 19,337 20,711
Earnings before income taxes............................. 124,538 116,428 104,348 92,183 81,670
Income taxes............................................. 49,333 46,227 42,060 37,578 32,476
Earnings before cumulative effect
of change in accounting principle...................... 75,205 70,201 62,288 54,605 49,194
Cumulative effect of accounting change................. - - - 2,100 -
Net earnings............................................. $ 75,205 $ 70,201 $ 62,288 $ 56,705 $ 49,194
Per common share:
Earnings before cumulative effect of accounting change $ 1.78 $ 1.67 $ 1.50 $ 1.33 $ 1.21
Cumulative effect of accounting change................ - - - .05 -
Net earnings.......................................... $ 1.78 $ 1.67 $ 1.50 $ 1.38 $ 1.21
Cash dividends........................................ $ .48 $ .42 $ .38 $ .34 $ .30
Weighted average number of common shares outstanding.... 42,298 42,092 41,544 41,049 40,520
December December December January January
28, 1996 30, 1995 31, 1994 1, 1994 2, 1993
BALANCE SHEET DATA: (Dollar amounts in thousands except per share data)
Working capital.......................................... $ 21,796 $ 23,512 $ 42,707 $ 118,830 $ 105,187
Total assets............................................. 1,183,727 961,830 877,605 795,355 768,596
Current maturities:
Long-term debt........................................ 14,213 11,246 14,409 7,180 7,015
Obligations under capital leases...................... 1,775 1,467 1,382 1,412 1,387
Long-term debt, excluding current maturities............. 227,525 150,648 153,687 156,716 171,578
Obligations under capital leases, excluding current
maturities............................................. 75,198 69,747 69,552 58,835 54,930
Redeemable preferred stock of a subsidiary............... - - - 1,883 2,781
Shareholders' equity..................................... 569,156 518,677 454,475 396,715 345,796
Book value per share..................................... $ 13.46 $ 12.26 $ 10.88 $ 9.63 $ 8.48
</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 1996, the Company achieved increased sales and earnings while continuing
its expansion in the Southeast. Sales and other revenues increased 15.2%
and net earnings increased 7.1% when compared to 1995 financial results.
The increased sales were achieved by expanding supermarket selling area by
7.8% coupled with a healthy increase of 3.2% in same store sales. The
increase in net earnings was achieved despite substantial costs associated
with the Company's significant expansion in the Southeast. Programs to
build sales and reduce the cost of doing business continue to yield positive
results. In November 1996, the Company opened a new distribution center in
the Southeast. The cost efficiencies anticipated to be gained from self-
delivery of product coupled with a continued focus on specific Southeast
operations should allow the Company to build upon its long-term growth
strategy. The Company expects to add approximately 11% to its supermarket
selling area in 1997 with the majority of this increase occurring in its
southeastern region.
<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 1996 FISCAL 1995
FISCAL YEAR COMPARED TO COMPARED TO
1996 1995 1994 FISCAL 1995 FISCAL 1994
100.0% 100.0% 100.0% Sales and other revenues 15.2 12.1%
24.2 24.0 24.6 Gross margin 15.9 9.5
Selling, general and
19.2 18.7 19.1 administrative expenses 18.1 9.9
5.0 5.3 5.5 Operating profit 8.1 8.0
0.8 0.8 1.0 Interest expense, net 14.6 (9.3)
4.2 4.5 4.5 Earnings before income taxes 7.0 11.6
1.7 1.8 1.8 Income taxes 6.7 9.9
2.5% 2.7% 2.7% Net earnings 7.1 12.7
$1.78 $1.67 $1.50 Earnings per common share 6.6 11.3
<PAGE>
Sales
Sales and other revenues rose 15.2% in 1996, to $2,958 million, an increase
of $390 million over 1995 results. Retail sales increased $372 million or
15.0% to $2,853 million, reflecting an increase of $76 million or 3.2% in
sales from supermarkets that were open in both periods presented ("same
store sales") and additional sales of $296 million from the net impact of
new, expanded, relocated and closed stores. Other sales and revenues, which
include trucking, wholesale, real estate and miscellaneous retail
operations, increased $18 million in 1996.
The same store sales increase of 3.2% continues a positive trend that
started in 1993. Fourth quarter 1996 same store sales increased 3.0% in
comparison to fourth quarter 1995. These increases were achieved despite
low overall food inflation and continued strong supermarket competition.
In 1995, sales and other revenues were $2,568 million, an increase of $276
million or 12.1% over 1994 results. Retail sales increased $277 million or
12.6%. Same store sales reflected an increase of 2.5%. Other sales and
revenues, which include trucking, wholesale, real estate and miscellaneous
retail operations, decreased $1 million in 1995.
Gross Margin
Gross margin increased in 1996 to 24.2% of sales and other revenues in
comparison to 24.0% in 1995. The 1996 increase is the result of improved
selling margins in certain of the Company's marketing territories. The
Company continues to focus on maintaining a competitive pricing strategy in
all marketing territories.
Gross margins decreased in 1995 to 24.0% of sales and other revenues in
comparison to 24.6% in 1994. This decrease primarily reflects lower gross
margins earned by the Company's southeastern operations and competitive
pricing strategies.
<PAGE>
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased to 19.2% of sales and
other revenues in 1996 as compared to 18.7% in 1995. This increase is
principally the result of additional costs of establishing the Company's
position in its southeastern markets.
Selling, general and administrative expenses decreased to 18.7% of sales and
other revenues in 1995 as compared to 19.1% in 1994. 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 reflected cost containment efforts and the
impact resulting from the Company's acquisition of Wilson's Supermarkets.
Interest Expense, Net
Net interest expense expressed as a percentage of sales and other revenues
was 0.8% in both 1996 and 1995 and 1.0% in 1994.
Net interest expense in 1996 was $22.2 million, an increase of 14.6% from
1995 net interest expense of $19.4 million. This increase is primarily the
result of an increase of average debt levels coupled with a decrease in
invested cash which is reflected as a decrease in interest income.
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 was primarily the
result of a decrease in average debt levels coupled with a rise in
construction activity.
Income Taxes
The provision for income taxes includes both federal and state income taxes.
The effective tax rate decreased in 1996 to 39.6% from 39.7% in 1995 and
40.3% in 1994. These lower effective tax rates are the result of reductions
in the Company's overall state income tax rate. Assuming there are no
federal or state income tax rate changes, the Company expects the effective
tax rate for 1997 and thereafter to be in the 38% to 39% range.
<PAGE>
Net Earnings and Earnings Per Common Share
Net earnings increased 7.1% in 1996 to $75.2 million or 2.5% of sales and
other revenues, an increase of $5.0 million from 1995 net earnings of $70.2
million or 2.7% of sales and other revenues. This increase is the result of
increased sales and gross margin, partially offset by an increase in
selling, general and administrative expenses.
Net earnings for the fourth quarter of 1996 were $21.1 million, an increase
of 25.0% over 1995 fourth quarter net earnings of $16.4 million. Net
earnings per common share exhibited a similar percentage increase to $.50
for the fourth quarter of 1996 versus $.40 for the fourth quarter of 1995.
Management does not expect the Company to sustain increases of this
magnitude in the first half of 1997 due to a number of new store openings in
the first two quarters of the year.
Net earnings rose 12.7% in 1995 to $70.2 million, an increase of $7.9
million over 1994 net earnings of $62.3 million. This increase is the
result of increased sales and reduced selling, general and administrative
expenses expressed as a percentage of sales, partially offset by a reduction
in gross margin percentage.
Net earnings per common share in 1996 were $1.78 as compared to $1.67 in
1995, an increase of 6.6%.
Net earnings per common share in 1995 were $1.67 as compared to $1.50 in
1994, an increase of 11.3%.
<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 28, December 30, December 31,
1996 1995 1994
Cash and cash items $42.5 $ 7.0 $41.0
Working capital (FIFO inventory) $38.9 $39.1 $57.1
Unused lines of revolving credit $48.5 $63.6 $50.0
Unused lines of short-term credit $35.3 $43.9 $21.6
Current ratio (FIFO inventory) 1.16 1.23 1.36
The Company maintained a solid capital structure at the end of fiscal 1996.
Cash and cash items increased $35.5 million to $42.5 million at the end of
fiscal 1996. Lines of credit represent a continuing source of capital and
are available for purposes of short-term financing. At December 28, 1996,
the Company had $31.5 million outstanding on its revolving lines of credit.
In February 1997, the Company received the proceeds of a $20.0 million
senior uncollateralized debt financing. The term of the debt is 12 years,
with an average life of 10 years and an interest rate of 7.4%. 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 1997.
<PAGE>
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. Shares repurchased by the Company are
held as treasury shares and are available to the Company for use in funding
its stock based benefit plans, and when authorized, for other corporate
purposes. In 1996, the Company reacquired approximately 468,000 shares at a
cost of $14.1 million, all of which were targeted to fund issuances under
stock-based benefit plans.
Cash Flows from Operating Activities
Cash provided by operating activities was $201.2 million in 1996, an
increase of $63.0 million over the $138.2 million provided in 1995. This
increase is primarily attributable to an overall decrease in net working
capital items coupled with improved results of operations and higher
depreciation and amortization. Inventories increased $33.7 million when
comparing December 28, 1996 with December 30, 1995. This increase is
attributable to additional retail inventory in new stores coupled with
higher warehouse inventory due to the opening of the Company's new
distribution facility in the Southeast. Accounts payable, accrued expenses
and other liabilities increased $77.9 million over the same period
reflecting the overall growth of the Company's operations.
Cash provided by operating activities was $138.2 million in 1995, 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.
<PAGE>
Cash Flows from Investing Activities
Cash used in investing activities increased $59.3 million during 1996 to
$217.0 million from $157.7 million in 1995. This increase is primarily the
result of the Company's increased capital investment in 1996. Total capital
investments totaled $230.6 million in 1996 and were composed of $215.1
million in additions to property, plant and equipment, $7.9 million in
deferred charges and computer software costs and $7.6 million in non-cash
capital lease additions. These 1996 capital investments were primarily
composed of costs incurred in building and equipping new and expanded
supermarkets and in the construction of a new distribution facility for the
Southeast. The distribution facility, located in Butner, North Carolina,
began shipping product in November 1996.
Net retail selling space for supermarkets increased 7.8% in 1996 to
4,490,000 square feet at year-end, an increase of 324,000 square feet over
1995 year-end sales area. The Company opened 13 new supermarkets while
closing 7 facilities and selling 1 food store. A number of 1996 supermarket
construction starts will not be completed until 1997. The number of
supermarkets and square footage of selling area at year-ends 1996, 1995 and
1994 are summarized below:
SUPERMARKETS
NUMBER OF SQUARE FOOTAGE
UNITS SELLING AREA
1996 139 4,490,000
1995 134 4,166,000
1994 118 3,547,000
Newly constructed supermarkets in 1996, together with their square footage
of selling area, are listed below:
SQUARE FOOTAGE
LOCATION SELLING AREA
Northeast
Niskayuna, NY 47,000
Williston, VT 33,000
Brattleboro, VT 35,000
South Burlington, VT 33,000
Waterville, ME 32,000
Southeast
Cary, NC (Walnut St.) 35,000
Charlotte, NC (Johnston Rd.) 41,000
Norfolk, VA 34,000
Charlotte, NC (University) 34,000
Raleigh, NC 41,000
Chester, VA 41,000
Cary, NC (Preston Corners) 35,000
Richmond, VA 32,000
<PAGE>
Cash used in investing activities decreased $12.0 million during 1995 to
$157.7 million from $169.7 million in 1994. This decrease was primarily the
result of the Company's acquisition of Wilson's Supermarkets. Total capital
investments totaled $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.
Cash Flows from Financing Activities
Cash provided by financing activities was $51.3 million in 1996, an increase
of $65.8 million from the $14.5 of cash used in financing activities in
1995. This increase is the result of proceeds from the issuance of long-term
debt (Note 2) partially offset by payments of long-term debt and
purchases of treasury stock. During 1996, the Company received $75.0
million of proceeds from a senior uncollateralized debt financing and $31.5
million of proceeds from borrowings on its revolving lines of credit.
During 1995, the Company received $11.4 million of proceeds from borrowings
on its revolving line of credit. In 1996, the Company made payments of
$29.0 million on its long-term debt as compared to $18.4 million in 1995.
This increase of $10.6 million is the result of the Company utilizing a
portion of its long-term debt proceeds to repay $11.4 million on its
revolving lines of credit. The Company purchased 468,000 shares of common
stock at a cost of $14.1 million. The majority of this repurchased stock
was used to fund the Company's stock based benefit plans with the balance
being held in treasury. Previously the Company issued new shares to fund
certain benefit plans. These amounts were offset by proceeds of $9.7
million received during 1996 from the issuance of approximately 410,000
shares of treasury stock and approximately 40,000 shares of common stock.
The Company paid $20.3 million in dividends to common shareholders in 1996.
Quarterly cash dividends declared during 1996 totaled $.48 per common share,
an increase of 14.3% over the $.42 per share declared during 1995. This was
the thirty-fourth 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 1996 represented 27.0% of net
earnings available to common shareholders. In February 1997, the Company
declared an increased quarterly dividend on its common stock of $.135 per
share, payable March 27, 1997. The new quarterly dividend of $.135 per
share represents an increase of 12.5% over the $.12 per share paid in March
1996.
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.
<PAGE>
1997 Capital Program
Total capital expenditure commitments are projected to be in excess of $180
million in 1997, primarily for new, relocating and expanding store
construction, equipment, vehicles and other asset expenditures. During
1997, 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 11% during 1997. In addition, a number of
projects scheduled to start in 1997 will not be completed until 1998. The
1997 capital program is expected to be financed by internally generated
funds, long-term debt and leases.
FORWARD-LOOKING INFORMATION
From time to time, information provided by the Company or statements made by
its associates may contain forward-looking information, as defined in the
Private Securities Litigation Reform Act of 1995. Examples of such
statements in this report include those concerning the Company's expected
future earnings, construction schedules and capital expenditures. The
Company cautions investors that there can be no assurance that actual
results or business conditions will not differ materially from those
projected or suggested in such forward-looking statements as a result of
various factors and risks including, but not limited to the following:
(1) Hannaford's future operating results are dependent on its ability to
achieve increased sales and to control expenses. Factors such as lower than
expected inflation, product cost fluctuations particularly in perishable
categories, changes in product mix or the use of promotional items,
continued or increased competitive pressures from existing competitors and
new entrants, including pricing strategies, and deterioration in general or
regional economic conditions are all factors which could adversely affect
sales projections. Other components of operating results could be adversely
affected by state or federal legislation or regulation that increases costs,
increases in interest rates or the Company's cost of borrowing, increases in
labor rates due to low unemployment or other factors, unanticipated costs
related to the opening of new stores or the inability to control various
expense categories.
(2) Hannaford's future growth is dependent on its ability to expand its
retail square footage. Increases in interest rates or the Company's cost of
capital, the unavailability of funds for capital expenditures and the
inability to develop new stores or convert existing stores as rapidly as
planned are all risks to our projected future expansion.
<PAGE>
(3) Adverse determinations with respect to pending or future litigation or
other material claims against Hannaford could affect actual results.
Furthermore, the market price of Hannaford common stock could be subject to
fluctuations in response to quarter to quarter variations in operating
results, changes in analysts' earnings estimates, market conditions in the
retail sector, especially in the supermarket industry, as well as general
economic conditions and other factors external to Hannaford.
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 8 of this Form 10-K. These financial
statements 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 28, 1996 and December 30, 1995,
and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 28, 1996, in conformity
with generally accepted accounting principles.
s/Coopers & Lybrand
Portland, Maine
January 15, 1997
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In thousands)
December 28, December 30,
1996 1995
Current assets:
Cash and cash items $ 42,505 $ 7,017
Accounts receivable, net 17,384 15,556
Inventories (note 1C) 191,658 157,968
Prepaid expenses 5,834 7,217
Deferred income taxes (note 8) 4,589 6,584
Total current assets 261,970 194,342
Property, plant and equipment, net (notes 1D
and 2) 723,176 577,126
Leased property under capital leases, net
(note 3) 59,918 56,691
Other assets:
Goodwill, net (note 1F) 95,654 93,348
Deferred charges, net (note 1G) 26,332 27,484
Computer software costs, net (note 1H) 13,658 10,063
Miscellaneous assets 3,019 2,776
Total other assets 138,663 133,671
$1,183,727 $961,830
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 28, December 30,
1996 1995
Current liabilities:
Current maturities of long-term debt (note 2) $ 14,213 $ 11,246
Obligations under capital leases (note 3) 1,775 1,467
Accounts payable 177,895 113,846
Accrued payroll 22,554 20,652
Other accrued expenses 21,205 23,619
Income taxes 2,532 -
Total current liabilities 240,174 170,830
Deferred income tax liabilities (note 8) 23,757 23,229
Other liabilities 47,917 28,699
Long-term debt (note 2) 227,525 150,648
Obligations under capital leases (note 3) 75,198 69,747
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;
December 28, 1996: Issued, 42,338,316
shares, outstanding 42,280,695 shares.
December 30, 1995: Issued and
outstanding 42,298,230 shares 31,754 31,724
Additional paid-in capital 119,399 121,974
Preferred stock purchase rights 423 423
Retained earnings 419,459 364,556
571,035 518,677
Less common stock in treasury
(December 28, 1996: 57,621 shares at cost) 1,879 -
Total shareholders equity 569,156 518,677
$1,183,727 $961,830
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
1996 1995 1994
Sales and other revenues $2,957,559 $2,568,061 $2,291,755
Cost of sales 2,242,784 1,951,248 1,728,499
Gross margin 714,775 616,813 563,256
Selling, general and administrative
expenses 568,033 481,017 437,548
Operating profit 146,742 135,796 125,708
Interest expense, net (notes 1I and 2) 22,204 19,368 21,360
Earnings before income taxes 124,538 116,428 104,348
Income taxes (note 8) 49,333 46,227 42,060
Net earnings $ 75,205 $ 70,201 $ 62,288
Per share of common stock:
Net earnings $ 1.78 $ 1.67 $ 1.50
Cash dividends $ .48 $ .42 $ .38
Weighted average number of common shares
outstanding 42,298 42,092 41,544
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 Treasury Stock
Shares Amount Capital Purchase Rights Earnings Shares Amount
<S> <C> <C> <C> <C> <C> <C> <C>
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
Net earnings 75,205
Cash dividends:
Common stock (20,302)
Shares issued to certain shareholders
per agreement 20 15 484
Shares issued under employee
benefit plans 20 15 (3,059) 410 12,250
Treasury stock purchases (468) (14,129)
Balance, December 28, 1996 42,338 $31,754 $119,399 $423 $419,459 ( 58) ($1,879)
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
1996 1995 1994
Cash flows from operating activities:
Net income $ 75,205 $ 70,201 $ 62,288
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 77,420 69,016 62,756
Decrease (increase) in inventories (33,689) (25,545) 6,372
Decrease (increase) in receivables and
prepayments (805) (1,196) 6,903
Increase in accounts payable,
accrued expenses and other liabilities 77,889 27,821 4,988
Increase (decrease) in income
taxes payable 2,532 (5,409) 2,274
Increase (decrease) in deferred taxes 2,523 2,279 (1,466)
Other operating activities 96 1,059 (178)
Net cash provided by
operating activities 201,171 138,226 143,937
Cash flows from investing activities:
Acquisition of Wilson's Supermarkets,
net of cash acquired - - (110,201)
Acquisition of property, plant
and equipment (215,067) (133,587) (83,969)
Sale of property, plant and equipment, net 5,958 2,607 9,641
Increase in goodwill and deferred charges (1,930) (22,599) (2,308)
Increase in computer software costs (5,933) (4,130) (2,676)
Decrease in short-term investments - - 19,855
Net cash used in investing
activities (216,972) (157,709) (169,658)
Cash flows from financing activities:
Principal payments under capital
lease obligations (1,493) (1,404) (1,359)
Proceeds from issuance of long-term debt 106,500 11,400 25,500
Issuance of common stock 776 11,694 9,348
Payments of long-term debt (28,994) (18,452) (26,550)
Purchase of treasury stock (14,129) - -
Issuance of treasury stock 8,931 - -
Dividends paid (20,302) (17,693) (15,876)
Redemption of preferred stock - - (1,883)
Net cash provided by (used in)
financing activities 51,289 (14,455) (10,820)
Net increase (decrease) in cash and
cash items 35,488 (33,938) (36,541)
Cash and cash items at beginning of year 7,017 40,955 77,496
Cash and cash items at end of year $ 42,505 $ 7,017 $ 40,955
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 in 1994, 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)
1996 1995 1994
Interest (net of amount capitalized,
$3,357 in 1996, $2,529 in 1995 and
$1,669 in 1994 $22,765 $21,986 $24,205
Income taxes 42,577 49,254 41,286
Supplemental disclosure of noncash investing and financing activities
Capital lease obligations totalling $7,652,000, $1,997,000 and
$12,480,000 were incurred during 1996, 1995 and 1994, 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 28, 1996, for fiscal year 1996,
December 30, 1995, for fiscal year 1995 and December 31, 1994, for fiscal
year 1994. 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. The majority of 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 71% of inventories were valued using the LIFO method in 1996
as compared to 75% in 1995. 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
$17,076,000 at December 28, 1996 and $15,608,000 at December 30, 1995.
<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 1996 1995
2% Land and improvements $ 117,218 $ 90,430
3% Buildings 252,228 228,858
12% Furniture, fixtures and equipment 404,725 333,492
4% Leasehold interests and improvements 245,490 188,730
Construction in progress 31,850 16,179
1,051,511 857,689
Less accumulated depreciation
and amortization 328,335 280,563
$ 723,176 $577,126
Effective January 1, 1996, the Company adopted "Statement of Financial
Accounting Standards (SFAS) No. 121, Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of", which requires
the Company to review for impairment long-lived assets, certain identifiable
intangibles and goodwill (see Note 1F) related to those assets whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. The measurement criteria for recognition of
an impairment loss requires the Company to estimate future cash flows for an
asset at the store level. Actual future cash flows could differ from
management's estimates which would result in an adjustment to the carrying
value of certain assets in a future period. The adoption of SFAS No. 121
did not have an impact on the financial position, results of operations or
cash flows of the Company.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
E. STORE OPENING COSTS
The noncapital expenditures incurred in opening new stores or remodelling
existing stores are expensed in the year in which they are incurred.
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. Goodwill amortization expense charged to operations was $5,140,000
in 1996, $4,448,000 in 1995 and $2,533,000 in 1994.
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 $3,246,000 in
1996, $5,609,000 in 1995 and $5,483,000 in 1994.
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 $2,338,000 in 1996,
$2,448,000 in 1995 and $3,085,000 in 1994.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
I. CAPITALIZED INTEREST
The Company capitalizes interest as a part of the cost of acquiring and
constructing certain assets. Capitalized interest was $3,357,000 in 1996,
$2,529,000 in 1995 and $1,669,000 in 1994.
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 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 and 1996.
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, accounts receivable 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 approximates its fair value.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
2. EXTERNAL FINANCING
At December 28, 1996, the Company had revolving credit lines with several
banks totalling $80 million with interest rates determined by different
borrowing options including prime, quoted money market or LIBOR plus a
premium. Subsequent to December 28, 1996, two of these lines were increased
bringing the total to $92 million. At December 28, 1996, there were $31.5
million of outstanding borrowings under these credit lines with a weighted-
average interest rate of 6.1%. 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 0.21% on the unused portion of the
line. One line, which expires in 1997, requires a commitment fee of 0.12%.
There are no compensating balances required during the commitment period.
In addition, the Company had unused, uncommitted short-term lines of credit
with three banks totalling $38 million at December 28, 1996. Of this
amount, approximately $2.7 million is reserved to support outstanding
standby letters of credit which guarantee payment of certain insurance
claims and premiums.
During 1996, the Company extinguished certain debt, collateralized by real
estate and equipment and held by insurance companies, totalling $3,750,000.
These loans had terms ranging from 6 to 15 years and interest rates between
8.9% and 9.6%. Also, during 1996, the Company made prepayments on certain
debt, collateralized by real estate, totalling $2,812,000. These loans had
terms ranging from 12 to 20 years and interest rates between 8.65% and
10.2%.
In February 1997, the Company received the proceeds of a $20,000,000 senior
uncollateralized debt financing. The term of the debt is 12 years, with an
average life of 10 years and an interest rate of 7.41%.
At December 28, 1996, real estate and equipment with a net book value of
approximately $91,140,000 served as collateral for debt of approximately
$79,672,000.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Net interest expense was as follows:
(In thousands)
1996 1995 1994
Interest on debt $17,460 $15,302 $16,508
Capital lease interest 9,351 9,105 8,615
Capitalized interest (3,357) (2,529) (1,669)
Interest income (1,250) (2,510) (2,094)
$22,204 $19,368 $21,360
Long-term debt consists of the following:
(In thousands)
1996 1995
Collateralized by real estate, due in
varying installments through 2011 with
interest from 7.55% to 10.35% $ 75,255 $ 80,294
Uncollateralized senior notes due in varying annual
installments through 2016 with interest from
6.16% to 8.97%. 123,500 51,750
Collateralized by equipment, due in varying
installments through 1999 with interest
from 6.3% to 7.2%. 4,417 10,250
Uncollateralized revolving credit loans with
interest from 5.8% to 6.8% 31,500 11,400
Other 7,066 8,200
241,738 161,894
Less current portion 14,213 11,246
$227,525 $150,648
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
The uncollateralized senior note agreements contain certain restrictive
covenants, which among other provisions, limit total debt and require
minimum levels of tangible net worth.
Maturities of long-term debt at December 28, 1996, are as follows:
(In thousands)
1997 $ 14,213
1998 20,545
1999 24,738
2000 28,548
2001 31,737
2002 and thereafter 121,957
$241,738
<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 3 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)
1996 1995
Real property $83,047 $76,457
Less accumulated amortization 23,129 19,766
Net real property under capital leases $59,918 $56,691
Amortization of property under capital leases was $4,004,478 in 1996,
$3,866,000 in 1995 and $3,526,000 in 1994.
Future minimum rental payments under capital lease obligations and operating
leases at December 28, 1996, are as follows:
(In thousands)
Capital Operating
Leases Leases
1997 $ 11,615 $ 20,120
1998 11,636 19,655
1999 11,840 18,722
2000 11,955 17,184
2001 11,825 16,074
2002 and thereafter 124,076 205,217
Total minimum lease payments 182,947 296,972
Less:
Imputed interest (at rates
from 6.50% to 21.13%) 105,972
Estimated executory costs 2
Present value of net mini-
mum lease payments 76,973
Less current obligations 1,775
Long-term obligations $ 75,198
<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 $6,683,000 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)
1996 1995 1994
Capital leases:
Contingent rentals $ 169 $ 166 $ 379
Operating leases:
Minimum rentals 19,019 13,847 11,578
Contingent rentals 491 517 291
Rentals from subleases (690) (222) (344)
18,820 14,142 11,525
$18,989 $14,308 $11,904
<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 operated
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 are as follows:
UNAUDITED
(IN THOUSANDS EXCEPT PER SHARE DATA) 1994
Net sales $2,385,837
Net earnings $ 63,124
Net earnings per share $ 1.52
The foregoing proforma data is not necessarily indicative of what would have
occurred had the acquisition been consummated at the beginning of the 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 May 1996, the Company amended and extended its existing standstill
agreement with certain shareholders ("the Sobey Parties"). The
amendment extends the term of the standstill agreement to December
31, 1998, subject to automatic renewal for successive one-year
periods (but not beyond December 31, 2000) unless by July 31 of a
given year either the Company or any of the Sobey Parties gives
written notice of an intention not to further extend the term of the
standstill agreement.
The amendment also made technical changes to the agreement which will
allow the Company greater flexibility in the use of common stock to
compensate employees and directors and will permit renewal of
Hannaford's Shareholder Rights Plan through February 28, 2001. The
amendment maintains the Sobey Parties' ownership limit at
approximately 25.6% of the Company's voting stock, 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 1994 the Company has issued to the Sobey Parties the following shares
of common stock pursuant to their purchase rights under the agreement:
1996, 19,600 shares; 1995, 132,000 shares; and 1994, 143,000 shares. All
sales to the Sobey Parties pursuant to the standstill agreement have been
made at market prices. Due to the Company's share repurchase program to
fund stock-based benefit plans and the resulting slowdown in the growth of
Company shares outstanding, the Sobey Parties purchased fewer shares in 1996
to maintain the same relative ownership.
<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,
1996 and 1995, the plan's measurement dates, the discount rates used in
determining the actuarial present values of the projected benefit
obligations were 8.25% and 7.75%, respectively; the long-term rate of
increase in compensation levels was assumed to be 4.5% in both years. The
expected long-term rate of return on plan assets used in determining net
pension expense was 9.5% for 1996, 9.0% for 1995, and 9.0% for 1994.
The components of net pension expense were as follows:
(In thousands)
1996 1995 1994
Service cost $ 4,709 $ 4,248 $ 4,547
Interest expense 5,155 4,916 4,882
Actual return on plan assets (7,194) (8,566) (682)
Net amortization and deferral 1,662 3,769 (3,670)
Net pension expense $ 4,332 $ 4,367 $ 5,077
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
The following summarizes the funded status of the plan at December 28, 1996
and December 30, 1995:
(In thousands)
1996 1995
Actuarial present value of
benefit obligations:
Vested benefit obligation $45,331 $48,144
Accumulated benefit obligation $47,912 $49,378
Projected benefit obligation $64,379 $67,880
Plan assets at fair value 70,391 62,766
Plan assets (greater than) less than
projected benefit obligation (6,012) 5,114
Unrecognized net asset
at transition 352 396
Unrecognized net gain (loss) 7,359 (841)
Unrecognized prior service benefit (cost) 1,590 (2,129)
Accrued pension cost $ 3,289 $ 2,540
In October 1996, the Board of Directors approved an amendment to the plan
which converts it to a cash balance plan. This amendment will be effective
January 1, 1998, and will result in the remeasurement of the plan's
accumulated benefit obligation, for which the expected reduction will be
amortized over the average future service period of active employees.
<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, 1996 and 1995, the plan's measurement
date, were 8.25% and 7.75%, respectively. A 6.5% annual rate of increase in
the per capita costs of covered health care was assumed for 1997, 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)
1996 1995 1994
Service cost $ 70 $ 65 $ 82
Interest expense 438 530 686
Net amortizations 167 231 497
Net periodic postretirement
benefit expense $ 675 $ 826 $ 1,265
The following summarizes the status of the plan at December 28, 1996 and
December 30, 1995:
(In thousands)
1996 1995
Accumulated benefit obligation:
Retirees $ 3,836 $ 4,432
Actives - eligible to retire 559 582
Actives - not eligible to retire 985 964
Total obligation 5,380 5,978
Unrecognized transition obligation (8,847) (9,400)
Unrecognized net gain 5,003 4,849
Accrued postretirement benefit liability $ 1,536 $ 1,427
The Company also provides a defined contribution 401(k) plan to
substantially all employees. Amounts charged to expense for this plan were
$3,076,000 in 1996, $2,744,000 in 1995 and $2,277,000 in 1994. 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 (the final grants under which expired
on May 4, 1996) 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 1988 Stock Plan, both incentive stock options and non-qualified
stock options may have various vesting schedules, but generally none are
exercisable until at least 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 trigger the granting of non-qualified
"reload" options for the balance of the original option term. Original
option grants expire ten years from the date of grant (seven years in the
case of the 1985 Incentive Stock Option Plan). Incentive stock option
activity for the fiscal years ended December 28, 1996 and December 30, 1995,
was as follows:
1996 1995
WEIGHTED WEIGHTED
AVERAGE AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE
Outstanding at
beginning of year 1,361,632 $20.85 1,184,740 $20.43
Granted 359,040 30.39 335,636 26.75
Exercised (286,482) 19.63 (137,338) 16.08
Cancelled (11,987) 26.65 (21,406) 23.66
Outstanding at end
of year 1,422,203 24.91 1,361,632 22.37
Exercisable at end
of year 902,064 22.42 859,526 20.85
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
Non-qualified stock option activity for the fiscal years ended December 28,
1996 and December 30, 1995, was as follows:
1996 1995
WEIGHTED WEIGHTED
AVERAGE AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE
Outstanding at
beginning of year 217,542 $24.60 102,709 $22.09
Granted 189,371 31.30 115,450 26.85
Exercised (34,892) 19.96 - -
Cancelled (936) 31.63 (617) 25.04
Outstanding at end
of year 371,085 28.19 217,542 24.60
Exercisable at end
of year 150,595 24.60 80,170 22.19
Available for future
grants (all plans) 553,810 - 1,089,298 -
Exercise prices for options outstanding as of December 28, 1996 ranged from
$18.81 to $33.38. The weighted-average remaining contractual life of these
options is approximately 7.6 years.
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 1996, employees purchased 105,515 shares, for which
$2,220,072 was paid to the Company. As of December 28, 1996, grants had
been exercised by employees for the purchase of 116,544 shares and 201,764
shares remained available for issuance under the Plan. As of February 1997,
$2,587,976 had been received by the Company upon issuance of these shares
and the balance of shares available for future issuance was reduced to
85,220.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
In 1995, the Financial Accounting Standards Board issued "Statement of
Financial Accounting Standards (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 25), "Accounting for Stock Issued to Employees". The
Company has elected to follow APB 25 in accounting for its employee stock
plans, and accordingly, no compensation cost has been recognized.
Had compensation cost for the Company's stock plans been determined based on
the fair value requirements of SFAS No. 123, the Company's net income and
earnings per share would have been reduced to the proforma amounts indicated
below:
(In thousands except earnings per share)
1996 1995
Net earnings As reported $75,205 $70,201
Proforma 72,567 68,814
Net earnings per share As reported $1.78 $1.67
Proforma 1.71 1.63
During the phase-in period of SFAS No. 123, the fair value of stock options
included in the proforma accounts for fiscal 1996 and 1995 is not
necessarily indicative of the future effects on net income and earnings per
share.
The fair value of each stock option grant has been estimated on the date of
grant using the Black-Scholes option pricing model with the following
wieghted-average assumptions:
1996 1995
Risk-free interest rate 7.03% 6.61%
Dividend yield 1.54% 1.60%
Expected volatility 19.44% 18.77%
Expected life 4.9 yrs. 4.6 yrs.
The weighted-average grant date fair values of options granted during 1996
and 1995 were $8.28 and $6.76, respectively.
<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)
1996 1995 1994
Current
Federal $38,842 $35,689 $34,585
State 7,969 8,259 9,100
46,811 43,948 43,685
Deferred
Federal 2,276 2,024 (1,209)
State 246 255 (416)
2,522 2,279 (1,625)
Total income tax expense $49,333 $46,227 $42,060
The reconciliation of income tax computed at the United States Federal
statutory tax rates to income tax expense is:
(In thousands)
1996 1995 1994
Amount Percent Amount Percent Amount Percent
Tax at U.S.
statutory rate $43,588 35.00% $40,750 35.00% $36,522 35.00%
State income taxes,
net of federal tax
benefit 5,280 4.24 5,530 4.75 5,645 5.41
Other - net 465 .37 (53) (.05) (107) (.10)
$49,333 39.61% $46,227 39.70% $42,060 40.31%
<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 28, 1996 and December 30, 1995 were as
follows:
(In thousands)
1996 1995
Deferred Tax Liabilities:
Depreciation and amortization $38,729 $33,240
Other 4,398 4,496
43,127 37,736
Deferred Tax Assets:
Capital leases (6,870) (5,938)
Insurance reserves (9,412) (9,379)
Associate benefit plans (5,400) (3,922)
Other (2,277) (1,852)
(23,959) (21,091)
19,168 16,645
Net current deferred tax assets 4,589 6,584
Net non-current deferred tax liabilities $23,757 $23,229
The Company expects to realize the deferred tax assets in the ordinary
course of business operations in subsequent years, and, accordingly, has not
established a valuation reserve relative to these amounts.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
<TABLE>
<CAPTION>
9. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a presentation of selected financial data for each of the four quarters of fiscal years 1996,
1995 and 1994.
(In thousands except per share amounts)
First Second Third Fourth
Quarter Quarter Quarter Quarter
1996
<S> <C> <C> <C> <C>
Sales and other revenues...... $690,525 $729,081 $773,271 $764,682
Gross margin...................... 167,836 176,345 184,093 186,501
Net earnings...................... 14,674 19,509 19,898 21,124
Per common share............. $ .35 $ .46 $ .47 $ .50
Weighted average common shares
outstanding..................... 42,305 42,314 42,284 42,291
1995
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
</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 12, 1997.
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 12, 1997.
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 12, 1997.
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 12, 1997.
<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............................. 25
Consolidated Balance Sheets - December 28, 1996 and
December 30, 1995.......................................... 26-27
Consolidated Statements of Earnings - Fiscal Years Ended,
December 28, 1996, December 30, 1995 and December 31, 1994. 28
Consolidated Statements of Changes in Shareholders'
Equity - Fiscal Years Ended, December 28, 1996,
December 30, 1995 and December 31, 1994.................... 29
Consolidated Statements of Cash Flows
- Fiscal Years Ended, December 28, 1996,
December 30, 1995 and December 31, 1994.................... 30-31
Notes to Consolidated Financial Statements.................... 32-51
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);
(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) and (iii) a Second Amendment
Agreement dated as of May 14, 1996, which extends the term of
the agreement and makes other technical changes, a copy of
which was filed as Exhibit 1 to the Registrant's current report
on Form 8-K, dated May 14, 1996 (SEC File No. 1-7603).
NOTE: Compensatory plans and arrangements and management contracts are
filed as Exhibits 10.2 through 10.25 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
<PAGE>
PAGES
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.
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 - Amended and Restated Hannaford Bros. Co. Employees' Retirement
Plan, effective January 1, 1998. 62-146
10.4 - 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).
10.5 - 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); (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) and (iv) the Third 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 28, 1996 (SEC File No. 1-7603).
<PAGE>
PAGES
10.6 - Fourth Amendment to the Hannaford Bros. Co. Employee
Stock Purchase Plan, effective February 11, 1997. 147-148
10.7 - 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).
10.8 - Second Amendment to the 1993 Long Term Incentive Plan,
effective December 2, 1996. 149-150
10.9 - 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).
10.10 - There is incorporated herein by reference the Amended and
Restated Hannaford Bros. Co. Annual Incentive Plan,
effective December 7, 1995, 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 December 30, 1995 (SEC File
No. 1-7603).
<PAGE>
PAGES
10.11 - 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
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).
10.12 - 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).
10.13 - 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).
<PAGE>
PAGES
10.14 - 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).
10.15 - 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
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).
10.16 - 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).
10.17 - 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).
<PAGE>
PAGES
10.18 - There is incorporated herein by reference a standard form
of Deferred Compensation Agreement available to certain
management employees pursuant to the Registrant's Amended
and Restated Deferred Compensation Plan, a copy of which
was filed as Exhibit 10.19 to the Registrant's Annual Report
on Form 10-K for the fiscal year ended January 2, 1993 (SEC
File No. 1-7603).
10.19 - 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).
10.20 - 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).
10.21 - First Amendment to the Hannaford Bros. Co. Stock Ownership
Plan for Outside Directors, effective January 1, 1997. 151-152
10.22 - 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).
10.23 - 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
10.24 - There is incorporated herein by reference a Letter
Agreement between the Registrant and James J. Jermann, dated
July 8, 1996, 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 June 29, 1996 (SEC File No. 1-7603).
10.25 - Consulting Agreement between the Registrant and Omega
Group, Inc. dated December 11, 1996. 153-154
21 - Subsidiaries of the Registrant............................ 155
23 - Consents of Accountants................................... 156
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, 1997
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, 1997 March 12, 1997
March 12, 1997
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, 1997 March 12, 1997
Chief Financial Officer
(Principal Accounting Officer)
March 12, 1997
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, 1997 March 12, 1997
President
Chief Executive Officer
Director
March 12, 1997 s/Robert D. Bolinder
Robert D. Bolinder William A. Andres
Director Director
s/Bruce G. Allbright March 12, 1997 March , 1997
Bruce G. Allbright
Director
March 12, 1997 s/William T. End s/James W. Gogan
William T. End James W. Gogan
s/Renee M. Love Director Director
Renee M. Love March 12, 1997 March 12, 1997
Director
March 12, 1997
Exhibit 10.3
HANNAFORD BROS. CO.
EMPLOYEES' RETIREMENT PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1998)
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS 1
ARTICLE II PARTICIPATION 20
2.1 Date of Participation 20
2.2 Participation Requirements 21
2.3 Transfers Among Affiliated Employers 21
2.4 Reemployed Former Participant 21
ARTICLE III RETIREMENT DATES 22
3.1 Normal Retirement Date 22
3.2 Early Retirement Date 22
3.3 Deferred Retirement Date 22
ARTICLE IV BENEFIT FORMULAS 22
4.1 Benefits For Participants Other Than Certain
Warehouse and Driver Participants 22
(a) Cash Balance Account 22
(b) Contribution Credit 24
(c) Interest Credit 24
(d) Normal Retirement Benefit 24
(e) Early Retirement Benefit 24
(f) Deferred Retirement Benefit 24
(g) Vested Benefit 25
4.2 Benefits For Certain Warehouse Participants 25
4.3 Employment Transfers 26
ARTICLE V RETIREMENT AT NORMAL RETIREMENT DATE 26
5.1 Normal Retirement Benefit 26
5.2 Form of Normal Retirement Benefit 26
5.3 Qualified Joint and Survivor Annuity 27
5.4 Disability Benefit 27
ARTICLE VI RETIREMENT AT EARLY RETIREMENT DATE 27
6.1 Early Retirement Benefit 27
6.2 Form of Early Retirement Benefit 27
6.3 Qualified Joint and Survivor Annuity 28
ARTICLE VII RETIREMENT AT DEFERRED RETIREMENT DATE 28
7.1 Deferred Retirement Benefit 28
7.2 Form of Deferred Retirement Benefit 28
7.3 Qualified Joint and Survivor Annuity 29
<PAGE>
ARTICLE VIII TERMINATION OF EMPLOYMENT 29
8.1 Termination of Employment 29
8.2 Vested Benefit 29
8.3 Form of Benefit 29
8.4 Qualified Joint and Survivor Annuity 30
8.5 Forfeitures 30
ARTICLE IX DEATH BENEFITS 30
9.1 Death Before Annuity Starting Date 30
9.2 Death After Annuity Starting Date 33
9.3 Designation of Beneficiary 33
9.4 Qualified Domestic Relations Orders 33
ARTICLE X QUALIFIED JOINT AND SURVIVOR ANNUITY ELECTION 34
10.1 Election Period 34
10.2 Written Explanation 34
10.3 Additional Information Furnished Upon Request 35
10.4 Election Not to Receive Qualified Joint and
Survivor Annuity 35
10.5 Qualified Joint and Survivor Annuity 35
10.6 Spousal Consent 35
ARTICLE XI OPTIONAL FORMS OF BENEFITS 35
11.1 Early Retirement Benefit - Optional Lump Sum 35
11.2 Vested Benefit - Optional Lump Sum 37
11.3 Contingent Annuitant Option 38
11.4 Five Year Certain and Life Annuity Option 38
11.5 Lump Sum Option 39
ARTICLE XII BENEFIT ADJUSTMENTS AND CASH OUTS 39
12.1 Offset of Amounts Transferred to the Trust From
Other Plans 39
12.2 Prohibition Against Duplication of Benefits 39
12.3 Small Installments and Cash Outs 40
ARTICLE XIII LIMITATION ON BENEFITS 41
13.1 Limitation For Defined Benefit Plans 41
13.2 Adjustments 41
13.3 Reduction For Less Than Ten (10) Years of
Participation or Service 43
<PAGE>
13.4 Adjustment to Dollar Limitation 43
13.5 Limitation For Defined Benefit Plan and Defined
Contribution Plan 43
13.6 Combining and Aggregating Plans 45
13.7 Definition of Compensation 45
13.8 Certain Contributions Treated as Annual Additions 45
ARTICLE XIV RESTRICTION ON BENEFITS PAYABLE TO CERTAIN
PARTICIPANTS 46
14.1 Nondiscriminatory Benefit 46
14.2 Limits on Annual Payments 46
ARTICLE XV SUSPENSION OF BENEFITS 47
15.1 Suspension Before Normal Retirement Date 47
15.2 Status Determination 47
ARTICLE XVI CREDIT FOR YEARS OF BENEFIT SERVICE UPON REEMPLOYMENT
FOLLOWING RECEIPT OF AN OPTIONAL LUMP SUM 47
16.1 Reemployment With Credit For Prior Years of
Benefit Service 47
16.2 Reemployment Without Credit For Prior Years of
Benefit Service 48
16.3 Reemployment With Partial Credit For Prior
Years of Benefit Service 48
ARTICLE XVII TOP HEAVY PROVISIONS 48
17.1 Top Heavy Requirements 48
17.2 Minimum Vesting Requirement 48
17.3 Minimum Benefit Requirement 49
17.4 Modified Limitation on Annual Additions 50
17.5 Present Value Factors 50
ARTICLE XVIII CONTRIBUTIONS 50
18.1 Employer Contributions 50
18.2 Erroneous Employer Contributions 50
18.3 Application For Forfeitures 50
18.4 Trust 50
ARTICLE XIX RETIREMENT COMMITTEE 51
19.1 Appointment of Retirement Committee 51
19.2 Appointment, Resignation and Removal 51
<PAGE>
19.3 Duties 51
19.4 Notice to Trustee 52
19.5 Fiduciary Duties 52
19.6 Reporting and Disclosure 52
19.7 Delegation of Ministerial Duties 53
19.8 Compensation and Reimbursement of Expenses 53
19.9 Uniformity of Rules and Regulations 53
19.10 Reliance on Reports 53
19.11 Multiple Signatures 53
19.12 Payment of Plan Expenses 53
ARTICLE XX FINANCE COMMITTEE 54
20.1 Duties 54
20.2 Fiduciary Duties 54
20.3 Compensation and Reimbursement of Expenses 55
20.4 Reliance on Reports 55
20.5 Multiple Signatures 55
ARTICLE XXI CLAIMS PROCEDURE 55
21.1 Filing a Claim For Benefits 55
21.2 Denial of Claim 55
21.3 Appeal of Denied Claim 56
21.4 Decision on Appeal 56
ARTICLE XXII AMENDMENT AND TERMINATION 56
22.1 Amendment 56
22.2 Termination 57
22.3 Benefit Service and Average Annual Compensation
Following Plan Termination 58
ARTICLE XXIII Retiree Medical Benefits 59
23.1 401(h) Account 59
23.2 Retiree Medical Benefits 59
23.3 Contributions 59
23.4 Forfeitures 60
23.5 Investments 60
23.6 Reversion to Employer 60
23.7 Key Employees 60
<PAGE>
ARTICLE XXIV Nonalienability of Benefits; Qualified Domestic
Relations Orders 60
24.1 Nonalienability of Benefits 60
24.2 Qualified Domestic Relations Orders 61
24.3 Notice 61
24.4 Representative 61
24.5 Separate Account 61
24.6 Determination by Retirement Committee 61
24.7 Definitions 62
ARTICLE XXV Direct Rollovers 63
25.1 Eligibility 63
25.2 Notice 64
25.3 Election 65
ARTICLE XXVI Miscellaneous 66
26.1 Merger or Consolidation of Plan 66
26.2 Distributions to Minors and Incompetent Persons 66
26.3 Commencement of Distributions 66
26.4 Separate Plans 67
26.5 Service in Various Fiduciary Capacities 67
26.6 Exclusive Benefit 67
26.7 Employment 67
26.8 Predecessor Employer Plan 67
26.9 Governing Law 67
26.10 Article and Section Headings and Table of Contents 67
26.11 Actuarial Equivalency Assumptions 67
26.12 Prohibition on Reduction of Accrued Benefit 68
26.13 Delegation of Authority by Subsidiaries 68
26.14 Cost of Living Adjustment 68
26.15 Early Retirement Incentive Program 68
26.16 Directed Payments 69
<PAGE>
HANNAFORD BROS. CO.
EMPLOYEES' RETIREMENT PLAN
Hannaford Bros. Co. hereby amends and restates the Hannaford Bros. Co.
Employees' Retirement Plan effective generally January 1, 1998. It is
intended that the Plan, as amended and restated, meet all applicable
requirements of the Internal Revenue Code of 1986 and the Employee
Retirement Income Security Act of 1974 ("ERISA"), as the same may from time
to time be amended. The Plan shall, therefore, be interpreted to comply
with the applicable terms of the Code and ERISA and all applicable
regulations and rulings issued thereunder.
ARTICLE
DEFINITIONS
The following terms, when used herein, shall have the meanings as
hereinafter set forth, unless the context indicates otherwise:
1.1 "Accrued Benefit" shall mean, as of any date of reference (and
except as otherwise provided in Section 1.11), a Participant's monthly
retirement benefit commencing on the first day of the month coinciding with
or next following his or her Normal Retirement Date (or, if later, the date
of reference) payable in the normal form and in an amount determined in
accordance with the Normal Retirement Benefit formula set forth in Article
IV. The Accrued Benefit of a Participant whose benefit under the Plan is
expressed as a Cash Balance Account shall be determined as of any date of
reference prior to his or her Normal Retirement Date by (i) projecting the
future value of the Account balance to the Participant's Normal Retirement
Date at the rate interest is credited under Section 4.1(c), and then (ii)
converting the projected Account balance to a monthly retirement benefit
payable in the form of a life annuity, based on the factors set forth in
Section 12.3(b).
1.2 "Actuarial Equivalence," "Actuarial Equivalent," or "Actuarially
Equivalent" shall mean equality in value of the aggregate amounts expected
to be received under different forms of payment, based on the assumptions
set forth in Section 26.11.
1.3 "Affiliated Employer" shall mean any Employer which has adopted
the Plan in accordance with Section 1.19 and any other corporation or other
business organization if any such Employer and such other corporation or
business organization are members of a controlled group of corporations (as
defined in Section 414(b) of the Code), trades or businesses (whether or
not incorporated) which are under common control (as defined in Section
414(c) of the Code) or an affiliated service group (as defined in Section
414(m) of the Code).
<PAGE>
1.4 "Annual Benefit" shall mean a benefit which is payable annually
in the form of a straight-life annuity, excluding any benefits attributable
to contributions by Employees, rollover contributions and assets
transferred from a qualified plan not maintained by the Employer. For
purposes of applying the limitations of Article XIII, a benefit payable in
any form other than a straight-life annuity shall, except as hereinafter
provided, be adjusted to a straight-life annuity using the mortality table
specified in Section 12.3(b)(ii) and an interest assumption of 5% or the
rate specified in Section 26.11 for determining Actuarial Equivalence,
whichever is greater; provided, however, effective for Limitation Years
beginning in 1995, the interest rate specified in Section 12.3(b)(i) shall
be substituted for 5% for purposes of adjusting any form of benefit subject
to Section 417(e)(3) of the Code. No actuarial adjustment shall be made,
however, for (i) the value of a qualified joint and survivor annuity (as
defined in Section 10.5), (ii) the value of benefits that are not directly
related to retirement benefits (such as qualified disability benefits, pre-
retirement death benefits and post-retirement medical benefits) and (iii)
the value of post-retirement cost of living increases, if any, made in
accordance with Section 415(d) of the Code and Section 1.415-3(c)(2)(iii)
of the Treasury Regulations.
1.5 "Annuity Starting Date" shall mean the first day of the first
month for which an amount is payable as an annuity or, in the case of an
optional lump sum benefit, the first day on which such lump sum is payable.
1.6 "Average Annual Compensation" shall mean a Participant's annual
Compensation averaged over the sixty (60) consecutive calendar months of
his or her employment for which such average is the highest during the one
hundred and twenty (120) consecutive calendar month period immediately
prior to the date as of which such Participant's Average Annual
Compensation is to be determined. If a Participant has fewer than sixty
(60) calendar months of employment during such period, such average shall
be taken over all of his or her calendar months of employment. Any
calendar month during such sixty (60) consecutive month averaging period
(or during all calendar months of employment, if shorter) in which a
Participant receives no Compensation shall be disregarded in determining
his or her Average Annual Compensation.
Effective July 1, 1992, the Average Annual Compensation of a disabled
Participant who meets the applicable conditions set forth in Section 5.4
shall be determined based on the assumption that such Participant's rate of
Compensation during the Plan Year immediately preceding commencement of his
or her disability continued during the period of such disability.
1.7 "Beneficiary" shall mean the person or persons designated by a
Participant as provided in Section 9.3 to receive any death benefits
payable under the Plan following the death of a Participant.
<PAGE>
1.8 "Board of Directors" shall mean the Board of Directors of
Hannaford Bros. Co. or any corporation into which Hannaford Bros. Co. may
be merged or consolidated.
1.9 "Break in Service" shall have the meaning set forth in subsection
(a), (b) or (c) below, whichever is applicable:
(a) In the case of an hourly Employee other than a Driver
Employee or any full-time Employee of Progressive Distributors, Inc.
who is employed as a truck driver, the term "Break in Service" with
regard to Plan Years commencing prior to January 1, 1980, shall have
the meaning under the terms of the Plan as in effect on December 31,
1979, and with regard to Plan Years commencing on or after January 1,
1980, shall mean a Plan Year in which such an Employee is not credited
with more than four hundred and thirty-five (435) Hours of Service on
account of any one or more of the following:
(i) discharge from employment;
(ii) voluntary termination of employment;
(iii) failure to return to the employ of an Affiliated
Employer prior to the expiration of the period entitling such
Employee to reemployment rights under the Federal Selective
Service Act or any federal law promulgated to supersede such law
after military service in the Armed Forces of the United States;
(iv) failure to return to the employ of an Affiliated
Employer upon the expiration of any period of absence due to
sickness, accident or disability for which such an Employee is
entitled to receive benefits under any welfare plan sponsored by
an Affiliated Employer; or
(v) failure to return to the employ of an Affiliated
Employer when recalled following a temporary period of layoff for
a period not to exceed twelve (12) months.
(b) In the case of a Driver Employee or any full-time Employee
of Progressive Distributors, Inc. who is employed as a truck driver,
the term "Break in Service" with regard to Plan Years commencing prior
to January 1, 1983, shall have the meaning applicable to other hourly
Employees in accordance with subsection (a) of this Section and with
regard to Plan Years commencing on or after January 1, 1983, shall
have the meaning applicable to salaried and salaried nonexempt
Employees in accordance with subsection (c) of this Section.
<PAGE>
(c) In the case of a salaried or salaried nonexempt Employee,
the term "Break in Service" shall mean a Plan Year in which such an
Employee is not credited with more than five hundred (500) Hours of
Service on account of any one or more of the reasons set forth in
paragraphs (i) through (v) of subsection (a) of this Section.
1.10 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.11 "Compensation" shall mean the basic compensation paid, before
any reduction pursuant to a deferral election under a Code Section 401(k)
plan or a benefit election under a Code Section 125 plan sponsored by an
Employer, to a Participant by an Employer, including compensation for
incentive hours and excluding reimbursements or other expense allowances,
fringe benefits (cash and noncash), moving expenses, deferred compensation,
welfare benefits, unguaranteed overtime pay, bonuses and other irregular
payments.
Notwithstanding the preceding sentence to the contrary, for benefits
accruing in Plan Years beginning on or after January 1, 1989, the annual
Compensation of any Participant in excess of Two Hundred Thousand Dollars
($200,000), or such higher amount as the Secretary of the Treasury may
prescribe, shall not be taken into account under the Plan; and for benefits
accruing in Plan Years beginning on or after January 1, 1994, the annual
Compensation of any Participant in excess of One Hundred Fifty Thousand
Dollars ($150,000), or such higher amount as the Secretary of the Treasury
may prescribe, shall not be taken into account under the Plan. In the event
Compensation is determined for a period which contains fewer than twelve
(12) calendar months, the annual Compensation limit shall be an amount
equal to the annual Compensation limit for the calendar year in which the
period begins multiplied by a fraction, the numerator of which is the
number of calendar months in the period and the denominator of which is
twelve (12). For purposes of the annual Compensation limit, any
Compensation paid to a Participant who is the spouse or a lineal descendant
(who has not attained age nineteen (19) by the close of the Plan Year) of a
Participant who is a Five Percent Owner or one of the ten (10) highly
compensated employees (within the meaning of Section 414(q) of the Code)
paid the highest compensation (as defined in Section 13.7) for the Plan
Year shall be treated as paid to or on behalf of such Five Percent Owner or
highly compensated employee. If the annual Compensation limit is exceeded
as a result of the application of the preceding sentence, then (except for
purposes of determining the portion of Compensation not in excess of
Covered Compensation) the limitation shall be prorated among the affected
Participants' Compensation, as determined prior to the application of the
annual Compensation limit.
The rules of this paragraph are effective January 1, 1994. If the
Secretary of the Treasury increases the annual Compensation limit for a
calendar year, the increased limit shall apply to any period beginning in
<PAGE>
such calendar year over which Compensation is determined ("determination
period"). If Compensation for a prior determination period is taken into
account for a determination period beginning on or after January 1, 1994,
such Compensation shall be subject to the annual Compensation limit
(determined under this Section) in effect for such prior determination
period. For purposes of this paragraph, the annual Compensation limit is
$150,000 for determination periods beginning before January 1, 1994.
Effective January 1, 1994, the Accrued Benefit of a Section 401(a)(17)
Participant shall be equal to the greater of:
(a) the Participant's Accrued Benefit as of the date such
benefit is determined; or
(b) the sum of:
(i) the Participant's Accrued Benefit based on his or her
Average Annual Compensation, Covered Compensation and Years of
Benefit Service as of December 31, 1993, determined under the
terms of the Plan in effect on that date; and
(ii) the Participant's Accrued Benefit (disregarding Years
of Benefit Service prior to January 1, 1994) as of the date such
benefit is determined.
"Section 401(a)(17) Participant" means a Participant whose Accrued Benefit
determined on or after January 1, 1994, is based on annual Compensation for
a period beginning before that date in excess of One Hundred Fifty Thousand
Dollars ($150,000). In the event the Plan is amended after January 1, 1994,
to add an optional form of benefit (within the meaning of Treasury
Regulation Section 1.401(a)(4)-4(e)), such benefit, if subsidized, shall
not be available to a Section 401(a)(17) Participant.
1.12 "Covered Compensation" shall mean, with respect to any
Participant for a Plan Year, the average (without indexing) of the Taxable
Wage Bases in effect for each calendar year during the thirty-five (35)
year period ending with the last day of the calendar year in which the
Participant attains (or will attain) Social Security Retirement Age.
In determining a Participant's Covered Compensation for a Plan Year,
the Taxable Wage Base in effect for all calendar years beginning after the
first day of the Plan Year is assumed to be the same as the Taxable Wage
Base in effect as of the beginning of the Plan Year.
A Participant's Covered Compensation for a Plan Year after the thirty-
five (35) year period described above is the Participant's Covered
Compensation for the Plan Year during which such period ends. A
<PAGE>
Participant's Covered Compensation for a Plan Year before the thirty-five
(35) year period described above is the Taxable Wage Base in effect as of
the beginning of the Plan Year.
1.13 "Determination Date" shall mean, with respect to any Plan Year,
the last day of the preceding Plan Year or, in the case of the first Plan
Year, the last day of such Plan Year.
1.14 "Driver Employee" shall mean an Employee who is employed as a
truck driver by Hannaford Bros. Co. or any subsidiary thereof.
1.15 "Driver Participant" shall mean a Participant who, as of the
date of his or her retirement or separation from service, is a Driver
Employee.
1.16 "Effective Date" of this Amendment and Restatement shall mean
January 1, 1998, except as otherwise specifically provided.
1.17 "Eligibility Computation Period" shall mean the initial twelve
(12) consecutive month period beginning with the date on which an Employee
first performs an Hour of Service and thereafter each Plan Year commencing
with the Plan Year which includes the first anniversary of the Employee's
Employment Commencement Date.
In the case of an hourly Employee other than a Driver Employee or any
full-time Employee of Progressive Distributors, Inc. who is employed as a
truck driver, if such an Employee is credited with the number of Hours of
Service determined in accordance with (a) or (b) below, whichever is
applicable, in his or her initial Eligibility Computation Period and in the
Plan Year which includes the first anniversary of his or her Employment
Commencement Date, he or she shall be credited with two (2) Years of
Participation Service:
(a) with regard to initial Eligibility Computation Periods and
Plan Years commencing on or after January 1, 1980, eight hundred and
seventy (870) Hours of Service; and
(b) with regard to initial Eligibility Computation Periods and
Plan Years commencing before January 1, 1980, one thousand (1,000)
Hours of Service.
In the case of a Driver Employee or any full-time Employee of
Progressive Distributors, Inc. who is employed as a truck driver, if such
an Employee is credited with the number of Hours of Service determined in
accordance with (a), (b), or (c) below, whichever is applicable, in his or
her initial Eligibility Computation Period and in the Plan Year which
<PAGE>
includes the first anniversary of his or her Employment Commencement Date,
he or she shall be credited with two (2) Years of Participation Service:
(a) with regard to initial Eligibility Computation Periods and
Plan Years commencing on or after January 1, 1983, one thousand
(1,000) Hours of Service;
(b) with regard to initial Eligibility Computation Periods and
Plan Years commencing on or after January 1, 1980, but prior to
January 1, 1983, eight hundred and seventy (870) Hours of Service; and
(c) with regard to initial Eligibility Computation Periods and
Plan Years commencing before January 1, 1980, one thousand (1,000)
Hours of Service.
In the case of a salaried or salaried nonexempt Employee, if such an
Employee is credited with one thousand (1,000) Hours of Service in both his
or her initial Eligibility Computation Period and the Plan Year which
includes the first anniversary of his or her Employment Commencement Date,
he or she shall be credited with two (2) Years of Participation Service.
In measuring completion of a Year of Participation Service upon an
Employee's return after a Break in Service, the term "Eligibility
Computation Period" shall mean the twelve (12) consecutive month period
beginning on the Employee's Reemployment Commencement Date and, where
necessary, Plan Years beginning with the Plan Year which includes the first
anniversary of the Employee's Reemployment Commencement Date.
1.18 "Employee" shall mean any individual employed by an Employer,
excluding Leased Employees and, prior to January 1, 1998, any individual
employed in a state south of New York.
1.19 "Employer" shall mean Hannaford Bros. Co. or any other
corporation which has adopted the Plan with the consent of the Board of
Directors, and "Employers" shall mean Hannaford Bros. Co. and each such
other corporation. If an Employer is a member of a group of employers
which constitutes a controlled group of corporations (as defined in Section
414(b) of the Code), trades or businesses (whether or not incorporated)
under common control (as defined in Section 414(c) of the Code) or an
affiliated service group (as defined in Section 414(m) of the Code), all
such employers shall be considered a single employer to the extent required
by Sections 414(b), 414(c), 414(m) and 414(o) of the Code. For purposes of
applying the limitations of Article XIII, Section 414(b) and 414(c) of the
Code shall be applied with the modification provided by Section 415(h).
1.20 "Employment Commencement Date" shall mean the first day for
which an Employee is entitled to be credited with an Hour of Service.
<PAGE>
1.21 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
1.22 "Finance Committee" shall mean the Finance Committee of the
Board of Directors.
1.23 "Five Percent Owner" shall mean:
(a) if the Employer is a corporation, any person who owns (or
is considered as owning within the meaning of Section 318 of the Code)
more than five percent (5%) of the outstanding stock of the
corporation or stock possessing more than five percent (5%) of the
total combined voting power of all stock of the corporation; or
(b) if the Employer is not a corporation, any person who owns
more than five percent (5%) of the capital or profits interest in the
Employer.
1.24 "Highest Average Compensation" shall mean the average of a
Participant's compensation (as defined in Section 13.7) for the period of
three (3) consecutive calendar years (or, the actual number of the
Participant's consecutive years of employment if the Participant has been
employed for less than three (3) consecutive calendar years) during which
the Participant was both an active Participant in the Plan and had the
greatest aggregate compensation (as defined in Section 13.7) from the
Employer.
1.25 "Hour of Service" shall have the meaning set forth in subsection
(a),(b), or (c) below, whichever is applicable:
(a) In the case of an hourly Employee other than a Driver
Employee or any full-time Employee of Progressive Distributors, Inc.
who is employed as a truck driver, the term "Hour of Service":
(i) with regard to Plan Years commencing prior to
January 1, 1980, shall mean an Hour of Service under the
terms of the Plan as in effect on December 31, 1979;
(ii) with regard to Plan Years commencing on or after
January 1, 1981, shall mean, for purposes of computing Years
of Participation Service, Years of Vesting Service and
Suspension Service (aa) each hour for which such an Employee
is paid, or entitled to payment, by an Affiliated Employer
for the performance of duties during the applicable
computation period and (bb) each hour for which back pay,
irrespective of mitigation of damages, is either awarded or
agreed to by an Affiliated Employer, provided the same Hours
<PAGE>
of Service shall not be credited both under this clause (bb)
and the preceding clause (aa); and shall mean, for purposes
of computing Years of Benefit Service, (aa) each hour for
which such an Employee is paid, or entitled to payment, by
an Employer for the performance of duties during the
applicable computation period and (bb) each hour for which
back pay, irrespective of mitigation of damages, is either
awarded or agreed to by an Employer, provided the same Hours
of Service shall not be credited both under this clause (bb)
and the immediately preceding clause (aa).
(iii) with regard to the Plan Year commencing January
1, 1980, shall have the meaning set forth in (i) or (ii)
above, whichever results in such an Employee being credited
with the greater number of Hours of Service during such Plan
Year;
(iv) with regard to any Plan Year in which such an
Employee sustains one or more injuries as a result of which
he or she is incapacitated for work and entitled to
compensation under applicable workers compensation laws,
such Employee shall, except for computing Years of Benefit
Service, be credited with four hundred and thirty-six (436)
additional Hours of Service if such Plan Year commenced on
or after January 1, 1980, or five hundred and one (501)
additional Hours of Service if such Plan Year commenced
before January 1, 1980, unless such Employee is otherwise
credited with at least eight hundred and seventy (870) Hours
of Service in such Plan Year if such Plan Year commenced on
or after January 1, 1980, or at least one thousand (1,000)
Hours of Service in such Plan Year if such Plan Year
commenced before January 1, 1980. If an Employee is not
credited with additional Hours of Service in the Plan Year
in which he or she sustains one or more such injuries by
reason of the number of Hours of Service otherwise credited
to him or her during such year and if such Employee's
incapacity to work continues into the next succeeding Plan
Year, he or she shall, with respect to such succeeding Plan
Year, be credited, except for computing Years of Benefit
Service, with four hundred and thirty-six (436) additional
Hours of Service if such Plan Year commenced on or after
January 1, 1980, or five hundred and one (501) additional
Hours of Service if such Plan Year commenced before
January 1, 1980; provided, in no event shall more than four
hundred and thirty-six (436) additional Hours of Service be
credited pursuant to this paragraph in any Plan Year
commencing on or after January 1, 1980, or five hundred and
one (501) additional Hours of Service in any Plan Year
commencing before January 1, 1980; or
<PAGE>
(b) In the case of a Driver Employee or any full-time
Employee of Progressive Distributors, Inc. who is employed as a
truck driver, the term "Hour of Service":
(i) with regard to the Plan Years commencing prior to
January 1, 1983, shall have the meaning applicable to other
hourly Employees in accordance with (i), (ii) and (iii) of
subsection (a) of this Section;
(ii) with regard to Plan Years commencing on or after
January 1, 1983, shall have the meaning applicable to
salaried and salaried nonexempt Employees in accordance with
(i), (ii), and (iii) of subsection (c) of this Section;
(iii) with regard to any Plan Year in which a Driver
Employee sustains one or more injuries as a result of which
he or she is incapacitated for work and entitled to
compensation under applicable workers compensation laws,
such Driver Employee, shall, except for computing Years of
Benefit Service, be credited with five hundred and one (501)
additional Hours of Service if such Plan Year commenced
before January 1, 1980, or on or after January 1, 1983, or
four hundred and thirty-six (436) Hours of Service if such
Plan Year commenced on or after January 1, 1980, but before
January 1, 1983, unless such Employee is otherwise credited
with at least one thousand (1,000) Hours of Service in such
Plan Year if such Plan Year commenced before January 1,
1980, or on or after January 1, 1983, or eight hundred and
seventy (870) Hours of Service in such Plan Year if such
Plan Year commenced on or after January 1, 1980, but before
January 1, 1983. If a Driver Employee is not credited with
additional Hours of Service in the Plan Year in which he or
she sustains one or more injuries by reason of the number of
Hours of Service otherwise credited to him or her during
such year and if such Driver Employee's incapacity to work
continues into the next succeeding Plan Year, he or she
shall, with respect to such succeeding Plan Year, be
credited, except for computing Years of Benefit Service,
with five hundred and one (501) Hours of Service if such
Plan Year commenced before January 1, 1980, or on or after
January 1, 1983, or four hundred and thirty (436) Hours of
Service if such Plan Year commenced on or after January 1,
1980, but before January 1, 1983; provided, in no event
shall more than five hundred and one (501) additional Hours
of Service be credited pursuant to this paragraph in any
Plan Year commencing before January 1, 1980, or on or after
<PAGE>
January 1, 1983, or four hundred and thirty-six (436)
additional Hours of Service in any Plan Year commencing on
or after January 1, 1980, but before January 1, 1983; or
(c) In the case of a salaried or salaried nonexempt
Employee, the term "Hour of Service":
(i) for purposes of computing Years of Participation
Service, Years of Vesting Service and Suspension Service
shall mean each hour for which such an Employee is paid, or
entitled to payment, by an Affiliated Employer for the
performance of duties during the applicable computation
period and, for purposes of computing Years of Benefit
Service, shall mean each hour for which such an Employee is
paid or entitled to payment by an Employer for the
performance of duties during the applicable computation
period;
(ii) for purposes of computing Years of Participation
Service, Years of Vesting Service and Suspension Service
shall mean each hour for which such an Employee is paid, or
entitled to payment, directly or indirectly, by an
Affiliated Employer on account of time during which no
duties are performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), layoff, jury
duty, military duty or leave of absence, and for purposes of
computing Years of Benefit Service, shall mean each hour for
which such an Employee is paid, or entitled to payment, by
an Employer on account of time during which no duties are
performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), layoff, jury
duty, military duty or leave of absence. Notwithstanding
anything contained in this subsection (c) to the contrary
(1) no more than five hundred and one (501) Hours of Service
shall be credited under this subsection (c) to such an
Employee on account of any single continuous period during
which such an Employee performs no duties (whether or not
such period occurs in a single computation period), (2) no
Hours of Service shall be credited if payment is made or due
under a plan maintained solely for the purpose of complying
with unemployment compensation or disability insurance laws,
and (3) no Hours of Service shall be credited if payment is
made solely to reimburse such an Employee for medical or
medically related expenses incurred by such an Employee;
<PAGE>
(iii) for purposes of computing Years of Participation
Service, Years of Vesting Service and Suspension Service
shall mean each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by an
Affiliated Employer, and for purposes of computing Years of
Benefit Service, shall mean each hour for which back pay,
irrespective of mitigation of damages, is either awarded or
agreed to by an Employer;
(iv) with regard to any period during which an
Employee sustains one or more injuries as a result of which
he or she is incapacitated for work and entitled to
compensation under applicable workers' compensation laws,
such Employee shall, except for computing Years of Benefit
Service, be credited with five hundred and one (501)
additional Hours of Service unless such Employee is
otherwise credited with at least one thousand (1,000) Hours
of Service in such Plan Year. If such an Employee is not
credited with additional Hours of Service in the Plan Year
in which he or she sustains one or more injuries by reason
of the number of Hours of Service otherwise credited to him
or her during such year and such Employee's incapacity to
work continues into the next succeeding Plan Year, he or she
shall, with respect to such succeeding Plan Year, be
credited, except for computing Years of Benefit Service,
with five hundred and one (501) additional Hours of Service;
provided, in no event shall more than five hundred and one
(501) additional Hours of Service be credited pursuant to
this paragraph in any Plan Year.
In determining the number of Hours of Service to be credited to any
Employee, the provisions of 29 CFR Sections 2530.200b-2(b) and 2(c) are
incorporated herein by reference.
Each Employee who is absent from work for any period (i) by reason of
the pregnancy of the Employee, (ii) by reason of the birth of a child of
the Employee, (iii) by reason of the placement of a child with the Employee
in connection with the adoption of the child by the Employee or (iv) for
purposes of caring for such child for a period beginning immediately
following such birth or placement shall, solely for purposes of determining
whether such Employee has incurred a Break in Service, be credited with the
Hours of Service which would normally have been credited to such Employee
but for such absence or, if such Hours of Service cannot be determined,
eight (8) Hours of Service for each day of such absence; provided the total
number of Hours of Service credited in accordance with this paragraph on
account of such absence shall not exceed five hundred and one (501). The
Hours of Service described in this paragraph shall be credited in the
<PAGE>
computation period in which the absence begins, if the Employee would be
prevented from incurring a Break in Service in such year solely because the
Employee is credited with such Hours of Service or, in all other cases, in
the immediately following computation period. The same hours shall not be
credited under both subsection (a), (b) or (c) and this paragraph.
In the case of any salaried or salaried nonexempt Employee or, with
respect to service after December 31, 1982, any Driver Employee or any
full-time Employee of Progressive Distributors, Inc. who is employed as a
truck driver, such an Employee shall be credited with forty-five (45) Hours
of Service for each week for which such Employee is required to be credited
with at least one (1) Hour of Service in accordance with paragraphs (i),
(ii), or (iii) of subsection (c) of this Section or in accordance with
paragraph (ii) of subsection (b) of this Section.
A disabled Employee who meets the applicable conditions set forth in
Section 5.4 shall be credited with the number of Hours of Service for which
he or she regularly would have been scheduled to work, based upon his or
her work schedule immediately prior to becoming disabled, during the period
he or she is so disabled; provided such disability continues until his or
her Normal Retirement Date, or the date the disabled Employee is reemployed
by an Affiliated Employer immediately following such disability. If a
disabled Employee is not reemployed by an Affiliated Employer immediately
following such disability, and such disability did not continue until his
or her Normal Retirement Date, then no Hours of Service shall be credited
pursuant to this paragraph.
1.26 "Individual Medical Account" shall mean an "individual medical
benefit account" as defined in Section 415(l) of the Code.
1.27 "Investment Manager" shall mean any fiduciary (other than the
Trustee or a named fiduciary as defined in Section 402(a)(2) of ERISA):
(a) who is appointed by the Finance Committee to manage,
acquire, or dispose of all or any portion of the Trust Fund;
(b) who (i) is registered as an investment adviser under the
Investment Advisers Act of 1940; (ii) is a bank, as defined in said
Act; or (iii) is an insurance company qualified to manage, acquire, or
dispose of all or any portion of the Trust Fund under the laws of more
than one State; and
(c) who has acknowledged, in writing, that he or she is a
fiduciary with respect to the Plan.
1.28 "Key Employee" shall mean any Employee or former Employee (and
the Beneficiary of such Employee) who at any time during the Plan Year or
the four (4) preceding Plan Years is:
<PAGE>
(a) an officer of an Employer having annual compensation (within
the meaning of Section 13.7) greater than fifty percent (50%) of the
amount in effect under Section 415(b)(1)(A) of the Code for any such
Plan Year, but in no event shall more than fifty (50) Employees (or,
if less, the greater of three (3) or ten percent (10%) of all
Employees) be treated as Key Employees by reason of being officers;
(b) a person owning (or considered as owning within the meaning
of Section 318 of the Code) more than a one-half percent (0.5%)
interest, as well as one of the ten (10) largest interests in the
Employer and having annual compensation (within the meaning of Section
13.7) from an Employer of more than the limitation in effect under
Section 415(c)(1)(A) of the Code for any such Plan Year;
(c) a Five Percent Owner;
(d) a person who has annual compensation (as defined in Section
13.7) from an Employer of more than One Hundred and Fifty Thousand
Dollars ($150,000) and who would be described in (c) above if one
percent (1%) was substituted for five percent (5%).
The determination of who is a Key Employee shall be made in accordance
with Section 416(i)(1) of the Code and the regulations thereunder, the
provisions of which are incorporated herein by reference.
1.29 "Leased Employee" shall mean any person who is not an Employee
and who provides services to the Employer if:
(a) such services are provided pursuant to an agreement between
the Employer and any leasing organization;
(b) such person has performed such services for the Employer (or
for the Employer and any related person within the meaning of Section
144(a)(3) of the Code) on a substantially full-time basis for a period of
at least one (1) year; and
(c) such services are of a type historically performed, in the
business field of the Employer, by employees.
1.30 "Limitation Year" shall mean the calendar year or any other
twelve (12) consecutive month period designated by the Board of Directors
pursuant to a written resolution. In the event the Limitation Year is
changed, the new limitation year shall begin within the Limitation Year in
which such change is effective.
1.31 "Non-Key Employee" shall mean any Employee who is not a Key
Employee.
<PAGE>
1.32 "Participant" shall mean an Employee who participates in the
Plan.
1.33 "Permissive Aggregation Group" shall mean each qualified
retirement plan of an Employer which is included in a Required Aggregation
Group and any other qualified retirement plan or plans of the Employer
which, when considered as a group with the Required Aggregation Group,
continues to satisfy the requirements of Sections 401(a)(4) and 410 of the
Code.
1.34 "Plan" shall mean the Hannaford Bros. Co. Employees' Retirement
Plan.
1.35 "Plan Year" shall mean the twelve (12) consecutive month period
ending December 31.
1.36 "Projected Annual Benefit" shall mean the Annual Benefit to
which a Participant would be entitled under the Plan assuming:
(a) the Participant continues employment with an Employer until
the Normal Retirement Date; and
(b) the Participant's Compensation for the current Limitation
Year and all other relevant factors used to determine benefits under
the Plan remain constant for all future Limitation Years.
1.37 "Reemployment Commencement Date" shall mean the first day for
which an Employee is entitled to be credited with an Hour of Service after
the first Eligibility Computation Period in which the Employee incurs a
Break in Service following an Eligibility Computation Period in which the
Employee is credited with more than the number of Hours of Service
determined in accordance with subsection (a), (b), or (c) below, whichever
is applicable:
(a) In the case of an hourly Employee other than a Driver
Employee or any full-time Employee of Progressive Distributors, Inc.
who is employed as a truck driver:
(i) with regard to Eligibility Computation Periods
commencing on or after January 1, 1980, four hundred and thirty-
five (435) Hours of Service; and
(ii) with regard to Eligibility Computation Periods
commencing before January 1, 1980, five hundred (500) Hours of
Service.
<PAGE>
(b) In the case of a Driver Employee or any full-time Employee
of Progressive Distributors, Inc. who is employed as a truck driver:
(i) with regard to Eligibility Computation Periods
commencing on or after January 1, 1983, five hundred (500) Hours
of Service;
(ii) with regard to Eligibility Computation Periods
commencing on or after January 1, 1980, but before January 1,
1983, four hundred and thirty-five (435) Hours of Service; and
(iii) with regard to Eligibility Computation Periods
commencing before January 1, 1980, five hundred (500) Hours of
Service.
(c) In the case of a salaried or salaried nonexempt Employee,
five hundred (500) Hours of Service.
In the case of an Employee who is credited with no Hours of Service in
an Eligibility Computation Period beginning after the Employee's
Reemployment Commencement Date, the Employee shall be treated as having a
new Reemployment Commencement Date as of the first day for which the
Employee is entitled to be credited with an Hour of Service after such
Eligibility Computation Period.
1.38 "Required Aggregation Group" shall mean each qualified
retirement plan (whether or not terminated) of an Employer in which a Key
Employee is a participant and each other qualified retirement plan of the
Employer which enables any plan of the Employer in which a Key Employee is
a participant to meet the requirements of Sections 401(a)(4) or 410 of the
Code.
1.39 "Retirement Committee" shall mean the committee appointed by the
Board of Directors in accordance with Section 19.1.
1.40 "Social Security Retirement Age" shall mean --
(a) with respect to a Participant born prior to 1938, age
sixty-five (65);
(b) with respect to a Participant born after 1937 and prior to
1955, age sixty-six (66); and
(c) with respect to a Participant born after 1954, age sixty-
seven (67).
<PAGE>
1.41 "Suspension Service" shall mean employment of a Participant by
an Employer as set forth in subsection (a) or (b) below, whichever is
applicable:
(a) with respect to employment prior to January 1, 1988, the
meaning given such term under the Plan as amended and restated,
effective January 1, 1985; and
(b) with respect to employment on or after January 1, 1988 --
(i) in the case of an hourly Participant other than a
Driver Participant or any Participant employed as a truck driver
by Progressive Distributors, Inc., during each calendar month in
which such Participant, during the four (4) or five (5) week
payroll period ending in such month is credited, in the
aggregate, with seventy-two (72) or more Hours of Service as
defined in Section 1.25;
(ii) in the case of a Driver Participant or any
Participant employed as a truck driver by Progressive
Distributors, Inc., during each calendar month in which such
Participant receives payment for Hours of Service (as defined in
Section 1.25(b)(ii)) performed on each of eight (8) or more days
in such month; and
(iii) in the case of a salaried or salaried nonexempt
Participant, during each calendar month in which such
Participant receives payment for Hours of Service (as defined in
Section 1.25(c)) performed on each of eight (8) or more days in
such month.
1.42 "Taxable Wage Base" shall mean the contribution and benefit base
in effect under Section 230 of the Social Security Act (42 U.S.C. Section
430) at the beginning of the Plan Year.
1.43 "Terminated Driver Participant" shall mean a Driver Participant
who ceases to be employed by an Affiliated Employer and is no longer
employed by any Affiliated Employer prior to his or her Normal Retirement
Date for any reason other than early retirement in accordance with Section
6.01 or death.
1.44 "Termination of Employment Date" shall mean the day on which an
Employee ceases to be employed by an Affiliated Employer and is no longer
employed by any Affiliated Employer for any reason other than retirement or
death.
<PAGE>
1.45 "Terminated Participant" shall mean a Participant who ceases to
be employed by an Affiliated Employer and is no longer employed by any
Affiliated Employer prior to his or her Normal Retirement Date for any
reason other than early retirement in accordance with Section 6.1 or death.
1.46 "Terminated Warehouse Participant" shall mean a Warehouse
Participant who ceases to be employed by an Affiliated Employer and is no
longer employed by any Affiliated Employer prior to his or her Normal
Retirement Date for any reason other than early retirement in accordance
with Section 6.1 or death.
1.47 "Top Heavy" shall mean, with respect to any Plan Year beginning
after December 31, 1983, that, as of the Determination Date:
(a) the Top Heavy Ratio for the Plan exceeds sixty percent
(60%), if the Plan is not included in a Required Aggregation Group; or
(b) the Top Heavy Ratio for the Required Aggregation Group
which includes the Plan exceeds sixty percent (60%), if the Plan is
included in a Required Aggregation Group, but is not included in a
Permissive Aggregation Group.
1.48 "Top Heavy Ratio" shall mean:
(a) if the Plan is not included in a Required Aggregation
Group, a fraction, the numerator of which is the sum of the present
values of Accrued Benefits of Key Employees under the Plan and the
denominator of which is the sum of the present values of Accrued
Benefits of all Participants under the Plan; or
(b) if the Plan is included in a Required Aggregation Group or a
Permissive Aggregation Group, a fraction, the numerator of which is
the sum of the account balances of Key Employees under all defined
contribution plans included in such group and the present values of
the accrued benefits of Key Employees under all defined benefit plans
included in such group and the denominator of which is the sum of the
account balances of all Participants under all defined contribution
plans included in such group and the present values of the accrued
benefits of all Participants under all defined benefit plans included
in such group.
The present value of accrued benefits under the Plan and under each
other plan with which it is aggregated shall be determined, in accordance
with the provisions of Section 416(g) of the Code and the regulations
thereunder which are incorporated herein by reference, as of the plan's
most recent valuation date that falls within or ends with the twelve (12)
month period ending on the plan's Determination Date. When aggregating
<PAGE>
plans (i) the present value of accrued benefits shall be determined
separately for each plan as of each plan's most recent valuation date that
falls within or ends with said period and (ii) the present value of accrued
benefits shall be calculated with reference to the Determination Dates that
fall within the same calendar year. The valuation date for the Plan is
January 1 which is the same date used for computing its costs for minimum
funding purposes.
In determining the Top Heavy Ratio for any Plan Year, if an individual
is a Non-Key Employee with respect to the Plan or with respect to any other
plan which is included in the same Required Aggregation Group or Permissive
Aggregation Group as the Plan, but was a Key Employee with respect to the
Plan or such other plan for any prior plan year, any account balance or
accrued benefit for such individual shall not be taken into account.
In addition, effective for Plan Years beginning after December 31,
1984, any account balance or accrued benefit of any individual who has not
performed services for the Employer at any time during the five (5) year
period ending on the Determination Date shall not be taken into account;
provided, however, if such individual subsequently performs services for
the Employer, his or her account balance or accrued benefit shall be taken
into account, as required by Treasury regulations, in a subsequent Plan
Year.
1.49 "Trust" shall mean the Hannaford Bros. Co. Employees'
Retirement Trust, maintained in accordance with the Plan.
1.50 "Trustee" shall mean the bank, trust company or individuals
appointed by the Finance Committee to serve as the trustee of the Trust.
1.51 "Trust Fund" shall mean the property held in trust for the
benefit of Participants and their Beneficiaries.
1.52 "Warehouse Employee" shall mean an Employee who is employed by
Hannaford Bros. Co. or any subsidiary thereof at its Distribution Center in
Scarborough, Maine, and whose employment is governed by a collective
bargaining agreement.
1.53 "Warehouse Participant" shall mean a Participant who, as of the
date of his or her retirement or separation from service, is a Warehouse
Employee.
1.54 "Welfare Benefit Fund" shall mean a "welfare benefit fund" as
defined in Section 419(e) of the Code.
1.55 "Year of Benefit Service" shall, except as hereinafter provided,
have the meaning set forth in subsection (a), (b) or (c) below, whichever
is applicable:
<PAGE>
(a) In the case of an hourly Employee other than a Driver
Employee or any full-time Employee of Progressive Distributors, Inc.
who is employed as a truck driver, the term "Year of Benefit Service"
with regard to Plan Years commencing prior to January 1, 1980, shall
mean a "Year of Benefit Service" under the terms of the Plan as in
effect on December 31, 1979, and with regard to Plan Years commencing
on or after January 1, 1980, shall mean a Plan Year in which such an
Employee is credited with eight hundred and seventy (870) or more
Hours of Service, excluding:
(i) in the case of such an Employee who does not have any
nonforfeitable right to an Accrued Benefit, his or her Years of
Benefit Service before any Break in Service if the Employee's
Years of Vesting Service are excluded under Section 1.57(d); or
(ii) in the case of such an Employee who receives an
optional lump sum benefit in accordance with Section 11.1 or
11.2, all or such lesser portion of his or her Years of Benefit
Service in accordance with the provisions of Article XVI.
(b) In the case of a Driver Employee or any full-time Employee
of Progressive Distributors, Inc. who is employed as a truck driver,
the term "Year of Benefit Service" shall:
(i) with respect to Plan Years commencing prior to
January 1, 1983, have the meaning applicable to other hourly
Employees in accordance with subsection (a) of this Section; and
(ii) with respect to Plan Years commencing on or after
January 1, 1983, have the meaning applicable to salaried and
salaried nonexempt Employees in accordance with subsection (c) of
this Section; or
(c) In the case of a salaried or salaried nonexempt Employee,
the term "Year of Benefit Service" shall mean a Plan Year in which
such an Employee is credited with one thousand (1,000) or more Hours
of Service, excluding:
(i) in the case of such an Employee who does not have any
nonforfeitable right to an Accrued Benefit, his or her Years of
Benefit Service before any Break in Service if the Employee's
Years of Vesting Service are excluded under Section 1.57(d); or
(ii) in the case of such an Employee who receives an
optional lump sum benefit in accordance with Section 11.1 or
11.2 all or such lesser portion of his or her Years of Benefit
Service in accordance with the provisions of Article XVI.
<PAGE>
In the case of an Employee whose employment by Hannaford Bros. Co.
terminated by reason of the sale of the Milbridge store, the term "Year of
Benefit Service" shall mean for the 1991 Plan Year that such Employee is
credited with four hundred (400) or more Hours of Service, if an hourly
Employee, or four hundred sixty (460) or more Hours of Service, if a
salaried or salaried nonexempt Employee. In the case of an Employee whose
employment with Wellby Super Drug Stores, Inc. terminated by reason of the
sale of assets to Rite Aid Corporation, the term "Year of Benefit Service"
shall mean for the 1992 Plan Year that such Employee is credited with three
hundred sixty-eight (368) or more Hours of Service, if an hourly Employee,
or four hundred twenty-three (423) or more Hours of Service, if a salaried
or salaried nonexempt Employee.
1.56 "Year of Participation Service" shall have the meaning set forth
in subsection (a), (b), or (c) below, whichever is applicable:
(a) In the case of an hourly Employee other than a Driver
Employee or any full-time Employee of Progressive Distributors, Inc.
who is employed as a truck driver, the term "Year of Participation
Service" with regard to Eligibility Computation Periods commencing
before January 1, 1980, shall mean a "Year of Participation Service"
under the terms of the Plan as in effect on December 31, 1979, and
with regard to Eligibility Computation Periods commencing on or after
January 1, 1980, shall mean an Eligibility Computation Period in which
such an Employee is credited with eight hundred and seventy (870) or
more Hours of Service; or
(b) In the case of a Driver Employee or any full-time Employee
of Progressive Distributors, Inc. who is employed as a truck driver,
the term "Year of Participation Service" shall:
(i) with respect Eligibility Computation Periods
commencing prior to January 1, 1983, have the same meaning
applicable to other hourly Employees in accordance with
subsection (a) of this Section; and
(ii) with respect to Eligibility Computation Periods
commencing on or after January 1, 1983, have the meaning
applicable to salaried and salaried nonexempt Employees in
accordance with subsection (c) of this Section; or
(c) In the case of a salaried or salaried nonexempt Employee,
the term "Year of Participation Service" shall mean an Eligibility
Computation Period in which such an Employee is credited with one
thousand (1,000) or more Hours of Service.
1.57 "Year of Vesting Service" shall, except as hereinafter provided,
have the meaning set forth in subsection (a), (b) or (c) below, whichever
is applicable:
<PAGE>
(a) In the case of an hourly Employee other than a Driver
Employee or any full-time Employee of Progressive Distributors, Inc.
who is employed as a truck driver, the term "Year of Vesting Service"
with regard to Plan Years commencing prior to January 1, 1980, shall
mean a "Year of Vesting Service" under the terms of the Plan as in
effect on December 31, 1979, and with regard to Plan Years commencing
on or after January 1, 1980, shall mean a Plan Year in which such an
Employee is credited with eight hundred and seventy (870) or more
Hours of Service, excluding, in the case of such an Employee who does
not have any nonforfeitable right to an Accrued Benefit, his or her
Years of Vesting Service before any Break in Service, in accordance
with subsection (d) of this Section;
(b) In the case of a Driver Employee or any full-time Employee
of Progressive Distributors, Inc. who is employed as a truck driver,
the term "Year of Vesting Service" shall:
(i) with respect to Plan Years commencing prior to January
1, 1983, have the meaning applicable to other hourly Employees in
accordance with subsection (a) of this Section; and
(ii) with respect to Plan Years commencing on or after
January 1, 1983, have the meaning applicable to salaried and
salaried nonexempt Employees in accordance with subsection (c) of
this Section; or
(c) In the case of a salaried or salaried nonexempt Employee,
the term "Year of Vesting Service" shall mean a Plan Year in which
such an Employee is credited with one thousand (1,000) or more Hours
of Service, excluding, in the case of such an Employee who does not
have any nonforfeitable right to an Accrued Benefit, his or her Years
of Benefit Service before any Break in Service, in accordance with
subsection (d) of this Section.
(d) In the case of an Employee who does not have any
nonforfeitable right to an Accrued Benefit, his or her Years of
Vesting Service before a Break in Service shall be excluded if:
(i) the number of his or her consecutive Breaks in Service
as of the earlier of his or her Reemployment Commencement Date or
December 31, 1984, equals or exceeds the aggregate number of his
or her Years of Vesting Service before such break, or
(ii) the number of his or her consecutive Breaks in Service
as of his or her Reemployment Commencement Date equals or exceeds
the greater of five (5) or the aggregate number of his or her
Years of Vesting Service before such break.
<PAGE>
In the case of an Employee whose employment by Hannaford Bros. Co.
terminated by reason of the sale of the Milbridge store, the term "Year of
Vesting Service" shall mean for the 1991 Plan Year that such Employee is
credited with four hundred (400) or more Hours of Service, if an hourly
Employee, or four hundred sixty (460) or more Hours of Service, if a
salaried or salaried nonexempt Employee. In the case of an Employee whose
employment with Wellby Super Drug Stores, Inc. terminated by reason of the
sale of assets to Rite Aid Corporation, the term "Year of Vesting Service"
shall mean for the 1992 Plan Year that such Employee is credited with three
hundred sixty-eight (368) or more Hours of Service, if an hourly Employee,
or four hundred twenty-three (423) or more Hours of Service, if a salaried
or salaried nonexempt Employee.
ARTICLE II
PARTICIPATION
2.1 DATE OF PARTICIPATION. Each Employee who is a Participant on the
Effective Date shall continue to participate in the Plan in accordance with
its terms. Each Employee who commenced employment with an Employer on or
before December 31, 1987, after attaining age sixty (60) and who satisfied
the minimum service requirements set forth in Section 2.2 as of December
31, 1987, shall commence participation on January 1, 1988, provided he or
she is credited with at least one (1) Hour of Service after December 31,
1987. Each other Employee who satisfied the minimum age and service
requirements specified in Section 2.2 on or before June 30, 1993, shall
commence participation in the Plan on the first day of the calendar month
following the date on which such Employee first satisfies such requirements
unless such Employee separates from service and does not return prior to
such commencement date. Each other Employee who satisfies the minimum age
and service requirements specified in Section 2.2 shall commence
participation in the Plan on the earlier of the first day of the Plan Year
or the first day of the seventh month of the Plan Year coinciding with or
next following the date on which such Employee first satisfies such
requirements unless such Employee separates from service and does not
return prior to such commencement date.
An Employee who separates from service after satisfying the
requirements of Section 2.2, but before he or she commences participation
in the Plan shall commence participation in the Plan immediately upon the
later of his or her reemployment date, or his or her participation
commencement date before separating from service, unless the number of his
or her consecutive Breaks in Service after his or her Reemployment
Commencement Date equals or exceeds five (5), in which event he or she
shall be considered a new Employee.
<PAGE>
2.2 PARTICIPATION REQUIREMENTS. Effective January 1, 1988, each
Employee who has attained age twenty-one (21) and who has completed one (1)
Year of Participation Service shall be eligible to participate in the Plan.
2.3 TRANSFERS AMONG AFFILIATED EMPLOYERS. In the event an employee
of an Affiliated Employer that has not adopted the Plan is transferred to
an Affiliated Employer that has adopted the Plan, he or she shall become a
Participant and thereby commence to accrue benefits under the Plan
effective as of the latest of the following dates:
(a) the first day of the calendar month following the date on
which he or she meets the requirements of Section 2.2, taking into
account his or her prior service with Affiliated Employers; or
(b) the date he or she is transferred to an Affiliated Employer
that has adopted the Plan.
A Participant who is transferred to an Affiliated Employer that has
not adopted the Plan shall cease to accrue any further benefits under the
Plan effective as of the date his or her employment is transferred; service
with such Affiliated Employer shall, however, be taken into account in
determining the Participant's Years of Vesting Service.
2.4 REEMPLOYED FORMER PARTICIPANT. If a former Participant who has a
nonforfeitable right to his or her Accrued Benefit returns to the employ of
the Employer, such former Participant shall resume participation as of his
or her Reemployment Commencement Date. A former Participant who does not
have a nonforfeitable right to his or her Accrued Benefit shall resume
participation as of his or her Reemployment Commencement Date unless the
number of his or her consecutive Breaks in Service as of his or her
Reemployment Commencement Date equals or exceeds five (5), in which event
he or she shall be considered a new Employee.
ARTICLE III
RETIREMENT DATES
3.1 NORMAL RETIREMENT DATE. Except as hereinafter provided,
effective January 1, 1988, the Normal Retirement Date of each Participant
shall be the later of the date he or she attains age 65 or the fifth
anniversary of his or her Employment Commencement Date. The Normal
Retirement Date of each Driver Participant hired before January 1, 1995,
and each Warehouse Participant shall be the date he or she attains age 62.
<PAGE>
3.2 EARLY RETIREMENT DATE. Effective January 1, 1989, a Participant
who has attained age fifty-five (55) and completed five (5) Years of
Vesting Service may retire at any time prior to his or her Normal
Retirement Date. The date of such Participant's actual early retirement
shall be referred to as his or her "Early Retirement Date."
3.3 DEFERRED RETIREMENT DATE. A Participant who does not retire on
his or her Normal Retirement Date may retire at any time thereafter. The
date on which he or she retires or is deemed to have retired shall be
referred to as his or her "Deferred Retirement Date."
ARTICLE IV
BENEFIT FORMULAS
4.1 BENEFITS FOR PARTICIPANTS OTHER THAN CERTAIN WAREHOUSE AND DRIVER
PARTICIPANTS. Effective January 1, 1998, the benefits payable to or in
respect of Participants other than Warehouse Participants shall be
determined as follows:
(a) CASH BALANCE ACCOUNT. Solely for purposes of determining
the amount of retirement or death benefits payable under the Plan,
each Participant's benefit shall be expressed as an account ("Cash
Balance Account" or "Account"). Each Cash Balance Account shall be
adjusted in accordance with subsection (b) to reflect Contribution
Credits and in accordance with subsection (c) to reflect Interest
Credits. No separate account shall be established or maintained under
this Plan, and no Participant shall have a claim to any specific Trust
Fund assets.
The opening Account balance of an Employee who is a Participant
on December 31, 1997, shall equal the present value of the
Participant's December 31, 1997, accrued benefit, determined as of
such date, based on the interest rate and mortality table set forth in
Section 12.3(b). A Participant's "December 31, 1997, accrued benefit"
shall mean his or her Accrued Benefit as of September 30, 1997,
modified by imputing Compensation and Hours of Service from October 1,
1997, through December 31, 1997, based on the Participant's actual
Compensation and Hours of Service from October 1, 1996, through
December 31, 1996.
<PAGE>
The opening Account balance of an Employee who is a Participant
on January 1, 1998, shall, to the extent such balance is attributable
to benefits accrued under the prior benefit formula, be increased in
accordance with the following table:
AGE INCREASE AGE INCREASE
65 and over 0% 44 66%
64 6% 43 60%
63 12% 42 54%
62 18% 41 48%
61 24% 40 42%
60 30% 39 36%
59 36% 38 30%
58 42% 37 24%
57 48% 36 18%
56 54% 35 12%
55 60% 34 6%
54 69% 33 and under 0%
45-53 62%
"Prior benefit formula" shall mean the benefit formula in effect on
December 31, 1997, under Section 4.1 of the Plan.
The opening Account balance of a former Participant who
terminated employment prior to January 1, 1998, and who is reemployed
by an Employer on or after such date shall be established as of
December 31, 1997, based on the Participant's Accrued Benefit as of
such date, taking into account the Break in Service rules under
Section 1.57(d) and the repayment rules under Section 16.1.
The Account balance of a former Participant who does not have a
nonforfeitable right to his or her Accrued Benefit and who terminates
employment after December 31, 1997, shall be restored with Interest
Credits from his or her Termination of Employment Date, unless the
number of his or her consecutive Breaks in Service as of his or her
Reemployment Commencement Date equals or exceeds five (5).
The opening Account balance of a Warehouse Participant who
transfers employment, after January 1, 1998, to a position that is not
governed by a collective bargaining agreement shall equal the present
value of his or her Accrued Benefit as of the date of transfer, based
on the interest rate and mortality table set forth in Section 12.3(b).
<PAGE>
(b) CONTRIBUTION CREDIT. At the end of each month, the Cash
Balance Account of each Participant shall be credited with an amount
("Contribution Credit") equal to three percent (3%) of the
Participant's Compensation for such month. The Cash Balance Account
of an Employee whose service with an Employer is terminated on account
of a nonwork-related disability for which he or she receives Social
Security disability income benefits shall be credited with
Contribution Credits, based upon his or her monthly rate of
Compensation immediately preceding commencement of his or her
disability, for the period during which such disability income
benefits continue.
(c) INTEREST CREDIT. Interest shall be credited monthly on the
beginning Account balance of each Participant ("Interest Credit") at
one-twelfth (1/12) of the following rate: the yield on one-year
Treasury Constant Maturities as reported in the Federal Reserve
Bulletin on the last business day of October of the preceding Plan
Year plus one-half of one percent (0.50%).
(d) NORMAL RETIREMENT BENEFIT. A Participant who retires or is
deemed to retire on his or her Normal Retirement Date shall be
entitled to receive a monthly retirement benefit ("Normal Retirement
Benefit") equal to one-twelfth (1/12) of the amount determined by
converting his or her Account balance as of the end of the month
preceding the Annuity Starting Date to a life annuity, based on the
factors set forth in Section 12.3(b).
The Normal Retirement Benefit of a Participant who retires or is
deemed to retire after December 31, 1997, shall not be less than the
Participant's Accrued Benefit, payable in the normal form, determined
in accordance with the terms of the Plan as in effect on such date.
(e) EARLY RETIREMENT BENEFIT. A Participant who retires on an
Early Retirement Date shall be entitled to receive a monthly
retirement benefit ("Early Retirement Benefit") equal to his or her
Accrued Benefit as of such date, reduced using the interest rate and
mortality table set forth in Section 12.3(b), for commencement prior
to Normal Retirement Date.
The Early Retirement Benefit of a Participant who retires after
December 31, 1997, shall not be less than the Participant's Accrued
Benefit, payable in the normal form and reduced for early commencement
of payment, determined in accordance with the terms of the Plan as in
effect on such date.
(f) DEFERRED RETIREMENT BENEFIT. A Participant who retires or
is deemed to retire on a Deferred Retirement Date shall be entitled to
<PAGE>
receive a monthly retirement benefit ("Deferred Retirement Benefit")
equal to his or her Accrued Benefit as of such date.
The Deferred Retirement Benefit of a Participant who retires
after December 31, 1997, shall not be less than the Participant's
Accrued Benefit, payable in the normal form, determined in accordance
with the term of the Plan as in effect on such date.
(g) VESTED BENEFIT. A Terminated Participant who is credited
with at least five (5) Years of Vesting Service on his or her
Termination of Employment Date shall be entitled to receive a monthly
retirement benefit ("Vested Benefit") equal to his or her Accrued
Benefit as of such date, reduced using the interest rate and mortality
table set forth in Section 12.3(b), for commencement prior to Normal
Retirement Date.
The Vested Benefit of a Participant who terminates employment
after December 31, 1997, shall not be less than the Participant's
Vested Benefit, payable in the normal form and reduced for early
commencement of payment, determined in accordance with the terms of
the Plan as in effect on such date.
4.2 BENEFITS FOR CERTAIN WAREHOUSE PARTICIPANTS. The benefits payable
to or in respect of Warehouse Participants who retire or separate from
service before March 20, 1994, shall be determined in accordance with the
terms of the Plan as in effect on the date of each such Participant's
retirement or separation from service.
(a) The benefits payable to or in respect of Warehouse
Participants who retire or separate from service on or after February
17, 1996, shall be determined as follows:
(i) Normal Retirement Benefit. A Warehouse Participant who
retires or is deemed to retire on his or her Normal Retirement
Date shall be entitled to receive a monthly retirement benefit
("Normal Retirement Benefit") equal to the amount determined by
multiplying the number of such Warehouse Participant's Years of
Benefit Service determined as of his or her Normal Retirement
Date by Thirty Dollars ($30.00).
(ii) Early Retirement Benefit. A Warehouse Participant who
retires on an Early Retirement Date shall be entitled to receive
a monthly retirement benefit ("Early Retirement Benefit") equal
to the amount determined by multiplying the number of such
Warehouse Participant's Years of Benefit Service determined as of
his or her Early Retirement Date by Thirty Dollars ($30.00).
<PAGE>
The amount determined in accordance with this subsection
(ii) shall be reduced by 0.5952 of 1% for each month by which the
commencement of such Warehouse Participant's Early Retirement
Benefit precedes the first day of the month coinciding with or
next following his or her Normal Retirement Date.
(iii) Deferred Retirement Benefit. A Warehouse Participant
who retires or is deemed to retire on a Deferred Retirement Date
shall be entitled to receive a monthly retirement benefit
("Deferred Retirement Benefit") equal to the amount determined by
multiplying the number of such Warehouse Participant's Years of
Benefit Service determined as of his or her Deferred Retirement
Date by Thirty Dollars ($30.00).
(iv) Vested Benefit. Effective January 1, 1989, a
Terminated Warehouse Participant who is credited with at least
five (5) Years of Vesting Service shall be entitled to a monthly
retirement benefit ("Vested Benefit") equal to the amount
determined by multiplying the number of such Warehouse
Participant's Years of Benefit Service determined as of his or
her Termination of Employment Date by Thirty Dollars ($30.00).
The amount determined in accordance with this subsection
(iv) shall be reduced by 0.5952 of 1% for each month by which the
commencement of such Warehouse Participant's Vested Benefit
precedes the first day of the month coinciding with or next
following his or her Normal Retirement Date.
(b) Notwithstanding the preceding to the contrary, the benefits
payable to or in respect of a Warehouse Participant who retires or
separate from service shall not be less than his or her Accrued
Benefit determined in accordance with the terms of the Plan as in
effect on April 10, 1982, based upon his or her Years of Benefit
Service and Average Annual Compensation as of such date.
4.3 EMPLOYMENT TRANSFERS. If a benefit is payable to or in respect
of a Participant whose employment status has changed to or from that of a
Warehouse Employee or to or from that of a Driver Employee, such benefit
shall not be less than the benefit which would have been payable to such
Participant if he or she had retired or terminated employment on the date
of such change and deferred payment of his or her Accrued Benefit as of
such date until the date payment of his or her benefit commences.
<PAGE>
ARTICLE V
RETIREMENT AT NORMAL RETIREMENT DATE
5.1 NORMAL RETIREMENT BENEFIT. A Participant who retires or is
deemed to retire on his or her Normal Retirement Date shall be entitled to
receive a Normal Retirement Benefit determined as of such date in
accordance with Section 4.1 or 4.2. A Participant who continues in the
employ of the Employer after his or her Normal Retirement Date may elect to
receive a monthly retirement benefit in accordance with this Article and,
as a result of such election, shall be deemed to have retired on his or her
Normal Retirement Date. Such Participant shall continue to accrue a
benefit in accordance with Section 7.1 with respect to employment after his
or her Normal Retirement Date.
5.2 FORM OF NORMAL RETIREMENT BENEFIT. Effective January 1, 1989,
except as provided in Section 5.3, a Participant's Normal Retirement
Benefit shall be an annuity, payable monthly for life, commencing with the
first day of the month coinciding with or next following his or her Normal
Retirement Date and ending with the monthly payment preceding the
Participant's death. If a Driver Participant or a Warehouse Participant
dies after his or her Normal Retirement Benefit commences in accordance
with this Section 5.2 and prior to receiving retirement benefit payments
equal to sixty (60) times his or her monthly Normal Retirement Benefit, his
or her Beneficiary shall receive a death benefit equal to sixty (60) times
the last monthly benefit paid to such Participant reduced by the total
amount of benefits paid to such Participant. Such death benefit shall be
paid in a lump sum unless the Beneficiary requests payment in the form of
an annuity.
5.3 QUALIFIED JOINT AND SURVIVOR ANNUITY. If a Participant is
legally married on the date on which his or her Normal Retirement Benefit
commences, such benefit shall be paid in the form of a qualified joint and
survivor annuity described in Section 10.5 unless the Participant elects in
writing during the election period described in Section 10.1 not to receive
his or her Normal Retirement Benefit in the form of a qualified joint and
survivor annuity and the Participant's spouse consents to such election
within the time and in the manner set forth in Section 10.6.
5.4 DISABILITY BENEFIT. Effective July 1, 1992, an Employee other
than a Warehouse Employee whose service with an Employer is terminated on
account of a nonwork-related disability for which he or she receives Social
Security disability income benefits shall be entitled to receive a Normal
Retirement Benefit, provided such disability and such disability income
benefits continue at least until the Employee's Normal Retirement Date.
<PAGE>
ARTICLE VI
RETIREMENT AT EARLY RETIREMENT DATE
6.1 EARLY RETIREMENT BENEFIT. A Participant who retires on an Early
Retirement Date shall be entitled to receive an Early Retirement Benefit
determined as of such date in accordance with Section 4.1 or 4.2.
6.2 FORM OF EARLY RETIREMENT BENEFIT. Effective January 1, 1989,
except as provided in Section 6.3, a Participant's Early Retirement Benefit
shall be an annuity, payable monthly for life, commencing at the election
of the Participant, with the first day of the month coinciding with or next
following his or her Early Retirement Date or the first day of any month
thereafter prior to his or her Normal Retirement Date and ending with the
monthly payment preceding the Participant's death. If a Driver Participant
or a Warehouse Participant dies after his or her Early Retirement Benefit
commences in accordance with this Section 6.2 and prior to receiving
retirement benefit payments equal to sixty (60) times his or her monthly
Early Retirement Benefit, his or her Beneficiary shall receive a death
benefit equal to sixty (60) times the last monthly benefit paid to such
Participant reduced by the total amount of benefits paid to such
Participant. Such death benefit shall be paid in a lump sum unless the
Beneficiary requests payment in the form of an annuity.
6.3 QUALIFIED JOINT AND SURVIVOR ANNUITY. If a Participant is
legally married on the date on which his or her Early Retirement Benefit
commences, such benefit shall be paid in the form of a qualified joint and
survivor annuity described in Section 10.5 unless the Participant elects in
writing during the election period described in Section 10.1 not to receive
his or her Early Retirement Benefit in the form of a qualified joint and
survivor annuity and the Participant's spouse consents to such election
within the time and in the manner set forth in Section 10.6.
ARTICLE VII
RETIREMENT AT DEFERRED RETIREMENT DATE
7.1 DEFERRED RETIREMENT BENEFIT. A Participant who retires or is
deemed to retire on a Deferred Retirement Date shall be entitled to receive
a Deferred Retirement Benefit determined in accordance with Section 4.1 or
4.2. A Participant who continues in the employ of the Employer after his
or her Normal Retirement Date may elect to receive a monthly retirement
benefit in accordance with this Article and, as a result of such election,
shall be deemed to have retired on a Deferred Retirement Date. Such
Participant shall continue to accrue a benefit in accordance with the
<PAGE>
Normal Retirement Benefit formula with respect to each Plan Year after his
or her Normal Retirement Date; provided, however, that such accrual shall
be reduced by the Actuarial Equivalent of the payments received by the
Participant by the close of the Plan Year. Further, if such payments are
not made in the normal form described in Section 7.2 and the total amount
of such payments received by the Participant after his or her Normal
Retirement Date exceeds the total amount of such payments the Participant
would have received if payments had been made in the normal form, only the
amount that would have been paid in the normal form shall be taken into
account for purposes of the reduction required by this Section. In no
event, however, shall the Participant's Accrued Benefit as of any Plan Year
be less than his or her Accrued Benefit for the prior Plan Year,
actuarially increased in accordance with Code Section .
Any additional retirement benefit payable with respect to a
Participant as a result of accrual of a benefit after the Participant's
deemed retirement date shall commence, in the form such Participant's
retirement benefit is being paid, on the first day of the month coinciding
with or next following the Participant's actual retirement date. In the
event a Participant dies before payment of such additional benefit
commences, any death benefit payable with respect to the Participant shall
be adjusted, as may be required under the applicable provisions of the
Plan, to take into account such additional benefits.
7.2 FORM OF DEFERRED RETIREMENT BENEFIT. Effective January 1, 1989,
except as provided in Section 7.3, a Participant's Deferred Retirement
Benefit shall be an annuity, payable monthly for life, commencing with the
first day of the month coinciding with or next following the earlier of:
(a) his or her Deferred Retirement Date; or
(b) April 1 following the calendar year in which the Participant
attains age seventy and one-half (70 1/2), if required under Section
26.3;
and ending with the monthly payment preceding the Participant's death. If
a Driver Participant or a Warehouse Participant dies after his or her
Deferred Retirement Benefit commences in accordance with this Section 7.2
and prior to receiving retirement benefit payments equal to sixty (60)
times his or her monthly Deferred Retirement Benefit, his or her
Beneficiary shall receive a death benefit equal to sixty (60) times the
last monthly benefit paid to such Participant reduced by the total amount
of benefits paid to such Participant. Such death benefit shall be paid in
a lump sum unless the Beneficiary requests payment in the form of an
annuity.
<PAGE>
7.3 QUALIFIED JOINT AND SURVIVOR ANNUITY. If a Participant is
legally married on the date on which his or her Deferred Retirement Benefit
commences, such benefit shall be paid in the form of a qualified joint and
survivor annuity described in Section 10.5 unless the Participant elects in
writing during the election period described in Section 10.1 not to receive
his or her Deferred Retirement Benefit in the form of a qualified joint and
survivor annuity and the Participant's spouse consents to such election
within the time and in the manner set forth in Section 10.6.
ARTICLE VIII
TERMINATION OF EMPLOYMENT
8.1 TERMINATION OF EMPLOYMENT. There are no benefits payable under
the Plan if a Participant's employment ceases prior to his or her Normal
Retirement Date unless (a) the Participant is eligible to elect early
retirement in accordance with Section 6.2, (b) the Participant is entitled
to receive a Normal Retirement Benefit in accordance with Section 5.4, (c)
a death benefit is payable with respect to such Participant in accordance
with Article IX, or (d) the Participant meets the requirements of Section
8.2.
8.2 VESTED BENEFIT. Effective January 1, 1989, if a Terminated
Participant, a Terminated Warehouse Participant, or a Terminated Driver
Participant is credited with at least five (5) Years of Vesting Service at
his or her Termination of Employment Date, he or she shall be entitled to
receive a Vested Benefit determined as of his or her Termination of
Employment Date in accordance with Section 4.1 or 4.2.
8.3 FORM OF BENEFIT. Effective January 1, 1989, except as provided
in Section 8.4, a Terminated Participant's Vested Benefit, a Terminated
Warehouse Participant's Vested Benefit and a Terminated Driver
Participant's Vested Benefit shall be an annuity, payable monthly for life,
commencing at the election of such Participant with the first day of any
month coinciding with or next following his or her fifty-fifth (55th)
birthday, but prior to his or her Normal Retirement Date, and ending with
the monthly payment preceding the death of such Participant. If a
Terminated Warehouse Participant or a Terminated Driver Participant dies
after his or her Vested Benefit commences in accordance with this Section
8.3 and prior to receiving benefit payments equal to sixty (60) times his
or her monthly Vested Benefit, his or her Beneficiary shall receive a death
benefit equal to sixty (60) times the last monthly benefit paid to such
Participant reduced by the total amount of benefits paid to such
Participant. Such death benefit shall be paid in a lump sum unless the
Beneficiary requests payment in the form of an annuity.
<PAGE>
8.4 QUALIFIED JOINT AND SURVIVOR ANNUITY. If a Terminated
Participant, a Terminated Warehouse Participant or a Terminated Driver
Participant is legally married on the date on which his or her Vested
Benefit commences, such benefit shall be paid in the form of a qualified
joint and survivor annuity described in Section 10.5 unless such
Participant elects in writing during the election period described in
Section 10.1 not to receive his or her Vested Benefit in the form of a
qualified joint and survivor annuity and the Participant's spouse consents
to such election within the time and in the manner set forth in Section
10.6.
8.5 FORFEITURES. A Terminated Participant who is not credited with
five (5) Years of Vesting Service as of his or her Termination of
Employment Date shall, solely for purposes of determining the date as of
which he or she shall forfeit his or her Accrued Benefit, be deemed to have
received a lump sum payment of such Accrued Benefit as of his or her
Termination of Employment Date. Such Terminated Participant shall forfeit
his or her Accrued Benefit as of such date; provided, however, that such
forfeiture shall be restored if the Participant is reemployed by the
Employer prior to incurring five (5) consecutive Breaks in Service.
ARTICLE IX
DEATH BENEFITS
9.1 DEATH BEFORE ANNUITY STARTING DATE. In the event of the death of
a Participant, other than a Warehouse Participant, before his or her
Annuity Starting Date, the Participant's Account balance as of the end of
the month before the Annuity Starting Date shall be paid in the form of a
lump sum to his or her surviving spouse or, in the case of an unmarried
Participant, designated beneficiary. Notwithstanding the preceding
sentence to the contrary, if the Account balance exceeds $3,500 as of the
date distribution is to commence (or the date of any prior distribution)
the surviving spouse or designated beneficiary may elect payment in the
form of a life annuity. Payment of the death benefit shall, with the
consent of the surviving spouse or designated beneficiary, be made or
commence as soon as practicable following the date of death.
A death benefit with respect to any Warehouse Participant shall be
payable as follows:
(a) If a Warehouse Participant dies while in the employ of an
Employer, or while on an authorized leave of absence from service with
an Employer, then:
<PAGE>
(i) If such Participant has not attained age fifty-five
(55) and is survived by a spouse to whom he or she has been
legally married for a period of at least one (1) year, his or her
surviving spouse shall be entitled to receive a death benefit in
an amount equal to the greater of the following:
(1) two percent (2%) of such Participant's Average
Annual Compensation determined as of the date of his or her
death, multiplied by the number of his or her Years of
Benefit Service determined as of such date, up to a maximum
of twenty-five (25) years; or
(2) the Actuarial Equivalent value as of the date of
distribution of the benefit such spouse would have received
if the Participant had terminated employment on the date of
death, had survived to age fifty-five (55), had commenced
receiving benefits under a qualified joint and survivor
annuity described in Section 10.5, and had died the next
day;
and in the case of any other Participant, the amount set
forth in subsection (2) above of this Section.
Such death benefit shall be in the form of an annuity, computed
on an Actuarially Equivalent basis and payable monthly for the
life of the surviving spouse and, with the consent of such
spouse, shall commence with the first day of the month following
the month in which the Participant dies; unless such surviving
spouse elects in writing to be paid in a lump sum, in which case
such death benefit shall be paid in a lump sum as soon as
practicable following receipt by the Retirement Committee of such
written election.
(ii) If such Participant has attained age fifty-five (55)
and is survived by a spouse to whom he or she has been legally
married for a period of at least one (1) year, his or her
surviving spouse shall be entitled to receive a death benefit in
an amount equal to the greater of the following:
(1) the benefit such spouse would have received if the
Participant had retired on the day before his or her death,
had elected a Contingent Annuitant Option under Section 11.3
with one hundred percent (100%) continued to the Contingent
Annuitant, had named his or her spouse as the Contingent
Annuitant and had commenced receiving benefits; or
(2) Ten Dollars ($10) a month.
<PAGE>
Such death benefit shall be in the form of an annuity,
payable monthly for the life of the surviving spouse and,
with the consent of such spouse, shall commence on the first
day of the month following the month in which the
Participant dies; unless such surviving spouse elects in
writing to be paid in a lump sum, in which case such death
benefit shall be paid in a lump sum as soon as practicable
following receipt by the Retirement Committee of such
written election.
(iii) If such Participant is not survived by a spouse to
whom he or she has been legally married for a period of at least
one (1) year, his or her Beneficiary or surviving spouse, as the
case may be, shall be entitled to receive a death benefit in an
amount equal to two percent (2%) of such Participant's Average
Annual Compensation determined as of the date of his or her
death, multiplied by the number of his or her Years of Benefit
Service determined as of such date, up to a maximum of twenty-
five (25) years. Such death benefit shall be in the form of an
annuity, payable monthly for the life of the Beneficiary or
surviving spouse and, with the consent of such person, shall
commence on the first day of the month following the month in
which the Participant dies; unless such person elects in writing
to be paid in a lump sum, in which case such death benefit shall
be paid in a lump sum as soon as practicable following receipt by
the Retirement Committee of such written election.
Such death benefit shall be in the form of an annuity, payable monthly
for the life of the Beneficiary or surviving spouse and, with the
consent of such person, shall commence on the first day of the month
following the month in which the Participant dies; unless such person
elects in writing to be paid in a lump sum, in which case such death
benefit shall be paid in a lump sum as soon as practicable following
receipt by the Retirement Committee of such written election.
(b) If a Warehouse Participant dies after retiring, the
following death benefit shall be payable:
(i) If such Participant is survived by a spouse to whom he
or she has been legally married for a period of at least one (1)
year, his or her surviving spouse shall be entitled to receive
the greater of (1) the death benefit such spouse would have
received if the Participant had commenced receiving benefits on
the day before his or her death in the form elected by the
Participant under Article XI, or (2) the death benefit such
spouse would have received if the Participant had commenced
receiving benefits on the day before his or her death under a
qualified joint and survivor annuity described in Section 10.5;
or
<PAGE>
(ii) If such Participant is not survived by a spouse to
whom he or she has been legally married for a period of at least
one (1) year, his or her Beneficiary shall be entitled to receive
a death benefit equal to sixty (60) times the monthly Early,
Normal or Deferred Retirement Benefit which would have been paid
to such Participant.
Such death benefit shall be paid in a lump sum unless the
Beneficiary requests payment in the form of an annuity.
(c) If a Warehouse Participant dies after terminating
employment, then
(i) If such Participant has not attained age 55 and is
survived by a spouse to whom he or she has been legally married
for a period of at least one year, his or her surviving spouse
shall be entitled to receive a death benefit in an amount
determined in accordance with Section 9.1(a)(i). Such death
benefit shall be in the form of an annuity, computed on an
Actuarially Equivalent basis and payable monthly for the life of
the surviving spouse, commencing with the first day of the month
following the month in which the Participant dies; unless such
surviving spouse elects in writing to be paid in a lump sum, in
which case such death benefit shall be paid in a lump sum as soon
as practicable following receipt by the Retirement Committee of
such written election.
(ii) If such Participant has attained age fifty-five (55)
and is survived by a spouse to whom he or she has been legally
married for a period of at least one (1) year, his or her
surviving spouse shall be entitled to receive the death benefit
such spouse would have received if the Participant had died while
in the employ of an Employer, or while on an authorized leave of
absence from service with an Employer, as provided in Section
9.1(a)(ii).
(iii) If such Participant is not survived by a spouse to
whom he or she has been legally married for a period of at least
one (1) year, his or her Beneficiary or surviving spouse shall
receive a death benefit in accordance with Section 9.1(a)(iii).
9.2 DEATH AFTER ANNUITY STARTING DATE. Upon the death of a
Participant after his or her Annuity Starting Date, the form in which his
or her benefit is paid shall determine the amount, if any, and the form of
death benefit payable with respect to such Participant.
<PAGE>
9.3 DESIGNATION OF BENEFICIARY. Each unmarried Participant from time
to time, by completing and signing a form furnished by the Retirement
Committee, may designate any person or persons (who may be designated
concurrently or contingently) to receive benefits which are payable under
this Plan to his or her Beneficiary upon his or her death. Each
Beneficiary designation shall revoke all prior designations by the
Participant and will be effective only when filed in writing with the
Retirement Committee during the Participant's lifetime. If an unmarried
Participant fails to designate a Beneficiary before his or her death as
aforesaid, or if the Beneficiary dies before the date of the Participant's
death, then the benefits which are payable as aforesaid shall be paid in
such manner as the Retirement Committee may determine to the Participant's
estate. An unmarried Participant may change any Beneficiary designation
without the consent of any Beneficiary.
9.4 QUALIFIED DOMESTIC RELATIONS ORDERS. The provisions of this
Article shall be subject to the terms of any qualified domestic relations
order (as defined in Section 414(p) of the Code) which may be in effect
with respect to a Participant at the time distribution of the Participant's
vested Accrued Benefit is to commence; and, the former spouse of a
Participant shall be treated, under this Article, as such Participant's
spouse or surviving spouse to the extent required by any qualified domestic
relations order.
ARTICLE X
QUALIFIED JOINT AND SURVIVOR ANNUITY ELECTION
10.1 Election Period. The election period during which a Participant
may elect not to receive his or her benefit in the form of a qualified
joint and survivor annuity as described in Sections 5.3, 6.3, 7.3 and 8.4
is the ninety (90) day period ending on the Annuity Starting Date;
provided, however, that (I) if the information described in Section 10.2
has not been furnished to the Participant on or about the date specified
therein, the election period will be extended, if necessary, to include the
ninety (90) day period following the date on which such information is
furnished to the Participant, and (ii) if the Participant requests the
additional information described in Section 10.3, the election period shall
be extended, if necessary, to include the sixty (60) day period following
the day on which such additional information is personally delivered or
mailed to the Participant. In the event the election period is extended,
the commencement of the Participant's benefit shall be delayed, if
necessary, until the end of the extended election period, at which time the
deferred benefits, plus such interest as the Retirement Committee shall
determine, shall be paid.
<PAGE>
An election under this Article may be revoked in writing during the
aforesaid election period, and after such election has been revoked,
another election may be made during said election period.
10.2 WRITTEN EXPLANATION. The Retirement Committee shall furnish
each Participant a written explanation of:
(a) the terms and conditions of the qualified joint and
survivor annuity,
(b) the circumstances in which it will be provided unless the
Participant has elected not to receive his or her retirement benefit
in the form of a qualified joint and survivor annuity,
(c) the Participant's right to make the election described in
Section 10.1,
(d) the right of the Participant's spouse to consent to the
election described in Section 10.1,
(e) the right to make, and the effect of, a revocation of an
election under Section 10.1,
(f) the relative financial effect on the Participant's benefit
of such an election, and
(g) the availability of the additional information described in
Section 10.3.
The written explanation shall be delivered or mailed (first class mail,
postage prepaid) by such time as to reasonably assure that it will be
received by the Participant before the earliest date the Participant could
elect to receive his benefits.
10.3 ADDITIONAL INFORMATION FURNISHED UPON REQUEST. The Retirement
Committee shall furnish to a Participant upon receipt of a written request
within the sixty (60) day period following the date on which the written
explanation described in Section 10.2 is mailed or personally delivered to
the Participant, a further written explanation in nontechnical language of
the terms and conditions of the qualified joint and survivor annuity and
the financial effect, in terms of dollars per annuity payment, upon the
particular Participant's benefit of making the election described in
Section 10.1. The Retirement Committee need not comply with more than one
such request made by a particular Participant. The explanation described
herein shall be personally delivered or mailed (first class mail, postage
prepaid) to the Participant within thirty (30) days from the date of the
Participant's written request.
<PAGE>
10.4 ELECTION NOT TO RECEIVE QUALIFIED JOINT AND SURVIVOR ANNUITY.
In the event a Participant elects not to receive his or her retirement
benefit in the form of a qualified joint and survivor annuity, his or her
benefit shall be paid in accordance with Section 5.2, 6.2, 7.2 or 8.3,
whichever is applicable, unless the Participant has elected an optional
form of benefit in accordance with Article XI.
10.5 QUALIFIED JOINT AND SURVIVOR ANNUITY. The qualified joint and
survivor annuity described in Sections 5.3, 6.3, 7.3 and 8.4 shall be an
annuity for the life of the Participant with a survivor annuity for the
life of his or her spouse which is equal to fifty percent (50%) of the
amount of the annuity payable during the joint lives of the Participant and
his or her spouse. Such qualified joint and survivor annuity shall be the
Actuarial Equivalent of the normal form of life annuity.
10.6 SPOUSAL CONSENT. An election by a Participant under Section
10.1 shall not be effective unless the spouse of the Participant consents
in writing to such election within the applicable election period, and the
spouse's consent acknowledges the effect of such election and is witnessed
by a notary public. A consent by a spouse under this Section shall be
effective (only with respect to such spouse) upon delivery thereof to the
Retirement Committee. A revocation of an election by a Participant under
Section 10.1 does not require spousal consent.
ARTICLE XI
OPTIONAL FORMS OF BENEFITS
11.1 EARLY RETIREMENT BENEFIT - OPTIONAL LUMP SUM. In lieu of
receiving an Early Retirement Benefit in the manner described in Section
6.2 or 6.3, a Participant entitled to an Early Retirement Benefit may, with
the consent of his or her spouse, if married, elect to receive an optional
lump sum benefit if he or she commenced employment with an Employer prior
to January 1, 1981 or, at the time of making such election, he or she is a
Driver Participant who was hired before January 1, 1995, or a Warehouse
Participant. For purposes of the preceding sentence, in determining the
time when an Employee commenced employment with an Employer, any service
which is disregarded under Section 1.57 shall not be taken into account.
Such election and, if required, spousal consent, shall be effective upon
delivery of a written instrument to the Retirement Committee within the
applicable election period described in Section 10.1. If an electing
Participant dies prior to his or her Annuity Starting Date, such election
shall be void, and any death benefit payable with respect to such
Participant shall be determined in accordance with the applicable
<PAGE>
provisions of Article IX. A Participant who receives a benefit pursuant to
this Section and is thereafter reemployed by an Employer shall not be
eligible to receive a further benefit under this Section.
The amount of the optional lump sum benefit for a Driver Participant
shall be equal to 2% of his or her Average Annual Compensation determined
as of the earlier of December 31, 1994, or his or her Early Retirement
Date, multiplied by the number of his or her Years of Benefit Service as of
such date, not exceeding 25. The amount of the optional lump sum benefit
for a Warehouse Participant shall be equal to 2% of his or her Average
Annual Compensation determined as of his or her Early Retirement Date,
multiplied by the number of his or her Years of Benefit Service as of such
date, not exceeding 25. The amount of the optional lump sum benefit for
any other eligible Participant shall be equal to 2% of his or her Average
Annual Compensation determined as of the earlier of December 31, 1988, or
his or her Early Retirement Date, multiplied by the number of his or her
Years of Benefit Service as of such date not exceeding 25.
In the event a Participant elects an optional lump sum benefit as
provided in this Section 11.1 and the present value of his or her Early
Retirement Benefit exceeds the amount of his or her optional lump sum
benefit, he or she shall, in addition to his or her optional lump sum
benefit, be entitled to receive an actuarially reduced Early Retirement
Benefit. Such actuarially reduced Early Retirement Benefit shall be paid
at the time and in the manner which the retired Participant's Early
Retirement Benefit would have been paid if he or she had not elected an
optional lump sum benefit under this Section 11.1 and shall be calculated
in such a manner that the present value of his or her actuarially reduced
Early Retirement Benefit when added to the amount of his or her optional
lump sum benefit equals the present value of his or her Early Retirement
Benefit.
Effective January 1, 1996, the present value of a Participant's Early
Retirement Benefit shall be calculated using the interest rate and
mortality table set forth in Section 12.3(b). In the event the present
value of such Participant's actuarially reduced Early Retirement Benefit is
$10,000 or less, the Retirement Committee shall, with the written consent
of such Participant and, if married, his or her spouse, distribute the
present value of such actuarially reduced Early Retirement Benefit in a
single sum payment at the time such Participant's optional lump sum benefit
is distributed. In the event that a Participant dies after receiving an
optional lump sum benefit and before the Annuity Starting Date of his or
her actuarially reduced Early Retirement Benefit, any death benefit payable
with respect to such Participant shall be determined in accordance with the
applicable provisions of Article IX and shall reflect only such
Participant's actuarially reduced Early Retirement Benefit.
<PAGE>
11.2 VESTED BENEFIT - OPTIONAL LUMP SUM. In lieu of receiving a
Vested Benefit in the manner described in Section 8.3 or 8.4, a Participant
entitled to a Vested Benefit may, with the consent of his or her spouse, if
married, elect to receive an immediate optional lump sum benefit if he or
she commenced employment with an Employer prior to January 1, 1981, or at
the time of making such election, he or she is a Driver Participant who was
hired before January 1, 1995, or a Warehouse Participant. For purposes of
the preceding sentence, in determining the time when an Employee commenced
employment with an Employer, any service which is disregarded under Section
1.57 shall not be taken into account. Such election and, if required,
spousal consent, shall be effective upon delivery of a written instrument
to the Retirement Committee within the applicable election period described
in Section 10.1. If an electing Participant dies prior to his or her
Annuity Starting Date, such election shall be void and any death benefit
payable with respect to such Participant shall be determined in accordance
with the applicable provisions of Article IX. A Participant who receives a
benefit pursuant to this Section and is thereafter reemployed by an
Employer shall not be eligible to receive a further benefit under this
Section.
The amount of the optional lump sum benefit for a Driver Participant
shall be equal to 2% of his or her Average Annual Compensation determined
as of the earlier of December 31, 1994, or his or her Termination of
Employment Date, multiplied by the number of his or her Years of Benefit
Service as of such date, not exceeding 25. The amount of the optional lump
sum benefit for a Warehouse Participant shall be equal to 2% of his or her
Average Annual Compensation determined as of his or her Termination of
Employment Date, multiplied by the number of his or her Years of Benefit
Service as of such date, not exceeding 25. The amount of the optional lump
sum benefit for any other eligible Participant shall be equal to 2% of his
or her Average Annual Compensation determined as of the earlier of December
31, 1988, or his or her Termination of Employment Date, multiplied by the
number of his or her Years of Benefit Service as of such date, not
exceeding 25.
In the event a Participant elects an optional lump sum benefit as
provided in this Section 11.2 and the present value of his or her Vested
Benefit exceeds the amount of his or her optional lump sum benefit, he or
she shall, in addition to his or her optional lump sum benefit, be entitled
to receive an actuarially reduced Vested Benefit. Such actuarially reduced
Vested Benefit shall be paid at the time and in the manner which such
Participant's Vested Benefit would have been paid if he or she had not
elected an optional lump sum benefit under this Section 11.2 and shall be
calculated in such a manner that the present value of his or her
actuarially reduced Vested Benefit when added to the amount of his or her
optional lump sum benefit equals the actuarial value of his or her Vested
Benefit.
<PAGE>
Effective January 1, 1996, the present value of a Participant's Vested
Benefit shall be calculated using the interest rate and mortality table set
forth in Section 12.3(b). In the event the present value of such
Participant's actuarially reduced Vested Benefit is $10,000 or less, the
Retirement Committee shall, with the written consent of such Participant
and, if married, his or her spouse, distribute the present value of such
actuarially reduced Vested Benefit in a single sum payment at the time such
optional lump sum benefit is distributed. In the event that a Participant
dies after receiving an optional lump sum benefit and before the Annuity
Starting Date of his or her actuarially reduced Vested Benefit, any death
benefit payable with respect to such Participant shall be determined in
accordance with the applicable provisions of Article IX and shall reflect
only such Participant's actuarially reduced Vested Benefit.
Notwithstanding any provision of the Plan to the contrary, a
Participant who is entitled to elect an immediate lump sum payment may
elect within the applicable election period to receive payment in the
normal form prescribed in Section 8.3 or 8.4, commencing on the date such
lump sum payment would be made.
11.3 CONTINGENT ANNUITANT OPTION. In lieu of receiving the normal
form of benefit described in Section 5.2, 6.2, 7.2 or 8.3, or the qualified
joint and survivor annuity described in Section 10.5, a Participant may,
with the consent of his or her spouse, if married, elect to have his or her
benefit paid in the form of an Actuarially Equivalent contingent annuity.
A Participant who has elected a Contingent Annuitant Option shall
receive an actuarially reduced benefit during his or her lifetime so that
following the Participant's death, payment of a benefit in an amount equal
to one hundred percent (100%), sixty-six and two-thirds percent (66-2/3%)
or fifty percent (50%) of the Participant's actuarially reduced benefit, as
elected by the Participant, shall continue to the person designated by the
Participant ("Contingent Annuitant") at the time of making the election for
the life of the Contingent Annuitant. An election and, if required,
spousal consent under this Section 11.3, shall be effective upon delivery
of a written instrument to the Retirement Committee within the applicable
election period described in Section 10.1. If an electing Participant dies
prior to his or her Annuity Starting Date, such election shall be void and
any death benefit payable with respect to such Participant shall be
determined in accordance with the applicable provisions of Article IX. If
the Contingent Annuitant dies prior to the commencement of benefits to the
Participant, the Participant's election under this Section 11.3 shall be
void and the Participant shall be entitled to his or her normal form of
benefit under the Plan. If the Contingent Annuitant dies after the
commencement of the Participant's benefits under this Plan, the Participant
shall receive only the reduced amount of benefit provided under this
option.
<PAGE>
If distribution to a Participant commences in the form of a contingent
annuity option for the joint lives of the Participant and a contingent
annuitant other than his or her spouse, the periodic annuity payment
payable to the contingent annuitant must not at any time on and after the
date payments are required to commence to the Participant exceed the
applicable percentage for such period payable to the Participant using the
table set forth in regulation Section 1.401(a)(9)-2 Q&A-6. For purposes of
the preceding sentence, a former spouse to whom all or a portion of a
Participant's Accrued Benefit is payable pursuant to a qualified domestic
relations order (as defined in Section 414(p) of the Code) shall be treated
as a spouse of the Participant. If a Participant's Accrued Benefit is
divided and a portion is allocated to an alternate payee pursuant to a
qualified domestic relations order (as defined in Section 414(p) of the
Code), this paragraph shall not apply to the portion so allocated.
11.4 FIVE YEAR CERTAIN AND LIFE ANNUITY OPTION. In lieu of receiving
the normal form of benefit described in Section 5.2, 6.2, 7.2 or 8.3, or
the qualified joint and survivor annuity described in Section 10.5, a
Participant may elect an Actuarially Equivalent Five Year Certain and Life
Annuity Option which will provide for an actuarially reduced benefit
payable to the Participant during his or her lifetime with the guarantee
that 60 monthly benefit payments will be made.
If this option is elected and the Participant dies prior to the receipt
of the guaranteed monthly payments, the balance of the guaranteed monthly
payments shall be paid to the Participant's Beneficiary and shall continue
until the total guaranteed monthly payments have been made to the
Participant and his or her Beneficiary. The first such payment to the
Beneficiary shall be due and payable as of the first day of the month
following the Participant's death.
In the event there is no Beneficiary living at the death of the
Participant, the balance of the guaranteed monthly payments which would
otherwise have been payable to the Participant's Beneficiary shall be paid
to the Participant's estate.
If the Beneficiary of a deceased Participant should die prior to
receiving the balance of the guaranteed monthly payments, the balance of
the guaranteed payments shall be paid to the Beneficiary's estate.
11.5 LUMP SUM OPTION. In lieu of receiving the normal form of
benefit described in Section 5.2, 6.2, 7.2, or 8.3, or the qualified joint
and survivor annuity described in Section 10.5, a Participant, other than a
Warehouse Participant, may elect payment in the form of a lump sum equal to
his or her Account balance as of the end of the month preceding the Annuity
Starting Date.
<PAGE>
ARTICLE XII
BENEFIT ADJUSTMENTS AND CASH OUTS
12.1 OFFSET OF AMOUNTS TRANSFERRED TO THE TRUST FROM OTHER PLANS. If
any amounts are transferred to the Trust from other pension or profit-sharing
plans which cover periods of time for which the Participants are
receiving benefits under this Plan, any benefit payable under the Plan to
any Participant (or spouse or Beneficiary of such Participant) shall be
inclusive of, and not in addition to, the value of such transferred
benefits. Notwithstanding anything to the contrary above, if such a
Participant terminates his or her service for any reason, or dies, before
he or she has received the full amount of any such transferred amount which
was fully vested in him or her prior to such date of termination, there
shall be a benefit payable to the Participant (or his or her surviving
spouse or Beneficiary, whoever is entitled to benefits in the event of his
or her death as provided under the Plan) at least equal to the difference
between the amount so transferred and any amount that may have previously
been paid under the Plan.
12.2 PROHIBITION AGAINST DUPLICATION OF BENEFITS. In the event a
former Participant is reemployed by an Employer after distribution of his
or her benefits has been made or commenced then at the time of his or her
subsequent retirement or separation from service, his or her benefit shall
be recomputed in accordance with the applicable Plan provisions without
regard to the benefits previously distributed to him and such Participant's
benefit as recomputed shall be reduced by a benefit which is the Actuarial
Equivalent of the benefits previously distributed to such Participant.
12.3 SMALL INSTALLMENTS AND CASH OUTS.
(a) In the event that any payment under the Plan would be $50
or less if paid monthly and the present value of all such payments as
of the date distribution is to commence would exceed $3,500, the
Retirement Committee shall, with the written consent of the
Participant (if living) and the Participant's spouse (if married)
within the 90 day period ending on the distribution date, direct the
Trustee to pay such benefit in a lump sum. The present value of such
benefit shall be calculated in the manner set forth in subsection (b)
of this Section.
(b) Notwithstanding any provision of the Plan to the contrary,
if the present value of the entire nonforfeitable benefit payable with
respect to a Participant does not exceed $3,500 as of the date
distribution of such benefit is to commence (or the date of any prior
distribution), the Retirement Committee shall direct the Trustee to
<PAGE>
pay such benefit in a lump sum as soon as practicable following the
Participant's retirement date, Termination of Employment Date or
death, as the case may be. Effective January 1, 1996, the present
value of such benefit shall be calculated:
(i) using the annual rate of interest on 30 year Treasury
securities for the second full calendar month preceding the
first day of the Plan Year that contains the Annuity Starting
Date, with such rate remaining constant for the Plan Year; and
(ii) using the 1983 Group Annuity Mortality Table, as
blended in accordance with Revenue Ruling 95-6.
In no event, however, shall the present value of such benefit be
less than the present value of the Participant's Accrued Benefit
as of December 31, 1995, calculated under the terms of the Plan
in effect on such date. A lump sum payment may be made after the
Annuity Starting Date only with the written consent of the
Participant (if living) and the Participant's spouse (if married)
within the 90 day period ending on the distribution date.
(c) If the present value of the entire nonforfeitable benefit
payable with respect to a Warehouse Participant exceeds $3,500, but
does not exceed $10,000, as of the date distribution is to commence,
such Participant may, at any time prior to the Annuity Starting Date,
elect to receive payment in the form of an immediate lump sum (in lieu
of the form prescribed in Sections 5.2, 6.2, 7.2, 8.3 or 10.5);
provided, if the Participant is married, his or her spouse must
consent in writing to such election within the 90 day period ending on
the date of distribution. The present value of such benefit shall be
calculated in the manner set forth in subsection (b) of this Section.
Notwithstanding any provision of the Plan to the contrary, a
Participant who is entitled to elect an immediate lump sum payment may
elect within such ninety 90 day period, payment in the normal form
prescribed in Articles V, VI, VII or VIII, as the case may be,
commencing on the date such lump sum payment would be made.
(d) In the event a benefit is payable to an alternate payee
(other than the surviving spouse of a Participant) pursuant to a
qualified domestic relations order, following the death of the
Participant and after his or her Annuity Starting Date, such benefit
shall be paid in a lump sum as soon as practicable following the
Participant's death. If such alternate payee is the Participant's
surviving spouse, such payment shall be made only with his or her
written consent within the 90 day period ending on the date of
distribution. In no event shall the aggregate amount of such death
benefit payable to all alternate payees exceed the present value of
<PAGE>
the benefits payable following the Participant's death under the form
in which the Participant's retirement benefit was being paid. Present
value shall be determined in the manner set forth in subsection (b) of
this Section.
(e) Any election pursuant to this Section shall be in writing
and shall be effective upon receipt by the Retirement Committee. A
spouse's consent under this Section must meet the applicable
requirements of Section 10.6.
ARTICLE XIII
LIMITATION ON BENEFITS
13.1 LIMITATION FOR DEFINED BENEFIT PLANS. Except as hereinafter
provided, the provisions of this Article shall be effective January 1,
1987. The benefits with respect to a Participant, when expressed as an
Annual Benefit, shall not exceed the lesser of --
(a) Ninety Thousand Dollars ($90,000.00);
(b) one hundred percent (100%) of the Participant's Highest
Average Compensation.
The limitation of this Section shall be deemed satisfied if the
benefits payable with respect to a Participant, when expressed as an Annual
Benefit, do not exceed the product of (I) One Thousand Dollars ($1000.00),
and (ii) the Participant's Years of Benefit Service (not exceeding ten
(10)), and if an Employer has not at any time maintained a qualified
defined contribution plan, a Welfare Benefit Fund or an Individual Medical
Account in which such Participant participated.
13.2 ADJUSTMENTS. The limitation in Section 13.1 shall be subject to
the following adjustments:
(a) If payment of benefits commences before age 62, the
limitation under Section 13.1(a), as reduced pursuant to Section 13.3,
if applicable, shall be the Actuarial Equivalent of such limitation
(as adjusted pursuant to Section 13.2(b)) beginning at age 62,
actuarially reduced for each month by which benefits commence before
the month in which the Participant attains age 62. For purposes of
making the adjustments required under this subsection, Actuarial
Equivalence shall be determined by using the mortality table specified
in Section 12.3(b)(ii) and an interest rate assumption of 5% or the
<PAGE>
rate specified in Section 26.11 of the Plan, whichever is greater;
provided, however, effective for Limitation Years beginning in 1995,
the applicable interest rate (as defined in Section 417(e)(3) of the
Code and as determined under Section 12.3(b)(i)) shall be substituted
for 5% with respect to any benefits payable in a form subject to
Section 417(e)(3) of the Code. Any decrease in the limitation under
Section 13.1(a) determined in accordance with this subsection shall
not reflect the mortality decrement to the extent that benefits will
not be forfeited upon the death of the Participant.
(b) If payment of benefits commences before Social Security
Retirement Age and on or after age 62, the limitation under Section
13.1(a), as reduced pursuant to Section 13.3, if applicable, shall be
determined as follows:
(i) if the Participant's Social Security Retirement Age is
65, by reducing such limitation by 5/9 of 1% for each month by
which benefits commence before the month in which the Participant
attains age 65; or
(ii) if the Participant's Social Security Retirement Age is
greater than 65, by reducing such limitation by 5/9 of 1% for
each of the first 36 months and 5/12 of 1% for each additional
month, up to 24 months, by which benefits commence before the
month in which the Participant attains Social Security Retirement
Age.
(c) If payment of benefits commences after Social Security
Retirement Age, the limitation under Section 13.1(a), as reduced
pursuant to Section 13.3, if applicable, shall be adjusted so that
such limitation is the Actuarial Equivalent of a $90,000 Annual
Benefit beginning at Social Security Retirement Age. For purposes of
making the adjustment required under this subsection, Actuarial
Equivalence shall be determined by using the mortality table specified
in Section 12.3(b)(ii) and an interest rate assumption of 5% or the
rate specified in Section 26.11 of the Plan, whichever is less.
Notwithstanding the foregoing to the contrary, a Participant's Accrued
Benefit shall not be reduced below his or her Accrued Benefit as of
December 31, 1994.
If the benefit which a Participant would otherwise accrue in a
Limitation Year would produce an Annual Benefit in excess of the limitation
prescribed by this Section, the rate of accrual shall be reduced to the
extent necessary to comply with said limitation.
<PAGE>
If a Participant is or has ever been covered under more than one
qualified defined benefit plan maintained by an Employer, the sum of the
Participant's benefits from all such plans, when expressed as an Annual
Benefit, shall not exceed the limitation prescribed by this Section. If
the sum of the benefits which a Participant would otherwise accrue would
exceed the limitation prescribed by this Section, the rate of accrual under
this Plan shall be reduced to the extent that if the rate of accrual under
each such other plan was reduced proportionately the limitation prescribed
by this Section would be satisfied.
In the case of an individual who was a Participant in the Plan or in
one or more other qualified defined benefit plans of an Employer as of the
first day of the first limitation year beginning after December 31, 1986,
the limitation prescribed by this Section shall not be less than the
individual's accrued benefit, when expressed as an Annual Benefit, under
this Plan and all such other qualified defined benefit plans as of the end
of the last limitation year beginning before January 1, 1987, disregarding
any changes in the terms and conditions of the plans after May 5, 1986, and
any cost of living adjustments occurring after May 5, 1986. The preceding
sentence shall apply only if the Plan and all such other qualified defined
benefit plans met the requirements of Section 415 of the Code, as in effect
for all limitation years beginning before January 1, 1987.
13.3 REDUCTION FOR LESS THAN TEN (10) YEARS OF PARTICIPATION OR
SERVICE.
(a) In the case of a Participant with less than ten (10) years
of participation in the Plan, the limitation described in
Section 13.1(a) shall be reduced by one-tenth (1/10) for each year of
participation in the Plan less than ten (10).
(b) In the case of a Participant who has less than ten (10)
Years of Benefit Service, the limitation described in Section 13.1(b)
shall be reduced by one-tenth (1/10) for each Year of Benefit Service
less than ten (10).
(c) The reductions required by this Section shall be applied in
the denominator of the fraction under Section 13.5(a), based upon
Years of Benefit Service, and such years shall include future Years of
Benefit Service occurring before the Participant's Normal Retirement
Date. Such future years shall include the year which contains the
Participant's Normal Retirement Date only if it can reasonably be
anticipated that the Participant shall receive credit for a Year of
Benefit Service for such Year.
<PAGE>
For purposes of this Section, the term "year of participation" shall mean a
Plan Year in which the Participant is credited with a Year of Benefit
Service and is included as a Participant in the Plan in accordance with
Article II for at least one day in such Plan Year.
13.4 ADJUSTMENT TO DOLLAR LIMITATION. Effective January 1, 1988, and
each January 1 thereafter the dollar limitation in effect under Section
13.1 shall be automatically adjusted for increases in the cost of living in
accordance with regulations promulgated under Section 415(d) of the Code.
Such adjustment shall apply to the Limitation Year ending within the
calendar year of the effective date of such adjustment.
13.5 LIMITATION FOR DEFINED BENEFIT PLAN AND DEFINED CONTRIBUTION
PLAN. If a Participant also participates or has participated in one or
more qualified defined contribution plans, Welfare Benefit Funds or
Individual Medical Accounts maintained by an Employer, then in addition to
the limitation set forth in Section 13.1, the sum of the fractions
determined under subsections (a) and (b) of this Section with respect to
said Participant for any Limitation Year shall not exceed 1.0.
(a) A fraction, the numerator of which is the sum of the
Participant's Projected Annual Benefits under all qualified defined
benefit plans (whether or not terminated) maintained by an Employer
and the denominator of which is the lesser of --
(i) the dollar limitation in effect under Sections
415(b)(1)(A) and 415(d) of the Code for such year multiplied by
1.24, or
(ii) the amount which may be taken into account under
Section 415(b)(1) (B) of the Code with respect to the Participant
for such year multiplied by 1.4.
If the Participant participated as of the first day of the first
limitation year beginning after December 31, 1986, in one or more
qualified defined benefit plans maintained by an Employer which were
in existence on May 6, 1986, the denominator of this fraction shall
not be less than one hundred and twenty-five percent (125%) of the sum
of the Annual Benefits which the Participant accrued under such
plans as of the end of the last limitation year beginning before
January 1, 1987, disregarding any changes in the terms and conditions
of the plans after May 5, 1986. The preceding sentence applies only
if the qualified defined benefit plans individually and in the
aggregate satisfied the requirements of Section 415 of the Code as in
effect for all limitation years beginning before January 1, 1987.
<PAGE>
(b) A fraction, the numerator of which is the sum of the annual
additions to the Participant's accounts under all qualified defined
contribution plans (whether or not terminated) maintained by an
Employer for the current and all prior limitation years (including the
annual additions attributable to the Participant's nondeductible
voluntary contributions under all qualified defined benefit plans,
whether or not terminated, and attributable to all Welfare Benefit
Funds or Individual Medical Accounts and the denominator of which is
the sum of the lesser of the following amounts determined for the
current and all prior limitation years (without regard to whether a
qualified defined contribution plan was maintained by an Employer) in
which the Participant performed service for an Employer:
(i) the dollar limitation in effect under Section
415(c)(1)(A) of the Code for such year multiplied by 1.24, or
(ii) thirty-five percent (35%) of the Participant's
compensation (as defined in Section 13.7) for such year.
If an Employee was a participant as of the first day of the first
limitation year beginning after December 31, 1986, in one or more
qualified defined contribution plans maintained by an Employer which
were in existence on May 6, 1986, the numerator of this fraction shall
be adjusted if the sum of the fractions under this Section would
otherwise exceed 1.0. Under the adjustment, an amount equal to the
product of (I) the excess of the sum of said fractions over 1.0
multiplied by (ii) the denominator of this fraction, shall be
permanently subtracted from the numerator of this fraction. The
adjustment shall be calculated using the fractions as they would be
computed as of the end of the last limitation year beginning before
January 1, 1987, and disregarding any changes in the terms and
conditions of the plans after May 6, 1986, but using the limitation
under Section 415 of the Code applicable to the first limitation year
beginning on or after January 1, 1987.
The annual addition for any limitation year beginning before
January 1, 1987, shall not be recomputed to treat all nondeductible
voluntary contributions as annual additions.
If the sum of said fractions for any Limitation Year exceeds 1.0,
the Annual Benefits under this Plan and any other qualified defined
benefit plan maintained by an Employer shall be proportionately
reduced to the extent necessary to comply with the limitation of this
Section.
<PAGE>
13.6 COMBINING AND AGGREGATING PLANS. For purposes of applying the
benefit limitations described in this Article:
(a) all qualified defined benefit plans (whether or not
terminated) ever maintained by an Employer shall be treated as one
defined benefit plan; and
(b) all qualified defined contribution plans (whether or not
terminated) ever maintained by an Employer shall be treated as one
defined contribution plan.
13.7 DEFINITION OF COMPENSATION. For purposes of applying the
limitations of this Article, the term "compensation" shall mean, with
respect to a Limitation Year, the total compensation paid by an Employer to
an Employee for services rendered while an Employee that constitutes wages
as defined in Section 3401(a) of the Code, and all other payments by an
Employer to an Employee for services rendered while an Employee for which
an Employer is required to furnish the Employee a written statement under
Sections 6041(d) and 6051(a)(3) of the Code, without regard to any rules
that limit the remuneration included in wages based on the nature or
location of the employment or services performed.
13.8 CERTAIN CONTRIBUTIONS TREATED AS ANNUAL ADDITIONS. For purposes
of this Article:
(a) Employer contributions (including "excess contributions" as
defined in Section 401(k) of the Code and "excess aggregate
contributions" as defined in Section 401(m) of the Code), employee
contributions and forfeitures allocated to an individual's account
under a qualified defined contribution plan maintained by an Employer
shall constitute annual additions.
(b) Contributions by Employees to a qualified defined benefit
plan maintained by an Employer shall be treated as annual additions to
a qualified defined contribution plan.
(c) Amounts derived from contributions paid or accrued in
taxable years ending after December 31, 1985, and which are
attributable to post-retirement medical benefits allocated to the
separate account of a Key Employee (as required in Section 419A(d) of
the Code) under a Welfare Benefit Fund maintained by an Employer,
shall be treated as annual additions to a qualified defined
contribution plan.
(d) Contributions allocated after March 31, 1984, to an
Individual Medical Account which is part of a pension or annuity plan
maintained by an Employer shall be treated as annual additions to a
qualified defined contribution plan.
<PAGE>
ARTICLE XIV
RESTRICTION ON BENEFITS PAYABLE TO CERTAIN PARTICIPANTS
14.1 NONDISCRIMINATORY BENEFIT. Notwithstanding any provision of the
Plan to the contrary, in the event the Plan is terminated, the benefit
payable with respect to a Participant who is an active or former highly
compensated employee (within the meaning of Section 414(q) of the Code)
shall be limited to a benefit that is nondiscriminatory under Section
401(a)(4) of the Code.
14.2 LIMITS ON ANNUAL PAYMENTS. Except as hereinafter provided, the
annual payments with respect to a Participant who is one of the twenty-five
(25) most highly compensated active or former highly compensated employees
(within the meaning of Section 414(q) of the Code) shall not exceed an
amount equal to the annual payments that would be made with respect to such
Participant under a straight life annuity that is the Actuarial Equivalent
of the Participant's Accrued Benefit and any other benefits to which he or
she is entitled under the Plan.
The foregoing provisions of this Section shall not apply if--
(a) the value of the Plan's assets equals or exceeds one hundred
ten percent (110%) of the value of the Plan's current liabilities (as
defined in Section 412(l)(7) of the Code), determined as of the same
date, after payment has been made to a Participant described above of
all benefits to which he or she is entitled under the Plan;
(b) the value of the benefits to which a Participant described
above is entitled under the Plan is less than one percent (1%) of the
value of current liabilities (as defined in Section 412(l)(7) of the
Code) before such benefits are distributed; or
(c) the value of the benefits to which a Participant described
above is entitled under the Plan does not exceed Three Thousand Five
Hundred Dollars ($3,500.00).
ARTICLE XV
SUSPENSION OF BENEFITS
15.1 SUSPENSION BEFORE NORMAL RETIREMENT DATE. In the event a former
Participant who is receiving benefits is reemployed by an Employer in
Suspension Service before his or her Normal Retirement Date his or her
benefit payments shall cease with the first day of the calendar month
<PAGE>
following such reemployment. If benefit payments have been suspended in
accordance with the preceding sentence, then payments shall resume not
later than the earlier of (i) the first day of the third calendar month
after the calendar month in which the Participant is no longer employed in
Suspension Service, or (ii) the first day of the calendar month coinciding
with or following the Participant's Normal Retirement Date. The amount of
the Participant's benefit at the time payments resume shall be equal to the
greater of:
(a) the benefit which such Participant is entitled to receive in
accordance with the terms of the Plan reduced by a benefit which is
the Actuarial Equivalent of the benefit payments received by such
Participant prior to such suspension; or
(b) the benefit which such Participant was entitled to receive
immediately prior to such suspension, actuarially adjusted to reflect
the period of such suspension prior to such Participant's Normal
Retirement Date.
15.2 STATUS DETERMINATION. A Participant may request the Retirement
Committee to determine whether specific contemplated employment will be
considered Suspension Service. Such request shall be in writing and shall
specify the name, address and social security number of the Participant,
the terms of the contemplated employment, the proposed date of employment,
job classification and work schedule, and such other information as the
Retirement Committee may request. The Retirement Committee shall notify
the Participant of its determination not later than sixty (60) days
following receipt of the Participant's notice and such additional
information as may be requested by the Retirement Committee to enable it to
make such determination.
ARTICLE XVI
CREDIT FOR YEARS OF BENEFIT SERVICE UPON REEMPLOYMENT
FOLLOWING RECEIPT OF AN OPTIONAL LUMP SUM
16.1 Reemployment With Credit For Prior Years of Benefit Service. If
a Participant who elected to receive an optional lump sum benefit under
Section 11.1 or Section 11.2 on or after January 1, 1976, is subsequently
reemployed by an Employer, his or her Years of Benefit Service shall
include his or her Years of Benefit Service prior to the date his or her
service terminated only if:
(a) the amount he or she received was less than the actuarial
value of his or her Accrued Benefit, as of the date his or her service
terminated; and
<PAGE>
(b) within two (2) years of the date the Participant resumes
employment with an Employer, he or she repays to the Trust the entire
amount he or she received, together with interest computed on such
amount from the date of distribution to the date of repayment,
compounded annually from the date of distribution, at the rate as
determined in Section 411(c)(2)(C) of the Code. Notwithstanding the
preceding sentence, a Participant shall not be required to repay the
amount he or she received before the end of a period of five (5)
consecutive one-year Breaks in Service.
16.2 REEMPLOYMENT WITHOUT CREDIT FOR PRIOR YEARS OF BENEFIT SERVICE.
If a Participant who elected to receive an optional lump sum benefit under
Section 11.1 or Section 11.2 on or after January 1, 1976, is subsequently
reemployed by an Employer, his or her Years of Benefit Service shall not
include his or her Years of Benefit Service prior to the date his or her
service terminated if the amount he or she received was equal to or greater
than the actuarial value of his or her Accrued Benefit as of the date his
or her service terminated.
16.3 REEMPLOYMENT WITH PARTIAL CREDIT FOR PRIOR YEARS OF BENEFIT
SERVICE. If a Participant who elected to receive an optional lump sum
benefit under Section 11.1 or Section 11.2 on or after January 1, 1976, and
received less than the actuarial value of his or her Accrued Benefit is
subsequently reemployed, but he or she does not repay to the Trust the
amount he or she received with interest thereon as provided in Section
16.1, his or her Years of Benefit Service shall include his or her Years of
Benefit Service prior to the date his or her service terminated, provided,
however, any subsequent benefit payable to or in respect of such
Participant shall be reduced by a benefit having an actuarial value equal
to the amount he or she received.
ARTICLE XVII
TOP HEAVY PROVISIONS
17.1 TOP HEAVY REQUIREMENTS. Notwithstanding any provision of this
Plan to the contrary, if the Plan is or becomes Top Heavy with respect to
any Employer in any Plan Year beginning after December 31, 1983, then the
provisions of this Article shall become applicable and supersede any
conflicting provisions of this Plan which are applicable with respect to
participation of such Employer in this Plan, but not with respect to the
participation of any other Employer.
<PAGE>
17.2 MINIMUM VESTING REQUIREMENT. Except as hereinafter provided,
the nonforfeitable interest of each Participant in his or her Accrued
Benefit shall be determined in accordance with the following schedule:
YEARS OF VESTING SERVICE VESTED PERCENTAGE
0 but less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
The nonforfeitable interest of any Participant who is not credited
with an Hour of Service after the Plan becomes Top Heavy shall, however, be
determined in accordance with the provisions of the Plan without regard to
this Section.
In the event the Plan ceases to be Top Heavy, the Employer may amend
the vesting schedule, provided the Employer complies with the provisions of
Section 22.1.
17.3 MINIMUM BENEFIT REQUIREMENT. The benefit of each Participant
who is a Non-Key Employee, when expressed as an annual retirement benefit
payable in the form of a single life annuity beginning at his or her Normal
Retirement Date, shall not be less than the Participant's average
compensation multiplied by the lesser of (I) two percent (2%) multiplied by
the number of the Participant's Years of Benefit Service, or (ii) twenty
percent (20%). For purposes of this Section:
(a) the following Years of Benefit Service shall be excluded in
determining the minimum benefit of any Participant:
(i) any Year of Benefit Service if the Plan was not Top
Heavy for the Plan Year ending during such year; and
(ii) any Year of Benefit Service completed in a Plan Year
beginning before January 1, 1984.
(b) The average compensation of a Participant shall mean the
average of the Participant's compensation (as defined in Section 13.7)
for the period of the Participant's Years of Benefit Service (not
exceeding five (5)) during which he or she had the greatest
compensation, excluding:
(i) any Year of Benefit Service (and compensation received
by the Participant during such year) which ends in a Plan Year
beginning before January 1, 1984; and
<PAGE>
(ii) any Year of Benefit Service (and compensation
received by the Participant during such year) which begins after
the close of the last year in which the Plan was Top Heavy.
17.4 MODIFIED LIMITATION ON ANNUAL ADDITIONS. The combined defined
contribution and defined benefit plan limitation set forth in Section 13.5
shall be applied by substituting 1.0 for 1.25 whenever 1.25 appears therein
for each Plan Year in which the Plan is Top Heavy.
17.5 PRESENT VALUE FACTORS. For purposes of determining the Top
Heavy Ratio, the present value of Accrued Benefits of the Plan shall be
based on the following factors:
Interest: Six and one-half percent (6 1/2%) per annum.
Mortality Table: 1971 Group Annuity Mortality Table using male rates
for all individuals regardless of sex.
ARTICLE XVIII
CONTRIBUTIONS
18.1 EMPLOYER CONTRIBUTIONS. Each Employer shall from time to time
contribute to the Trust such amounts as shall be required under accepted
actuarial principles to provide the benefits under the Plan and to meet the
funding requirements of ERISA.
18.2 ERRONEOUS EMPLOYER CONTRIBUTIONS. All contributions by an
Employer are conditioned upon the continued qualification of the Plan under
the Code, including any amendments to the Plan, and upon the deductibility
under Section 404 of the Code. Upon the request of an Employer, any
contribution made (a) by reason of a mistake of fact, (b) conditioned upon
initial qualification of the Plan or conditioned upon qualification of the
Plan, as amended, or (c) for which a deduction is disallowed under Section
404 of the Code shall be returned to the Employer within one (1) year of
the mistaken payment of the contribution, the date of denial of
qualification, or disallowance of the deduction, as the case may be. The
amount which may be returned to an Employer is the excess of the amount
contributed over the amount that would have been contributed had there not
occurred a mistake of fact or a mistake in determining the deduction.
Compensation attributable to any excess contribution shall not be returned
to the Employer, but losses attributable thereto shall reduce the amount
which may be returned.
<PAGE>
18.3 APPLICATION FOR FORFEITURES. All forfeitures arising from
terminations of employment shall be applied to reduce Employer
contributions, and no such amounts shall in any event be applied to
increase the benefits any Participant would otherwise receive under the
Plan at any time prior to the termination of the Plan.
18.4 TRUST. In order to establish a funding medium to carry out the
provisions of the Plan, the Employers shall maintain a Trust with a bank or
trust company as Trustee, as the Finance Committee shall appoint. Such
Trust shall become a part of the Plan and shall provide that no part of the
corpus or income of the Trust Fund shall, except as otherwise provided in
this Plan, be used for, or diverted to, purposes other than the exclusive
benefit of the Participants and their Beneficiaries.
ARTICLE XIX
RETIREMENT COMMITTEE
19.1 APPOINTMENT OF RETIREMENT COMMITTEE. The Human Resources
Committee of the Board of Directors shall appoint a committee of not less
than four (4) individuals who shall have authority to control and manage
the administration of the Plan. The Retirement Committee shall act by a
majority of its members, and such action may be taken by vote at a meeting
or in a writing without a meeting. Any member may participate in a meeting
by means of a conference telephone or similar communications equipment by
means of which all persons participating can hear each other.
19.2 APPOINTMENT, RESIGNATION AND REMOVAL. Any person appointed to
serve as a member of the Retirement Committee shall serve at the pleasure
of the Human Resources Committee of the Board of Directors and may be
removed by delivery of written notice of removal which shall take effect at
the date specified therein. Any member of the Retirement Committee may
resign at any time by delivering to the Human Resources Committee a written
notice of resignation which shall take effect at a date specified therein.
The Human Resources Committee, as soon as practicable following delivery of
a written notice of removal or receipt of a written notice of resignation
of any member of the Retirement Committee, shall consider the appointment
of a successor.
19.3 DUTIES. The Retirement Committee shall be a named fiduciary
within the meaning of Section 402(a)(2) of ERISA with the following powers
and complete discretionary authority to control and manage the operation
and administration of the Plan:
(a) to determine all questions concerning the eligibility of
Employees to participate in and receive benefits under the Plan;
<PAGE>
(b) to compute the amount of benefits payable to any
Participant or other person;
(c) to authorize and direct the Trustee with respect to payment
of benefits;
(d) to interpret the provisions of the Plan and to make rules
and regulations for the administration of the Plan;
(e) to maintain all the necessary records for the administration
of the Plan;
(f) to monitor the performance of the Trustee and any Investment
Managers and to report its findings to the Finance Committee not less
often than semiannually;
(g) to act as agent for service of legal process; and
(h) to employ or retain counsel, accountants, actuaries or such
other consultants as may be required to assist in administering the
Plan.
The interpretation of the Plan and the construction of Plan provisions
that are made by the Retirement Committee shall be final, conclusive and
binding on all affected parties.
Except as provided in subsection (f) of this Section, the Retirement
Committee shall have no power or authority over the investment of the
assets of the Trust Fund. The Finance Committee, Trustee and/or any duly
appointed Investment Manager or Managers shall have exclusive authority and
discretion to manage and control the Trust Fund in accordance with the
terms of the Trust.
19.4 NOTICE TO TRUSTEE. The Retirement Committee shall give the
Trustee written notice whenever a Participant or other person is entitled
to receive a distribution of Plan benefits. Such notice shall indicate the
name of the Participant or other person entitled to receive a distribution
and the manner in which the distribution is to be made.
Unless a Participant otherwise elects, in no event shall the
distribution of benefits to such Participant commence later than the
sixtieth (60th) day after the latest of (I) the close of the Plan Year in
which occurs the earlier of the date on which the Participant attains age
sixty-five (65) or his or her Normal Retirement Date, (ii) the close of the
Plan Year in which occurs the tenth (10th) anniversary of the year in which
the Participant commenced participation in the Plan, or (iii) the close of
the Plan Year in which the Participant terminates employment with an
<PAGE>
Employer and is no longer employed by any Employer. The aforesaid election
may be made by submitting to the Retirement Committee a written statement,
signed by the Participant, which specifies the date, subject to the
restrictions of Section 26.3, on which the distribution of benefits shall
commence.
19.5 FIDUCIARY DUTIES. The Retirement Committee shall discharge its
duties under the Plan solely in the interest of the Participants and their
Beneficiaries and:
(a) for the exclusive purpose of (i) providing benefits to
Participants and their Beneficiaries, and (ii) defraying reasonable
expenses of administering the Plan; and
(b) with the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent man acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims.
19.6 REPORTING AND DISCLOSURE. The Retirement Committee shall
furnish to each Participant and to each other person who is receiving
benefits under the Plan, and shall file with the Secretary of Labor, the
Secretary of Treasury and the Pension Benefit Guaranty Corporation all
reports, disclosures and notifications as are required under the Code.
19.7 DELEGATION OF MINISTERIAL DUTIES. The Retirement Committee may,
by a writing signed by a majority of its members, delegate to any member or
members of the Committee or to any Employee or Employees, severally or
jointly, the authority to perform any ministerial act in connection with
the administration of the Plan.
19.8 COMPENSATION AND REIMBURSEMENT OF EXPENSES. The members of the
Retirement Committee shall be entitled to reasonable compensation for
services rendered, and to reimbursement of expenses properly and actually
incurred, in the performance of their duties on behalf of the Plan, but no
person so serving who already receives pay from an Affiliated Employer
shall receive compensation for such services, except for reimbursement of
expenses properly and actually incurred and not otherwise reimbursed.
19.9 UNIFORMITY OF RULES AND REGULATIONS. In the administration of
the Plan and the interpretation and application of its provisions, the
Retirement Committee shall exercise its powers and authority in a
nondiscriminatory manner, and shall apply uniform administrative rules and
regulations in order to assure substantially the same treatment to
Participants in similar circumstances.
<PAGE>
19.10 RELIANCE ON REPORTS. The Retirement Committee shall be
entitled to rely upon all certificates and reports made by any counsel,
accountant, actuary or other consultant employed or retained to assist in
administering the Plan.
19.11 MULTIPLE SIGNATURES. A majority of the members of the
Retirement Committee or any one member authorized by such Committee shall
have authority to execute all documents, reports or other memoranda
necessary or appropriate to carry out the actions and decisions of the
Retirement Committee. The Trustee, any investment manager or any other
interested party may rely upon any document, report or other memorandum so
executed as evidence of the Retirement Committee action or decision
indicated thereby.
19.12 PAYMENT OF PLAN EXPENSES. Notwithstanding any provision of the
Plan or the Trust to the contrary, payment of any reasonable expenses of
administering the Plan, as determined by the Retirement Committee, shall be
made from the Trust Fund, unless paid by the Employer. If such expenses
are incurred as a result of services provided to the Plan or Trust by a
party in interest (as defined in Section 3(14) of ERISA), no payment shall
be made from the Trust Fund unless such payment - (a) satisfies the
applicable requirements of Section 408 of ERISA and the regulations
thereunder; or (b) is otherwise exempt from the applicable prohibited
transaction rules of the Code and ERISA.
ARTICLE XX
FINANCE COMMITTEE
20.1 DUTIES. The Finance Committee shall be a named fiduciary within
the meaning of Section 402(a)(2) of ERISA and shall have the following
duties and responsibilities:
(a) to appoint and remove the Trustee and establish the terms
of the Trust Agreement;
(b) to establish investment policies and objectives with regard
to management of the Trust Fund; and
(c) to appoint one or more Investment Managers to direct the
investment of the Trust Fund or such portion thereof as may be
designated by the Finance Committee, to remove any Investment Manager,
and to establish investment guidelines which shall be binding on such
Investment Managers.
<PAGE>
The Finance Committee shall act by a majority of its members and such
action may be taken by a vote at a meeting or in a writing without a
meeting. Any member may participate in a meeting by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other. In carrying out its
duties, the Finance Committee may employ or retain counsel, accountants,
actuaries and such other consultants as it deems to be in the best
interests of the Plan. The Finance Committee may, by a writing signed by a
majority of its members, delegate to any member or members of the Committee
or to any Employee or Employees, severally or jointly, the authority to
perform any ministerial act in connection with the administration of the
Plan.
The Finance Committee shall have no power or authority to control the
operation and administration of the Plan, apart from its duties as
enumerated in this Section.
20.2 FIDUCIARY DUTIES. The Finance Committee shall discharge its
duties under the Plan and Trust solely in the interest of the Participants
and their Beneficiaries and:
(a) for the exclusive purposes of (i) providing benefits to the
Participants and Beneficiaries; and (ii) defraying reasonable expenses
of administering the Plan and Trust;
(b) with the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of like character and with like aims; and
(c) by diversifying the investments of the Trust so as to
minimize the risk of large losses, unless under the circumstances it
is clearly prudent not to do so.
20.3 COMPENSATION AND REIMBURSEMENT OF EXPENSES. The members of the
Finance Committee shall be entitled to reasonable compensation for services
rendered, and to reimbursement of expenses properly and actually incurred,
in the performance of their duties on behalf of the Plan, but no person so
serving who already receives compensation from an Affiliated Employer for
services rendered as an Employee shall receive compensation for such
services, except for reimbursement of expenses properly and actually
incurred and not otherwise reimbursed.
20.4 RELIANCE ON REPORTS. The Finance Committee shall be entitled to
rely upon all certificates and reports made by any counsel, accountant,
actuary, investment manager or other consultant employed or retained to
assist in administering the Plan and Trust.
<PAGE>
20.5 MULTIPLE SIGNATURES. A majority of the members of the Finance
Committee or any one member authorized by such Committee shall have
authority to execute all documents, reports or other memoranda necessary or
appropriate to carry out the actions and decisions of the Finance
Committee. The Trustee, any investment manager or any other interested
party may rely upon any document, report or other memorandum so executed as
evidence of the Finance Committee action or decision indicated thereby."
ARTICLE XXI
CLAIMS PROCEDURE
21.1 FILING A CLAIM FOR BENEFITS. A Plan Participant or other person
entitled to benefits under the Plan may make a claim for Plan benefits by
filing a written request with the Retirement Committee upon a form to be
furnished to it for such purpose.
21.2 DENIAL OF CLAIM. If a claim is wholly or partially denied, the
Retirement Committee shall furnish the claimant with written notice setting
forth in a manner calculated to be understood by the claimant:
(a) the specific reason or reasons for the denial;
(b) specific reference to pertinent Plan provisions on which
the denial is based;
(c) a description of any additional material or information
necessary for the claimant to perfect his or her claim and an
explanation why such material or information is necessary; and
(d) appropriate information as to the steps to be taken if the
claimant wishes to submit his or her claim for review.
Such notice shall be furnished to the claimant within ninety (90) days
after receipt of his or her claim, unless special circumstances require an
extension of time for processing his or her claim. If an extension of time
for processing is required, the Retirement Committee shall, prior to the
termination of the initial ninety (90) day period, furnish the claimant
with written notice indicating the special circumstances requiring an
extension and the date by which the Committee expects to render its
decision. In no event shall an extension exceed a period of ninety (90)
days from the end of the initial ninety (90) day period.
<PAGE>
21.3 APPEAL OF DENIED CLAIM. A claimant may request the Retirement
Committee to review a denied claim. Such request shall be in writing and
must be delivered to the Retirement Committee within sixty (60) days after
receipt by the claimant of written notification of denial of claim. A
claimant or his or her duly authorized representative may:
(a) review pertinent documents, and
(b) submit issues and comments in writing.
21.4 DECISION ON APPEAL. The Retirement Committee shall notify the
claimant of its decision on review not later than sixty (60) days after
receipt of a request for review, unless special circumstances require an
extension of time for processing, in which case a decision shall be
rendered as soon as possible, but not later than one hundred twenty (120)
days after receipt of a request for review. If an extension of time for
review is required because of special circumstances, written notice of the
extension must be furnished to the claimant prior to the commencement of
the extension. The Retirement Committee's decision on review shall be in
writing and shall include specific reasons for the decision, as well as
specific references to the pertinent Plan provisions on which the decision
is based.
ARTICLE XXII
AMENDMENT AND TERMINATION
22.1 AMENDMENT. The Board of Directors may from time to time amend
any or all provisions of the Plan, provided that no amendments shall,
except as otherwise provided in this Plan, permit any part of the Trust
Fund to revert to any Employer or to be used or diverted to purposes other
than the exclusive benefit of the Participants, their surviving spouses and
Beneficiaries. Each such amendment shall be effective in respect of each
adopting Employer without further action by any such Employer.
If the vesting provisions in effect under the Plan are amended, each
Participant who has completed at least three (3) Years of Vesting Service,
may elect to have his or her nonforfeitable interest determined without
regard to such amendment. The Retirement Committee shall promptly furnish
each such Participant with written notice of the adoption of such amendment
and the availability of the election to have his or her nonforfeitable
interest determined without regard to such amendment. An election by a
Participant shall be in writing and shall be effective if filed with the
Retirement Committee at any time during the period beginning with the date
such amendment is adopted and ending on the later of (i) the date which is
<PAGE>
sixty (60) days after the day such amendment is adopted, (ii) the day which
is sixty (60) days after the day such amendment becomes effective, or (iii)
the day which is sixty (60) days after the Participant receives written
notice of such amendment. An election once made shall be irrevocable.
No amendment shall, except to the extent permitted under Section
412(c)(8) of the Code, decrease a Participant's Accrued Benefit or, except
to the extent permitted by Section 411(d)(6) of the Code, eliminate an
early retirement benefit, a retirement type subsidy or an optional form of
benefit. In addition, no amendment shall have the effect of decreasing a
Participant's nonforfeitable interest determined without regard to such
amendment as of the later of the date such amendment is adopted or the date
it becomes effective.
22.2 TERMINATION. An Employer may terminate the Plan with respect to
its Employees at any time. Upon complete or partial termination of the
Plan by an Employer, the rights of its affected Participants to their
respective Accrued Benefits, based on Years of Benefit Service prior to the
date of termination, shall become fully vested and nonforfeitable. The
assets of the Trust, other than the assets held pursuant to Article XXIII,
attributable to such Employer, after payment of all proper expenses, shall
be liquidated by the payment or provision for the payment of benefits in
the following order of preference:
(a) First, in the case of benefits payable as an annuity:
(i) In the case of a benefit of a Participant or
Beneficiary which was in pay status as of the beginning of the
three (3) year period ending on the termination date of the
Plan, to each such benefit, based on the provisions of the Plan
(as in effect during the five (5) year period ending on such
date) under which such benefit would be the least; and
(ii) In the case of a Participant's or Beneficiary's
benefit (other than a benefit described in (1) above) which
would have been in pay status as of the beginning of such three
(3) year period if the Participant had retired prior to the
beginning of the three (3) year period and if his or her
benefits had commenced (in the normal form of pension payment)
as of the beginning of such period, to each such benefit based
on the provisions of the Plan (as in effect during the five (5)
year period ending on such date) under which such benefit would
be the least.
For purposes of (i) above, the lowest benefit in pay status during a
three (3) year period shall be considered the benefit in pay status for
such period.
<PAGE>
(b) Second, (i) to all other benefits (if any) of individuals
under the Plan guaranteed under Title IV of ERISA (determined without
regard to Section 4022B(b) of ERISA, and (ii) to the additional
benefits (if any) which would be determined under (i) if Section
4022(b)(5) of ERISA did not apply.
(c) Third, to all other nonforfeitable benefits under the Plan.
(d) Fourth, to all other benefits under the Plan.
(e) Fifth, any balance attributable to such Employer remaining
in the Trust Fund after payment or providing for payment of the
benefits described in the foregoing categories (a) through (d) shall
be returned to the Employer.
If the assets of the Trust attributable to such Employer available for
allocation under any category (other than category (c) or (d)) are
insufficient to satisfy in full the benefits of all individuals which are
described in that category, the assets shall be allocated pro rata among
such individuals on the basis of the present value (as of the termination
date) of their respective benefits described in that category. If the
assets of the Trust available for allocation under category (c) are not
sufficient to satisfy in full the benefits of individuals described in that
category, then (i) except as provided in subsection (ii), the assets shall
be allocated to the benefits of individuals described in category (c) on
the basis of the benefits of individuals which would have been described in
category (c) under the Plan as in effect at the beginning of the five (5)
year period ending on the date of Plan termination; and (ii) if the assets
available for allocation under subsection (i) are sufficient to satisfy in
full the benefits described in category (c), then for purposes of
subsection (i) benefits of such individuals described therein shall be
determined on the basis of the Plan as amended by the most recent Plan
amendment effective during such five (5) year period under which the assets
available for allocation are sufficient to satisfy in full the benefits of
individuals described in subsection (i) and any assets remaining to be
allocated under such subsection shall be allocated under subsection (i) on
the basis of the Plan as amended by the next succeeding plan amendment
effective during such period.
22.3 BENEFIT SERVICE AND AVERAGE ANNUAL COMPENSATION FOLLOWING PLAN
TERMINATION. In the event an Employer terminates the Plan with respect to
its Employees, the Years of Benefit Service and Average Annual Compensation
of an affected Participant who is subsequently employed by another Employer
prior to incurring a Break in Service shall include his or her Years of
Benefit Service and Average Annual Compensation prior to such termination;
provided, however, the benefits, if any, subsequently payable to or in
respect of such a Participant shall be reduced by a benefit which is the
<PAGE>
Actuarial Equivalent of the amount, if any, distributed to him or her in
accordance with Section 22.2 by reason of such termination. If a
Participant who is affected by a termination is not employed by another
Employer before he or she has incurred a Break in Service, his or her Years
of Benefit Service and Average Annual Compensation prior to such
termination shall be disregarded.
ARTICLE XXIII
RETIREE MEDICAL BENEFITS
23.1 401(h) ACCOUNT. The Trustee shall establish and maintain a
separate account ("401(h) account") for the payment, in accordance with
this Article, of benefits for sickness, accident, hospitalization and
medical expenses of retired Employees, their spouses and their dependents.
The provision of such benefits is intended to comply with the applicable
requirements of Section 401(h) of the Code and the regulations thereunder.
23.2 RETIREE MEDICAL BENEFITS. The benefits payable under this
Article ("Retiree Medical Benefits") and the amount to be paid shall be
determined under the terms and provisions of the Hannaford Bros. Co.
Retiree Medical Plan ("Retiree Medical Plan"), as the same may from time to
time be amended. In no event shall payment of any benefit be made under
this Article with respect to any Employee unless --
(a) the Employee, or his or her spouse or dependent, is entitled
to such benefit under the Retiree Medical Plan; and
(b) the Employee is eligible to receive retirement benefits
under the Plan or has terminated employment due to permanent
disability. For purposes of the preceding sentence an Employee shall
not be considered eligible to receive retirement benefits if
termination of employment is a condition to receiving such benefits.
23.3 CONTRIBUTIONS. Each Employer whose Employees are eligible to
participate in the Retiree Medical Plan may from time to time contribute to
the Trust amounts to be allocated to the 401(h) account. At the time of
each such contribution, the Employer shall designate in writing that the
contribution is to be used to fund Retiree Medical Benefits. An Employer's
contributions to the 401(h) account shall be reasonable and ascertainable
and shall not exceed the total cost of providing Retiree Medical Benefits
to its Employees. The total cost of providing Retiree Medical Benefits
shall be determined in accordance with any generally accepted actuarial
method which is reasonable in view of the provisions of the Retiree Medical
<PAGE>
Plan, the funding medium, and other applicable considerations. In no event
shall the aggregate Employer contribution to fund Retiree Medical Benefits
for any taxable year exceed the greater of --
(a) an amount determined by distributing the remaining unfunded
costs of past and current service credits as a level amount or a level
percentage of Compensation over the remaining future service of each
Employee; or
(b) ten percent (10%) of the total cost required to fund such
benefits.
To determine the appropriate limit under the preceding sentence, either
subsection (a) shall apply to all Employees or subsection (b) shall apply
to all Employees.
In addition, the aggregate contributions for Retiree Medical Benefits
when added to the contributions, if any, under the Plan, for life insurance
benefits, shall not exceed twenty-five percent (25%) of the total actual
contributions to the Plan (other than contributions for past service
credits) after January 1, 1990. For purposes of this Section, life
insurance benefits include any benefit paid under the Plan as a result of a
Participant's death, to the extent such payment exceeds the amount of the
reserve required to provide the retirement benefits accrued by the
Participant as of the date of death.
23.4 FORFEITURES. In the event that the interest of any individual
in Retiree Medical Benefits is forfeited prior to the termination of the
Retiree Medical Plan, an amount equal to the amount of such forfeiture
shall be applied as soon as possible to reduce future Employer
contributions to fund Retiree Medical Benefits. Notwithstanding the
preceding sentence, at no time shall an Employee or his or her spouse or
dependents have a vested interest in Retiree Medical Benefits or in the
401(h) account; neither shall retirement nor entitlement to retirement
benefits hereunder create any such vested interest in any individual.
23.5 INVESTMENTS. The 401(h) account shall be maintained for
recordkeeping purposes only, and contributions to the 401(h) account may be
commingled for investment purposes with contributions pursuant to Article
XVIII of the Plan, provided that earnings and losses on investments are
allocated to the 401(h) account in the same proportion that the value of
assets in the 401(h) account bears to the total value of all Plan assets.
23.6 REVERSION TO EMPLOYER. Prior to the satisfaction of all
liabilities hereunder to pay Retiree Medical Benefits, no part of the
corpus or income of the 401(h) account may be used for, or diverted to, any
purpose other than the satisfaction of such liabilities or the payment of
<PAGE>
any necessary or appropriate expenses attributable to the administration of
the 401(h) account. After satisfaction of all liabilities hereunder to pay
Retiree Medical Benefits, any assets remaining in the 401(h) account shall
be returned to the Employers in the same proportion that each such
Employer's aggregate contributions to the 401(h) account bear to the total
contributions of all such Employers to the 401(h) account.
23.7 KEY EMPLOYEES. The Trustee shall establish and maintain a
separate subaccount within the 401(h) account with respect to the Retiree
Medical Benefits payable to a Key Employee (or his or her spouse and
dependents), and such benefits shall be payable only from such subaccount.
ARTICLE XXIV
NONALIENABILITY OF BENEFITS;
QUALIFIED DOMESTIC RELATIONS ORDERS
24.1 NONALIENABILITY OF BENEFITS. Except as expressly provided
below, the benefits provided under the Plan shall not be subject to
alienation, assignment, garnishment, attachment, execution or levy of any
kind, and any attempt to cause such benefits to be so subjected will not be
recognized.
24.2 QUALIFIED DOMESTIC RELATIONS ORDERS. The provisions of the
immediately preceding section shall apply to the creation, assignment or
recognition of a right to any benefit payable with respect to a Participant
pursuant to a domestic relations order, unless the order is determined to
be a qualified domestic relations order.
24.3 NOTICE. Upon the receipt of any domestic relations order by the
Plan, the Retirement Committee shall promptly notify, in writing, the
Participant and any alternate payee named in the domestic relations order
(at the address included in the domestic relations order) of the receipt of
such order and the Plan's procedures for determining the qualified status
of such domestic relations order.
24.4 REPRESENTATIVE. Any alternate payee named in a domestic
relations order received by the Plan shall have the right to designate, by
notice in writing to the Retirement Committee, a representative for the
receipt of copies of notices that are sent to the alternate payee with
respect to such domestic relations order.
24.5 SEPARATE ACCOUNT. During any period in which the issue of
whether a domestic relations order is a qualified domestic relations order
is being determined (by the Retirement Committee, by a court of competent
<PAGE>
jurisdiction, or otherwise), the Retirement Committee shall direct the
Trustee to segregate in a separate interest-bearing account in the Plan or
in an interest-bearing escrow account, the amounts which would have been
payable to any alternate payee during such period if the order had been
determined to be a qualified domestic relations order.
24.6 DETERMINATION BY RETIREMENT COMMITTEE.
(a) Within ninety (90) days after receipt of a domestic
relations order, the Retirement Committee shall determine whether such
order is a qualified domestic relations order and shall notify, in
writing, the Participant and each alternate payee named in such order
of such determination.
(b) If the Retirement Committee shall determine that the
domestic relations order is a qualified domestic relations order, the
Retirement Committee shall direct the Trustee to pay to each alternate
payee named in such order, the benefits required to be paid under such
order, including any amounts segregated in a separate account or
escrow account in accordance with the immediately preceding Section
(including any interest thereon).
(c) If the Retirement Committee shall determine that the
domestic order is not a qualified domestic relations order, the notice
required by subsection (a) above shall include a statement of the
specific reason or reasons for the Retirement Committee's
determination and the Retirement Committee shall direct the Trustee to
continue to segregate, in a separate account or escrow account, during
the eighteen (18) month period beginning on the date that the first
payment is required to be made under such domestic relations order,
any amounts which would have been payable to any alternate payee
during such eighteen (18) month period if the order had been
determined to be a qualified domestic relations order, unless such
order shall sooner be determined, by the Retirement Committee or a
court of competent jurisdiction, to be a qualified domestic relations
order, in which event the Retirement Committee shall direct the
Trustee to make payment of any such segregated amount to each
alternate payee named in the order in accordance with subsection (b)
above. If neither the Retirement Committee nor a court of competent
jurisdiction shall determine within said period of eighteen (18)
months that such domestic relations order is a qualified domestic
relations order; then, upon expiration of said period, the Retirement
Committee shall direct the Trustee to pay any such segregated amount
(including any interest thereon) to the person or persons who would
have been entitled to such amounts if there had been no order.
24.7 DEFINITIONS. As used in this Article, the following terms shall
have the meanings hereinafter set forth:
<PAGE>
(a) "Alternate payee" shall mean any spouse, former spouse,
child or other dependent of a Participant who is recognized by a
domestic relations order as having a right to receive all, or a
portion of, the benefits payable under the Plan with respect to such
Participant.
(b) "Domestic relations order" shall mean any judgment, decree
or order (including approval of property settlement agreement) which
relates to the provisions of child support, alimony payments or
marital property rights to a spouse, former spouse, child or other
dependent of a Participant, and is made pursuant to a state domestic
relations law (including a community property law).
(c) "Earliest retirement age" shall mean the date on which,
under the Plan, a Participant could elect to receive retirement
benefits.
(d) "Qualified domestic relations order" shall mean a domestic
relations order which:
(i) creates or recognizes the existence of an alternate
payee's right to, or assigns to an alternate payee the right to,
receive all or a portion of the benefits payable with respect to
a Participant under the Plan; and
(ii) clearly specifies:
(1) the name and the last known mailing address (if
any) of the Participant and the name and mailing address of
each alternate payee covered by the order;
(2) the amount or percentage of the Participant's
benefits to be paid by the Plan to each such alternate
payee, or the manner in which such amount or percentage is
to be determined;
(3) the number of payments or period to which such
order applies; and
(4) each plan to which such order applies; and
(iii) does not require the Plan to:
(1) provide any type or form of benefits, or any
option, not otherwise provided under the Plan;
(2) provide increased benefits (determined on the
basis of actuarial value); or
<PAGE>
(3) pay benefits to an alternate payee which are to
be paid to another alternate payee under an order
previously determined to be a qualified domestic relations
order.
In the case of any payment to an alternate payee before a Participant
has separated from service, a domestic relations order shall not be treated
as failing to meet the requirements of clause (1) of subparagraph (iii)
solely because such order requires that payment of benefits be made to an
alternate payee:
(i) on or after the date on which the Participant attains
(or would have attained) the earliest retirement age;
(ii) as if the Participant has retired on the date on
which such payment is to begin under such order; and
(iii) in any form in which such benefits may be paid under
the Plan to the Participant (other than in the form of a
qualified joint and survivor annuity with respect to the
alternate payee and his or her subsequent spouse).
ARTICLE XXV
DIRECT ROLLOVERS
25.1 ELIGIBILITY. Effective January 1, 1993, a Participant who is
entitled to receive a lump sum payment from the Plan may elect to have such
payment (or portion thereof not less than $500) made directly to an
individual retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of the Code
(other than an endowment contract), a trust described in Section 401(a) of
the Code which is exempt from tax under Section 501(a) of the Code and
which is part of a defined contribution plan described in Section 414(i) of
the Code that permits rollover contributions, or an annuity plan described
in Section 403(a) of the Code.
An alternate payee who is entitled to receive a lump sum payment from
the Plan pursuant to a qualified domestic relations order under Article
XXIV and who is the spouse or a former spouse of a Participant may make an
election pursuant to the preceding paragraph as if such alternate payee
were the Participant.
<PAGE>
A surviving spouse who is entitled to receive a lump sum payment from
the Plan by reason of the Participant's death may elect to have such
payment (or a portion thereof not less than $500.00) made directly to an
individual retirement account described in Section 408(a) of the Code or an
individual retirement annuity described in Section 408(b) of the Code. A
surviving spouse who is the Participant's beneficiary under a Five Year
Certain and Life Annuity and who is entitled to receive payments under such
annuity by reason of the Participant's death may elect as hereinafter
provided to have such payments (or a portion thereof not less than $500.00)
made directly to an individual retirement account described in Section
408(a) of the Code or an individual retirement annuity described in Section
408(b) of the Code, provided the aggregate amount of such payments for the
calendar year will be at least $200.00.
The preceding provisions of this Section shall apply only to the
extent payment to the Participant, alternate payee, or surviving spouse, as
the case may be, is not required under Section 26.3.
25.2 NOTICE. No earlier than ninety (90) days and no later than
thirty (30) days before a lump sum payment is to be made under the Plan, or
before payments commence to a surviving spouse under a Five Year Certain
and Life Annuity, the Retirement Committee shall provide the Participant,
alternate payee, or surviving spouse, as the case may be, with a written
explanation of -
(a) the rules under which he or she may elect a payment
pursuant to this Article ("direct rollover");
(b) the legal requirement that federal income tax be withheld
from the payment if he or she does not elect a direct rollover;
(c) the rules under which the amount that he or she actually
receives will not be subject to federal income tax if such amount is
transferred ("rolled over") within sixty (60) days after being
received pursuant to Section 402(c) of the Code;
(d) the rules, if applicable, for receiving special income tax
averaging, or capital gain treatment, under Section 402(d) of the
Code; and
(e) the Plan provisions under which a direct rollover election
by a surviving spouse with respect to one payment in a series of
periodic payments under a Five Year Certain and Life Annuity will
apply to all subsequent payments until such election is changed.
<PAGE>
Such written explanation shall be provided annually to a
surviving spouse receiving benefits under a Five Year Certain and Life
Annuity. If the time requirements in this paragraph would require
that written explanation be given prior to January 1, 1993, such
requirements shall not apply, and the Retirement Committee shall
provide the written explanation within a reasonable period of time
before payment is to be made.
Notwithstanding the foregoing to the contrary, if an individual,
after receiving the written explanation required by this Section,
affirmatively elects to make or not make a direct rollover, an
eligible rollover distribution may be made less than thirty (30) days
after the date such written explanation was given, provided the
Retirement Committee has informed such individual, in writing, of his
or her right to a period of at least thirty (30) days to make such
election.
25.3 ELECTION. An election pursuant to this Article shall be made in
such manner and at such time as the Retirement Committee shall prescribe
and shall include:
(a) the name of the individual retirement account or plan
receiving the direct rollover;
(b) a statement that such account or plan is eligible to receive
a direct rollover; and
(c) any other information necessary to permit a direct rollover
by the means selected by the Retirement Committee.
If a Participant is married, a direct rollover of a payment exceeding
$3,500 may not be made unless such Participant has obtained the written
consent of his or her spouse as required by Section 10.6. An alternate
payee who is a former spouse of a Participant shall not be required to
obtain the written consent of his or her new spouse, if remarried, in order
to make a direct rollover.
An election by a surviving spouse to make a direct rollover with
respect to one payment in a series of periodic payments under a Five Year
Certain and Life Annuity shall apply to all subsequent payments in the
series until such election is changed; such change with respect to
subsequent payments may be made at any time.
<PAGE>
ARTICLE XXVI
MISCELLANEOUS
26.1 MERGER OR CONSOLIDATION OF PLAN. In case of any merger or
consolidation of the Plan with, or transfer of assets or liabilities of the
Plan to, any other plan, provision must be made so that each Participant
would, if the Plan then terminated, receive a benefit immediately after the
merger, consolidation or transfer which is equal to or greater than the
benefit he or she would have been entitled to receive immediately before
the merger, consolidation or transfer if the Plan had then terminated. In
the case of a plan spin-off from the Plan, the applicable percentage of
"excess assets," as defined in Section 414(l) of the Code, if any, shall be
allocated to the spun off plan, as required under such section.
26.2 DISTRIBUTIONS TO MINORS AND INCOMPETENT PERSONS. If any person
to whom benefits shall be distributable under the Plan shall be a minor or
if the Retirement Committee, in its discretion, shall determine that such
person is incompetent by reason of mental or physical disability, the
Retirement Committee may direct the Trustee to distribute such benefits in
one or more of the following ways:
(a) directly to such minor or incompetent person;
(b) to the legal representative or spouse of such person; or
(c) to any other person for the use or benefit of such minor or
incompetent person.
In no event shall either the Retirement Committee or Trustee be
required to see to the application of any such distributions, and
distributions made pursuant to this Section shall operate as a complete
discharge of the Trustee, the Retirement Committee and the Trust Fund.
26.3 COMMENCEMENT OF DISTRIBUTIONS. A Participant who had not
attained age seventy and one-half (70 1/2) prior to January 1, 1988, shall
commence (or recommence if benefits were suspended), to receive benefits
not later than April 1 of the calendar year following the calendar year in
which he or she attains age seventy and one-half (70 1/2). A Participant
who had attained age seventy and one-half (70 1/2) prior to January 1,
1988, shall commence (or recommence) to receive benefits not later than
April 1 of the calendar year following the calendar year in which he or she
terminates employment, unless such Participant is a Five Percent Owner, in
which case benefits shall commence (or recommence) in accordance with the
requirements of the Plan as in effect on December 31, 1988. For purposes
of this Section, "Five Percent Owner" means a Participant who is a Five
Percent Owner at anytime during or after the Plan Year ending within the
calendar year in which such Participant attains age sixty-six and one-half
(66 1/2).
<PAGE>
Notwithstanding any provision of this Plan to the contrary,
distributions shall be made in accordance with the regulations under
Section 401(a)(9) of the Code, including the minimum distribution
incidental death benefit requirements of Section 1.401(a)(9)-2, and shall
be distributed over the life of such Participant (or over the lives of such
Participant and his or her designated Beneficiary) or over a period not
extending beyond the life expectancy of such Participant (or the life
expectancy of such Participant and his or her designated Beneficiary). The
provisions of Section 401(a)(9) of the Code and the regulations thereunder
shall override any distribution options inconsistent therewith.
Except as provided in Section 12.3, payment of benefits pursuant to
this Section shall be in the form of a qualified joint survivor annuity
described in Section 10.5 if the Participant is legally married on the date
payment is to commence, otherwise in the form of an annuity for the life of
the Participant.
26.4 SEPARATE PLANS. The adoption of the Plan by an Employer that is
not a subsidiary of Hannaford Bros. Co. shall constitute the adoption of a
separate and distinct plan from that of all other Employers. All
contributions made by each Employer, any forfeitures under each Employer's
plan, and all assets held in the Trust for the benefit of the participating
Employees of such Employer shall be treated and administered separately for
the exclusive benefit of the participating Employees of such Employer.
26.5 SERVICE IN VARIOUS FIDUCIARY CAPACITIES. Any person or group of
persons may serve in more than one fiduciary capacity with respect to the
Plan and Trust.
26.6 EXCLUSIVE BENEFIT. Except as provided in Sections 18.2, 22.2
and 23.6, no part of the corpus or income of the Trust Fund shall be used
for, or diverted to, purposes other than the exclusive benefit of the
Employees and their Beneficiaries.
26.7 EMPLOYMENT. Participation in the Plan shall not give any
Participant the right to be retained in the employ of the Employer, or any
other right not specified herein.
26.8 PREDECESSOR EMPLOYER PLAN. In the event an Employer maintained
a plan of a predecessor employer prior to adopting the Plan, service with
such predecessor employer shall be treated as service with such Employer.
26.9 Governing Law. This Plan shall be governed and construed by the
laws of the United States of America and, to the extent that such laws do
not preempt state law, by the laws of the State of Maine.
<PAGE>
26.10 Article and Section Headings and Table of Contents. The
Article and Section headings and Table of Contents are inserted for
convenience of reference and shall not be considered in the construction of
the Plan.
26.11 Actuarial Equivalency Assumptions. The following assumptions
shall be used to determine Actuarial Equivalency of benefits payable under
the Plan:
(a) Interest: Six and one-half percent (6 1/2%)
(b) Mortality: 1971 Group Annuity Mortality Table using male
rates for all Participants regardless of sex and male rates set back
six (6) years for all Contingent Annuitants regardless of sex.
In the event the above assumptions are amended, the Actuarial Equivalent of
a Participant's Accrued Benefit on or after the date of such amendment
shall be the greater of (i) the Actuarial Equivalent of such benefit under
the Plan, as amended, or (ii) the Actuarial Equivalent of the Participant's
Accrued Benefit, as of the date of such amendment, under the Plan prior to
the amendment.
26.12 PROHIBITION ON REDUCTION OF ACCRUED BENEFIT. Notwithstanding
any provision of the Plan to the contrary, no increase in Covered
Compensation shall, except to the extent permitted under Section
411(b)(1)(G) of the Code and not otherwise prohibited by the Code or ERISA,
decrease a Participant's Accrued Benefit.
26.13 DELEGATION OF AUTHORITY BY SUBSIDIARIES. Each subsidiary of
Hannaford Bros. Co. that adopts the Plan hereby irrevocably grants to
Hannaford Bros. Co., the Board of Directors, the Retirement Committee and
the Finance Committee exclusive authority to exercise all of the powers
conferred on them by the terms of the Plan, including the power vested in
the Board of Directors to amend or terminate the Plan. Each subsidiary
shall automatically become a party to the Trust without further action on
its part.
26.14 COST OF LIVING ADJUSTMENT. Effective January 1, 1990, the
monthly pension benefit of each current retiree under the Plan shall be
increased by four percent (4%), compounded annually, by the number of years
between 1989 and the later of the year of his or her retirement or 1975.
26.15 EARLY RETIREMENT INCENTIVE PROGRAM. A Participant, other than
a Driver Participant or Warehouse Participant, who meets the requirements
of subsection (a) shall receive the benefit enhancements described in
subsection (b). A Driver Participant or Warehouse Participant who meets
the requirements of subsection (c) shall receive the benefit enhancements
described in subsection (d).
<PAGE>
(a) To receive the benefit enhancements described in
subsection (b) a Participant must -
(i) have attained age fifty-five (55) and completed ten
(10) or more Years of Benefit Service on or before September 30,
1992; and
(ii) have elected by September 10, 1992, to retire on or
after July 1, 1992, and on or before September 30, 1992.
(b) A Participant who meets the requirements of
subsection (a) -
(i) shall receive an additional five (5) years of age, an
additional five (5) Years of Benefit Service, or a combination
of additional years of age and Years of Benefit Service not
exceeding five (5), whichever will produce the greatest Accrued
Benefit under Section 4.1;
(ii) shall have severance pay included in the definition
of "Compensation" for purposes of calculating his or her Accrued
Benefit under Section 4.1; and
(iii) may elect to receive an Actuarially Equivalent lump
sum payment of his or her entire Accrued Benefit upon
retirement.
(c) To receive the benefit enhancements described in sub-
section (d), a Driver Participant or Warehouse Participant must -
(i) have attained age fifty-five (55) and completed ten
(10) or more Years of Benefit Service on or before October 31,
1992; and
(ii) have elected by October 10, 1992, to retire on or
after July 1, 1992, and on or before October 31, 1992.
(d) A Driver Participant or Warehouse Participant who meets the
requirements of subsection (a) -
(i) shall receive an additional five (5) years of age, an
additional five (5) Years of Benefit Service or a combination of
additional years of age and Years of Benefit Service, whichever
will produce the greatest Accrued Benefit under Section 4.2 or
Section 4.3; provided, however, that additional Years of Benefit
Service will be credited only if a Participant is credited with
<PAGE>
fewer than thirty (30) Years of Benefit Service and only to the
extent such crediting of additional years would not cause a
Participant to exceed a total of thirty (30) Years of Benefit
Service; and
(ii) may elect to receive an Actuarially Equivalent lump
sum payment of his or her entire Accrued Benefit upon
retirement.
26.16 DIRECTED PAYMENTS. Effective January 1, 1994, a former
Participant, surviving spouse or Beneficiary who is entitled to receive
monthly benefit payments from the Plan and who is a participant in the
Hannaford Bros. Co. Retiree Medical Plan ("Retiree Medical Plan") may
direct the Trustee to deduct such portion of each monthly benefit payment
as is necessary to satisfy his or her required monthly contribution under
the Retiree Medical Plan and to remit such amount to the Hannaford Bros.
Co. Tax Exempt Employee Benefits Trust ("Tax Exempt Trust"), the amount of
each monthly benefit payment from the Plan is at least equal to the amount
of his or her required monthly contribution under the Retiree Medical Plan.
Such direction shall be made on such form and in such manner as the
Retirement Committee may prescribe and shall be effective as of the first
monthly benefit payment following receipt by the Retirement Committee,
provided it is received at least fifteen (15) days in advance of such
payment.
Notwithstanding the foregoing to the contrary, any individual who is a
former highly compensated employee (within the meaning of Section 414(q) of
the Code) or who is a "party in interest" (as defined in Section 3(14) of
ERISA) shall not be permitted to direct payments pursuant to this Section.
A direction pursuant to this Section may be revoked, in writing, by
the former Participant, surviving spouse or Beneficiary, as the case may
be, at any time, and shall be effective as soon as practicable following
receipt by the Retirement Committee.
The Retirement Committee may terminate the availability of this direct
payment provision upon thirty (30) days' prior written notice to the
Trustee and each affected former Participant, surviving spouse and
Beneficiary.
The Retirement Committee shall maintain records sufficient to
demonstrate that no payments have been made to the Tax Exempt Trust
pursuant to this Section before the monthly benefit payment would have been
otherwise made to the former Participant, surviving spouse or Beneficiary,
as the case may be, and that no expense has been incurred by the Plan as a
result of this Section.
Exhibit 10.6
FOURTH AMENDMENT
TO THE
HANNAFORD BROS. CO.
EMPLOYEE STOCK PURCHASE PLAN
This Fourth Amendment to the Hannaford Bros. Co. Employee Stock
Purchase Plan (the "Plan"), as amended and restated effective October 19,
1994, and thereafter amended effective February 7, 1995, August 20, 1995 and
October 2, 1996, is made with reference to the following premises:
WHEREAS, Hannaford Bros. Co. (the "Corporation") established and
maintains the Plan to offer employees an opportunity to invest in its common
stock; and
WHEREAS, Section 13 of the Plan authorizes the Board of Directors of
the Corporation, subject to the approval of stockholders, to amend the Plan
from time to time to increase the maximum aggregate number of shares which
may be issued under options granted; and
WHEREAS, the Board of Directors desires to so amend the Plan.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. The terms used in this Amendment shall have the meanings set forth
in the Plan, unless the context indicates otherwise.
2. Section 4 is hereby amended to read as follows:
"4. STOCK SUBJECT TO THE PLAN. Subject to the provisions of
Section 12, the maximum aggregate number of Shares which may be
issued under Options granted under the Plan shall be equal to
the sum of the following:
(a) the sixty thousand (60,000) Shares authorized when the Plan
was first approved by shareholders, as such number was
thereafter adjusted in accordance with Section 12; and
<PAGE>
(b) the four hundred thousand (400,000) Shares authorized when
the Plan was amended effective February 2, 1989, as such
number was thereafter adjusted in accordance with Section
12; and
(c) seven hundred fifty thousand (750,000) shares.
In the event that any Option granted under the Plan expires
or terminates for any reason, without having been exercised in
full, the Shares subject to, but not issued under, such Option
shall become available for other Options, unless the Plan shall
have been terminated."
3. This Amendment shall be effective February 11, 1997, if
subsequently approved by stockholders in accordance with Section 13
of the Plan.
Exhibit 10.8
SECOND AMENDMENT
TO THE
HANNAFORD BROS. CO.
1993 LONG TERM INCENTIVE PLAN
The Hannaford Bros. Co. 1993 Long Term Incentive Plan (the "Plan") was
adopted by the Board of Directors, subject to shareholder approval, on
February 9, 1993, and approved by shareholders on May 19, 1993. The Plan
was thereafter amended, effective January 2, 1994, and is hereby further
amended in the following respects.
1. The terms used in this Amendment shall have the meanings set forth
in the Plan unless the context indicates otherwise.
2. Subsection (e) of Section 2 is hereby amended to read:
"(e) Compensation' means the aggregate base salary and annual
incentive compensation earned by a Participant during an Award Period
(or during the portion of an Award Period for which he or she is a
Participant) for services rendered to the Corporation or one of its
Subsidiaries, without regard to any deferral of such amounts."
3. Section 3 is hereby amended to read:
"PARTICIPATION. The Compensation Committee shall: (a) designate
which, if any, employees of the Corporation or a Subsidiary shall be
Participants for an Award Period; (b) determine the duration of such
Award Period; and (c) award a Basic Award for each such Participant.
The Basic Award of a Participant who is promoted during an Award Period
to a position with respect to which a higher Basic Award is in effect
shall adjust automatically to reflect the remainder of the Award Period
the higher Basic Award. The Compensation Committee may designate that
a newly hired or newly promoted employee of the Corporation or a
Subsidiary shall be a Participant for an Award Period that commenced
prior to the date of such designation."
<PAGE>
4. The first paragraph of Section 6 is hereby amended to read:
"PAYMENT OF ACTUAL AWARDS. The Actual Award earned by a
Participant shall be paid after the close of the final fiscal year of
the relevant Award Period. In the sole discretion of the Compensation
Committee, an Actual Award may be paid in cash, common stock of the
Corporation at fair market value at the time of payment, or any
combination of cash and common stock. Payment in the form of common
stock may be subject to restrictions on transfer and vesting and to
such other terms, conditions and restrictions as the Compensation
Committee may determine in a separate written instrument."
5. This Amendment shall be effective December 2, 1996, and Part 2 shall
be effective only with respect to Award Periods commencing after such date.
Exhibit 10.21
FIRST AMENDMENT
TO THE
HANNAFORD BROS. CO.
STOCK OWNERSHIP PLAN FOR OUTSIDE DIRECTORS
The Hannaford Bros. Co. Stock Ownership Plan for Outside Directors (the
"Plan") was adopted by the Board of Directors, subject to shareholder
approval, on March 3, 1995, and approved by shareholders on May 24, 1995.
The Plan is hereby amended in the following respects.
1. The terms used in this Amendment shall have the meanings set forth
in the Plan unless the context indicates otherwise.
2. The penultimate paragraph of Section 5(b) is amended to read as
follows:
"If a Director has designated Common Stock as the deemed investment
for the Fees deferred, at the end of each calendar month for which such
Fees would otherwise be payable, the Company shall credit the account
with the number of Shares that could have been purchased with the
amounts deferred, at the Fair Market Value of a Share on the day (or
days) the Fees would have been paid in the absence of a deferral
election. Further, at the end of each calendar month during which a
dividend is paid, the Company shall credit the account with the number
of Shares that could have been purchased with the dividend, at the Fair
Market Value of a Share on the dividend payment date, based on the
number of Shares credited to such account on the dividend record date.
Thereafter the Company shall appropriately adjust the number of Shares
to reflect any stock split or stock dividend. As of the first day of
each calendar month, the Company shall debit an account deemed invested
in Common Stock as provided in subsection (ii)(A) above."
<PAGE>
3. The penultimate paragraph of Section 5(c) is amended to read as
follows:
"The Company shall pay the amount credited to the Deferral Account
of a Director whose Fees are deemed invested in Common Stock by
crediting his or her account under the Company's dividend reinvestment
plan with the number of Shares credited to the Deferral Account. If a
Director does not participate in the dividend reinvestment plan, the
Company shall issue a stock certificate to the Director evidencing the
Shares. Such certificate may bear a legend specifying any applicable
legal restrictions on the transferability of the Shares."
4. The last paragraph of Section 5(d) is amended to read as follows:
"The Company shall pay the amount credited to the Deferral Account
of a Director whose Fees are deemed invested in Common Stock by issuing
his or her designated beneficiary as soon as practicable following the
date of death a stock certificate registered in the beneficiary's name
and representing the number of Shares credited to the account."
5. Section 6(f) is amended to read as follows:
"(f) INVESTMENT OF ACCOUNT. Solely for purposes of valuing a
Director's Performance Share Deferral Account, such account shall be
treated as invested in Common Stock, with any dividends declared
thereon deemed reinvested in Common Stock, until distribution of such
account is made or commences. If distribution of a Director's
Performance Share Deferral Account is not made in a lump sum, solely
for purposes of valuing such account after distribution commences, such
account shall be credited with interest at the rate paid on five-year
U.S. Treasury notes on the first day of the calendar year in which the
interest is to be credited or at such other rate as is prescribed by
the Committee."
6. This Amendment shall be effective January 1, 1997.
Exhibit 10.25
December 11, 1996
Ms. Renee Love
Omega Group Inc.
937 Haverford Road
Bryn Mawr, PA 19010
RE: CONSULTING AGREEMENT
Dear Renee:
This letter will serve to confirm the agreement that we have reached regarding
the consulting services that Omega Group Inc. ("Omega") will provide to
Hannaford Bros. Co. ("Hannaford").
1. ASSIGNMENT. Omega will undertake and complete the consulting assignment
relating to development of a marketing strategy for Hannaford in the
southeastern U.S. market described in the "Market Exploration Work Design"
document prepared by Omega and dated November 13, 1996, using the methods
outlined in that Work Design Document.
2. SCHEDULE. Omega will perform its services in accordance with the project
schedule outlined in the Work Design Document, with an estimated completion
date of April 1, 1997.
3. FEES AND COSTS. The fee for Omega's services will be $59,800 (Fifty-nine
Thousand Eight Hundred Dollars), which will be billed by Omega, and paid by
Hannaford, in accordance with the payment schedule set forth in the Work
Design Document. Omega's reasonable out-of-pocket costs, as detailed in the
Work Design Document and currently estimated to approximate $24,300 (Twenty-
four Thousand Three Hundred Dollars), will be billed directly to Hannaford by
various third-party suppliers.
I hope and trust that this covers the principal points of our arrangement. If
you should have any questions, please do not hesitate to contact me.
<PAGE>
Ms. Renee Love
December 11, 1996
Page 2
We look forward to working with you and your organization.
Sincerely,
s/Paul A. Fritzson
Paul A. Fritzson
Senior Vice President
Marketing, Merchandising & Distribution
Seen and agreed to this 30th day of December, 1996.
OMEGA GROUP INC.
s/Renee Love
Renee Love
Chairman & Chief Executive Officer
Exhibit 21
Hannaford Bros. Co. Parents and Subsidiaries
Percentage
of Voting
State Securities
of Owned by the
Registrant Incorporation Registrant
Hannaford Bros. Co. Maine
Subsidiaries (1)
Athenian Real Estate Development, Inc. Virginia 100.00%
Boney Wilson & Sons, Inc. North Carolina 100.00%
Hannaford Licensing Corp. Maine 100.00%
Hannaford Procurement Corp. Maine 100.00%
Hannaford Trucking Company Maine 100.00%
HHR, Inc. Massachusetts 100.00%
Martin's Foods of South Burlington, Inc. Vermont 100.00%
Plain Street Properties, Inc. Maine 100.00%
Progressive Distributors, Inc. Maine 100.00%
Shop 'n Save-Mass., Inc. Massachusetts 100.00%
(1) Each of the subsidiaries is included in the consolidated financial
statements of the Registrant.
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Shareholders of
Hannaford Bros. Co.:
We consent to the incorporation by reference in the Registration Statements
of Hannaford Bros. Co. and subsidiaries on Form S-8 (File Nos.
2-77902, 2-98387, 33-1281, 33-22666, 33-31624, 33-45273, 33-60119, 33-60655
and 33-60691) of our report dated January 15, 1997, on our audits of the
consolidated financial statements and financial statement schedules of
Hannaford Bros. Co. and subsidiaries as of December 28, 1996 and December
30, 1995, and for each of the three years in the period ended December 28,
1996, which report is included in this annual report on Form 10-K.
s/Coopers & Lybrand
Portland, Maine
March 12, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> DEC-28-1996
<CASH> 42,505
<SECURITIES> 0
<RECEIVABLES> 17,597
<ALLOWANCES> 213
<INVENTORY> 191,658
<CURRENT-ASSETS> 261,970
<PP&E> 1,051,511
<DEPRECIATION> 328,335
<TOTAL-ASSETS> 1,183,727
<CURRENT-LIABILITIES> 240,174
<BONDS> 302,723
0
0
<COMMON> 31,754
<OTHER-SE> 537,402
<TOTAL-LIABILITY-AND-EQUITY> 1,183,727
<SALES> 2,957,559
<TOTAL-REVENUES> 2,957,559
<CGS> 2,242,784
<TOTAL-COSTS> 2,242,784
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<INTEREST-EXPENSE> 22,204
<INCOME-PRETAX> 124,538
<INCOME-TAX> 49,333
<INCOME-CONTINUING> 75,205
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 75,205
<EPS-PRIMARY> 1.78
<EPS-DILUTED> 1.78
</TABLE>
