FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 3, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-7603
HANNAFORD BROS. CO.
(Exact name of Registrant as specified in its charter)
MAINE 01-0085930
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
145 PLEASANT HILL ROAD, SCARBOROUGH, MAINE 04074 (Address of principal executive
offices; Zip Code)
Registrant's telephone number, including area code: (207) 883-2911
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X . No .
As of May 1, 1999, there were 42,195,840 outstanding shares of Common Stock,
$.75 par value, the only authorized class of common stock of the Registrant.
<PAGE>
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements:
Consolidated Balance Sheets, April 3, 1999 and
January 2, 1999 3-4
Consolidated Statements of Earnings, Three Months
Ended April 3, 1999 and April 4, 1998 5
Consolidated Statements of Cash Flows,
Three Months Ended April 3, 1999
and April 4, 1998 6-7
Notes and Schedules to Consolidated Financial Statements 8-10
Item 2. Management's Discussion and Analysis of
First Quarter 1999 Results 11-17
PART II
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 19
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In thousands)
(UNAUDITED)
April 3, January 2,
1999 1999
------------ ------------
Current assets:
Cash and cash equivalents $ 52,105 $ 59,722
Accounts receivable, net 21,885 22,869
Inventories 192,452 201,219
Prepaid expenses 6,071 6,116
Deferred income taxes 5,933 5,952
---------- ----------
Total current assets 278,446 295,878
Property, plant and equipment, net 819,651 823,368
Leased property under capital leases, net 53,860 54,911
Other assets:
Goodwill, net 62,472 63,517
Deferred charges, net 24,875 25,074
Computer software costs, net 20,141 19,318
Miscellaneous assets 2,187 2,472
---------- ----------
Total other assets 109,675 110,381
---------- ----------
$1,261,632 $1,284,538
See accompanying notes to consolidated financial statements.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(In thousands except per share amounts)
(UNAUDITED)
April 3, January 2,
1999 1999
------------ ------------
Current liabilities:
Current maturities of long-term debt $ 18,745 $ 19,296
Obligations under capital leases 2,239 2,108
Accounts payable 189,382 186,626
Accrued payroll 24,267 27,254
Other accrued expenses 22,159 23,873
Income taxes 8,730 442
---------- ----------
Total current liabilities 265,522 259,599
Deferred income tax liabilities 27,553 28,859
Other liabilities 38,394 38,734
Long-term debt 184,372 220,130
Obligations under capital leases 73,262 73,866
Shareholders' equity:
Class A Serial Preferred stock, no par,
authorized 2,000 shares - -
Class B Serial Preferred stock,
par value $.01 per share,
authorized 28,000 shares - -
Common stock, par value $.75 per share:
Authorized 110,000 shares;
42,338 and 42,338 shares issued 31,754 31,754
Additional paid-in capital 106,548 109,664
Preferred stock purchase rights 423 423
Retained earnings 538,359 525,344
---------- ----------
677,084 667,185
Less common stock in treasury
97 and 85 shares 4,555 3,835
---------- ----------
Total shareholders' equity 672,529 663,350
---------- ----------
$1,261,632 $1,284,538
See accompanying notes to consolidated financial statements.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands except per share data)
(UNAUDITED)
THREE MONTHS ENDED
April 3, April 4,
1999 1998
------------ ----------
Sales and other revenues $839,124 $788,296
Cost of sales 621,399 589,979
-------- --------
Gross margin 217,725 198,317
Selling, general and administrative expenses 179,249 162,995
-------- --------
Operating profit 38,476 35,322
Interest expense, net 6,265 6,534
-------- --------
Earnings before income taxes 32,211 28,788
Income taxes 12,221 10,973
-------- --------
Net earnings $ 19,990 $ 17,815
======== ========
Earnings per share:
Basic $ .47 $ .42
======== ========
Diluted $ .47 $ .42
======== ========
Cash dividends per share $ .165 $ .150
======== ========
Weighted average number of common shares
outstanding Basic 42,238 42,281
======== ========
Diluted 42,858 42,864
======== ========
See accompanying notes to consolidated financial statements.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(UNAUDITED)
THREE MONTHS ENDED
April 3, April 4,
1999 1998
----------- ----------
Cash flows from operating activities:
Net income $ 19,990 $ 17,815
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 25,531 23,030
Decrease in inventories 8,767 4,697
Decrease in receivables and
prepayments 822 1,456
Decrease in accounts payable
and accrued expenses (2,286) (16,573)
Increase in income taxes payable 8,289 6,559
Increase (decrease) in deferred taxes (1,287) 1,520
Other operating activities (1,500) (397)
-------- --------
Net cash provided by operating
activities 58,326 38,107
-------- --------
Cash flows from investing activities:
Acquisition of property, plant and
equipment (19,914) (37,474)
Sale of property, plant and
equipment, net 4,078 5,502
Increase in deferred charges (460) (1,178)
Increase in computer software costs (2,055) (1,946)
-------- --------
Net cash used in investing activities (18,351) (35,096)
-------- --------
Cash flows from financing activities:
Principal payments under capital
lease obligations (473) (437)
Payments of long-term debt (36,309) (8,271)
Issuance of common stock 4,894 5,248
Purchase of treasury stock (8,729) (7,561)
Dividends paid (6,975) (6,344)
-------- --------
Net cash used in
financing activities (47,592) (17,365)
-------- --------
Net decrease in cash and cash equivalents (7,617) (14,354)
Cash and cash equivalents at beginning of period 59,722 57,663
-------- --------
Cash and cash equivalents at end of period $ 52,105 $ 43,309
======== ========
See accompanying notes to consolidated financial statements.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Supplemental disclosures of cash flow information
(Dollars in thousands)
(UNAUDITED)
THREE MONTHS ENDED
April 3, April 4,
Cash paid during the first quarter for: 1999 1998
----------- ----------
Interest (net of amount capitalized,
$364 in 1999 and $802 in 1998) $5,587 $5,789
Income taxes $2,999 $2,894
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 (Unaudited)
1. CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the Company believes that
the disclosures are adequate to make the information presented not
misleading. In the opinion of management, the amounts shown reflect all
adjustments necessary to present fairly the financial position and results
of operations for the periods presented. All such adjustments are of a
normal recurring nature. The year-end consolidated balance sheet was derived
from audited financial statements, but does not include all disclosures
required by generally accepted accounting principles.
It is suggested that the financial statements be read in conjunction with
the financial statements and notes thereto included in the Company's latest
annual report.
The preparation of the Company's financial statements, in conformity with
generally accepted accounting principles, requires management to make
estimates and assumptions. These estimates and assumptions affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the end of the financial statements, and the
reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from these estimates.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
2. EARNINGS PER COMMON SHARE
Basic earnings per share of common stock have been determined by dividing
net earnings by the weighted average number of shares of common stock
outstanding during the periods presented. Diluted earnings per share reflect
the potential dilution that would occur if existing stock options were
exercised.
3. 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. Net income reflects the
application of the LIFO method based upon estimated annual inflation. LIFO
expense was $.4 million in both the first quarter of 1999 and the first
quarter of 1998.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
(In thousands)
(Unaudited)
April 3, January 2,
1999 1999
Land and improvements $ 144,300 $ 141,706
Buildings 303,866 300,708
Furniture, fixtures & equipment 510,147 506,512
Leasehold interests & improvements 322,394 324,106
Construction in progress 12,036 8,790
---------- ----------
1,292,743 1,281,822
Less accumulated depreciation and
amortization 473,092 458,454
---------- ----------
$ 819,651 $ 823,368
========== ==========
5. LEASED PROPERTY
Leased property under capital leases consists of the following:
(In thousands)
(Unaudited)
April 3, January 2,
1999 1999
Real property $82,500 $82,500
Less accumulated amortization 28,640 27,589
------- -------
$53,860 $54,911
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FIRST QUARTER 1999
RESULTS
RESULTS OF OPERATIONS
SALES
Sales and other revenues rose 6.4% in the first quarter of 1999, to $839
million, an increase of $51 million over the first quarter of 1998. Sales
from supermarkets that were open in both periods presented ("identical store
sales") increased $17 million or 2.3%. Additional supermarket sales of $33
million resulted from the net impact of new, expanded, relocated and closed
stores. Other sales and revenues which include wholesale, trucking, home
delivery, real estate and miscellaneous retail operations, increased $1
million. Comparable store sales, which included results from expanded and
relocated stores, increased 2.7% in the first quarter of 1999.
Sales and other revenues from the Easter holiday occurred in the first
quarter this year and the second quarter last year. Adjusting for Easter
sales, identical store sales increased 1.4% and comparable store sales were
up 1.7%.
GROSS MARGIN
Gross margins increased in the first quarter of 1999 to 25.9% of sales and
other revenues in comparison to 25.2% in the first quarter of 1998. This
increase is the result of improved selling margins in most of the Company's
marketing territories. The Company continues to focus on maintaining a
competitive pricing strategy.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FIRST QUARTER 1999 RESULTS
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased to 21.4% of sales and
other revenues in the first quarter of 1999 as compared to 20.7% in the
first quarter of 1998. Payroll and payroll related expenses, which exceeded
50% of selling, general and administrative expenses in both years, increased
as a percentage of sales in the current quarter. In addition, the Company
incurred increased marketing costs in the first quarter of 1999 as it
undertook programs to build sales in several of its marketing areas.
INTEREST EXPENSE, NET
Net interest expense expressed as a percentage of sales and other revenues
was 0.7% in the first quarter of 1999 versus 0.8% in the first quarter of
1998. This decrease is primarily the result of a decrease in average debt
levels partially offset by a decrease in capitalized interest from reduced
construction activity.
INCOME TAXES
The effective income tax rate decreased in the first quarter of 1999 to
37.9% from 38.1% in the first quarter of 1998. This lower rate is the result
of a reduction 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 fiscal 1999 to be in the 37.8% to 38.1% range.
NET EARNINGS AND EARNINGS PER COMMON SHARE
Net earnings increased 12.2% in the first quarter of 1999 to $20 million or
2.4% of sales and other revenues, an increase of approximately $2 million
from 1998 first quarter earnings of $18 million or 2.3% 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.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FIRST QUARTER 1999 RESULTS
Both basic and diluted earnings per common share were $0.47 in the first
quarter of 1999 as compared to $0.42 in the first quarter of 1998, an
increase of 11.9%.
YEAR 2000 ISSUES
Through its readiness plan which was initiated in 1996, the Company has been
addressing computer software and hardware modifications or replacements to
enable transactions to process properly in the Year 2000 (Y2K). Included in
this plan is an examination of critical non-IT systems, including embedded
chip technology at supermarket and distribution facilities. The Company
currently expects to complete all phases of its readiness plan as follows:
IT Systems
Mainframe Completed
Network June 1999
PC-Desktop August 1999
In-store August 1999
Facilities Systems June 1999
The readiness plan for IT and Facilities Systems is progressing on schedule.
The completion date for the remediation and testing of network systems was
changed from March to June of 1999. Although the majority of this testing
has been completed, the Company continues to receive updated versions of
software from certain vendors that must be implemented and tested to ensure
that they are Y2K compliant.
The total cost associated with anticipated Y2K modifications is not material
to the Company's results of operations, financial condition or cash flows.
The total estimated cost of the readiness plan, including the cost of
internal resources, remains at approximately $4.5 to $5 million, of which
approximately $4.0 million has been incurred through the end of the first
quarter of 1999.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FIRST QUARTER 1999 RESULTS
CAPITAL RESOURCES AND LIQUIDITY
OVERVIEW
Measures of liquidity for the periods presented are as follows:
(Dollars in millions)
April 3, January 2,
1999 1999
-------- ----------
Cash and cash equivalents $52 $60
Working capital (FIFO inventory) $33 $56
Unused lines of revolving credit $89 $58
Unused lines of short-term credit $ 1 $ 1
Current ratio (FIFO inventory) 1.12 1.22
The Company continued to maintain a strong capital position at April 3,
1999. Cash and cash equivalents decreased $8 million to $52 million at the
end of the first quarter of 1999. This decrease was primarily the result of
cash used in financing and investing activities partially offset by cash
provided by operating activities. Lines of credit represent a continuing
source of capital and are available for purposes of short-term financing. At
April 3, 1999, the Company had $3 million outstanding on its revolving lines
of credit. The Company is in a solid financial position to carry out its
current internal expansion and external growth plans in 1999.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FIRST QUARTER 1999 RESULTS
CASH FLOWS FROM OPERATING ACTIVITIES
Cash provided by operating activities was $58 million in the first quarter
of 1999, an increase of $20 million over the $38 million provided in the
first quarter of 1998. This increase is primarily attributable to an
increase in cash flows provided by net working capital items coupled with
increased net earnings and increased depreciation and amortization. The
fluctuations within working capital accounts are part of the Company's
normal business activities.
CASH FLOWS FROM INVESTING ACTIVITIES
Cash used in investing activities decreased $17 million in the first quarter
of 1999 to $18 million from $35 million in the first quarter of 1998. This
decrease is the result of the Company's reduced capital investment during
the period.
Capital investments totaled $22 million in the first quarter of 1999 and
were composed of $20 million in additions to property, plant and equipment
and $2 million in deferred charges and computer software costs. These first
quarter capital investments are primarily composed of costs incurred in
building and equipping new and expanded supermarkets and in improvements
necessary to maintain current facilities and systems. The Company expects to
spend in excess of $160 million in 1999 on a capital program that will
increase net retail selling area by 3.7% and will include four new stores
and four expansions, as well as additional investments in technology
initiatives. The 1999 capital program also includes eight major remodels,
and a number of minor ones, which will not add square footage, but are
important to the Company's presentation and its ability to build sales. This
program is subject to continuing change and review as conditions warrant.
Construction will also start on a number of stores to be opened in 2000. The
1999 capital program is being financed by internally generated funds, leases
and long-term debt.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FIRST QUARTER 1999 RESULTS
CASH FLOWS FROM FINANCING ACTIVITIES
Cash used in financing activities was $47 million in the first quarter of
1999 as compared to $17 million in the first quarter of 1998. This reduction
in cash flows of $30 million is principally the result of increased payments
on long-term debt. During the first quarter of 1999, the Company made $36
million in payments on its long-term debt as compared to $8 million in the
first quarter of 1998. This increase is the result of the Company's
repayment of $32 million on its revolving lines of credit.
The Company purchased 179,000 shares of common stock during the first
quarter of 1999 at a cost of $9 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. This amount was offset by proceeds of $5
million received during the first quarter of 1999 from the issuance of
168,000 shares of treasury stock. The Company paid $7 million in dividends
to common shareholders in the first quarter of 1999.
<PAGE>
FORWARD-LOOKING STATEMENTS
From time to time, information provided by the Company or statements made by its
associates may contain forward-looking statements, as defined in the Private
Securities Litigation Reform Act of 1995. Examples of such statements in this
report include those concerning the Year 2000 issue, the Company's expected
future tax rates, 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, both of which may affect
pricing strategy, continued or increased competitive pressures from existing
competitors and new entrants, including price cutting 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, interest rates or the Company's cost of borrowing, by increases
in labor rates due to low unemployment or other factors, by unanticipated costs
related to the opening and closing of stores or by the inability to control
various expense categories.
(2) Hannaford's future growth is dependent on its ability to expand its retail
square footage either de novo or through acquisitions. 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 projected future expansion.
(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.
<PAGE>
PART II
Item 5: Other Information
The Company is a party to a Standstill Agreement dated as of February 4,
1988 with Empire Company Limited and other related parties (the "Sobey
Parties"), who hold approximately 25.6% of the outstanding Hannaford stock. On
May 3, 1999, the Company received notice that Empire will not extend the
Standstill Agreement. As a result, the Agreement will expire December 31, 1999
unless earlier terminated by the Company or the Sobey Parties in accordance with
the Agreement.
In a amended Schedule 13D subsequently filed with the Company, Empire
stated that its purpose in delivering the notice is to enhance Empire's
flexibility in realizing the inherent value of its shares of Hannaford Common
Stock.
A limited review was made of the results of the three-month period ended
April 3, 1999, by PricewaterhouseCoopers LLP.
Item 6: Exhibits and Reports on Form 8-K
(a) There were no reports on Form 8-K filed during the first quarter.
(b) Exhibits required by Item 601 of Regulation S-K
15 Letter from PricewaterhouseCoopers LLP furnished pursuant to
Regulation S-X.
23 Letter from PricewaterhouseCoopers LLP furnished pursuant to Rule
436(c) under the Securities Act of 1933.
27 Financial Data Schedule
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HANNAFORD BROS. CO.
Date May 14, 1999 s/Blythe J. McGarvie
----------------------- --------------------------
Blythe J. McGarvie
Senior Vice President
(Chief Financial Officer)
Date May 14, 1999 s/Charles H. Crockett
------------------------ ---------------------------
Charles H. Crockett
Assistant Secretary
Exhibit 15
REPORT OF INDEPENDENT ACCOUNTANTS
April 21, 1999
To the Board of Directors and Shareholders of
Hannaford Bros. Co.:
We have reviewed the accompanying consolidated balance sheet of Hannaford Bros.
Co. and Subsidiaries as of April 3, 1999, and the related consolidated
statements of earnings and cash flows for the three month periods ended April 3,
1999 and April 4, 1998. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion. We previously audited and
expressed an unqualified opinion on the Company's consolidated financial
statements for the year ended January 2, 1999 (not presented herein). In our
opinion, the information set forth in the accompanying balance sheet as of
January 2, 1999, is fairly stated in all material respects, in relation to the
statement of financial position from which it has been derived.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
s/PricewaterhouseCoopers L.L.P.
Portland, Maine
Exhibit 23
May 5, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
RE: Hannaford Bros. Co.
Registrations on Form S-8
We are aware that our report dated April 21, 1999 on our review of interim
financial information of Hannaford Bros. Co. and Subsidiaries as of April 3,
1999 and for the three month periods ended April 3, 1999 and April 4, 1998, and
included in this Form 10-Q is incorporated by reference in the Company's
registration statements on Form S-8 (Numbers 2-77902, 2-98387, 33-1281,
33-22666, 33-31624, 33-41273, 33-60119, 33-60655, 33-60691, 333-41381 and
333-53109). Pursuant to rule 436(c) under the Securities Act of 1933, this
report should not be considered a part of the Registration Statements prepared
or certified by us within the meaning of Sections 7 and 11 of that Act.
s/PricewaterhouseCoopers L.L.P.
Portland, Maine
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<ARTICLE> 5
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<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-02-1999
<PERIOD-END> APR-3-1999
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<ALLOWANCES> 750
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0
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<TOTAL-REVENUES> 839,124
<CGS> 621,399
<TOTAL-COSTS> 621,399
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