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 1, 2000
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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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 April 26, 2000, there were 43,171,805 outstanding shares of Common
Stock, $.75 par value, the only authorized class of common stock of the
Registrant.
<PAGE>
FORM 10-Q HANNAFORD BROS. CO. 1-7603 APRIL 1, 2000
INDEX
PART I - FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements
Consolidated Balance Sheets, April 1, 2000 and
January 1, 2000 3-4
Consolidated Statements of Earnings, Three Months
Ended April 1, 2000 and April 3, 1999 5
Consolidated Statements of Cash Flows, Three Months
Ended April 1, 2000 and April 3, 1999 6-7
Notes and Schedules to Consolidated Financial
Statements 8-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-18
PART II - OTHER INFORMATION
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
Signatures 19
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In thousands except share amounts)
(UNAUDITED)
April 1, January 1,
2000 2000
------------ --------
Current assets:
Cash and cash equivalents $ 83,544 $ 53,641
Accounts receivable, net 26,610 26,633
Inventories 207,044 230,416
Prepaid expenses 5,967 5,817
Deferred income taxes 9,284 10,325
---------- ----------
Total current assets 332,449 326,832
Property, plant and equipment, net 837,775 841,335
Leased property under capital leases, net 50,480 51,536
Other assets:
Goodwill, net 58,175 58,154
Deferred charges, net 25,644 24,055
Computer software costs, net 20,288 26,149
Other assets 21,329 1,929
---------- ----------
Total other assets 125,436 110,287
---------- ----------
$1,346,140 $1,329,990
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 1, January 1,
2000 2000
------------ --------
Current liabilities:
Current maturities of long-term debt $ 20,583 $ 20,391
Obligations under capital leases 2,497 2,462
Accounts payable 191,695 187,344
Accrued payroll 24,201 30,768
Other accrued expenses 19,179 31,033
Income taxes 10,460 1,256
---------- ----------
Total current liabilities 268,615 273,254
Deferred income tax liabilities 28,499 32,676
Other liabilities 40,435 40,282
Long-term debt 160,615 185,126
Obligations under capital leases 70,831 71,464
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;
42,918 and 42,338 shares issued 32,189 31,754
Additional paid-in capital 133,559 103,085
Preferred stock purchase rights 429 423
Retained earnings 610,968 595,478
---------- ----------
777,145 730,740
Less common stock in treasury
0 and 68 shares - 3,552
---------- ----------
Total shareholders' equity 777,145 727,188
---------- ----------
$1,346,140 $1,329,990
See accompanying notes to consolidated financial statements.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
(Includes merger related costs)
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands except per share data)
(UNAUDITED)
THREE MONTHS ENDED
April 1, April 3,
2000 1999
------------ --------
Sales and other revenues $846,847 $839,124
Cost of sales 621,597 621,399
-------- --------
Gross margin 225,250 217,725
Selling, general and administrative expenses 182,819 179,249
Merger related costs 584 -
-------- --------
Operating profit 41,847 38,476
Interest expense, net 5,247 6,265
-------- --------
Earnings before income taxes 36,600 32,211
Income taxes 14,047 12,221
-------- --------
Net earnings $ 22,553 $ 19,990
======== ========
Earnings per share:
Basic $ .53 $ .47
======== ========
Diluted $ .52 $ .47
======== ========
Cash dividends per share $ .165 $ .165
======== ========
Weighted average number of common shares
outstanding Basic 42,550 42,238
======== ========
Diluted 43,469 42,858
======== ========
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 1, April 3,
2000 1999
----------- -------
Cash flows from operating activities:
Net income $ 22,553 $ 19,990
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 25,558 25,531
Decrease in inventories 21,696 8,767
(Increase) decrease in receivables
and prepayments (454) 822
Decrease in accounts payable
and accrued expenses (12,820) (2,286)
Increase in income taxes payable 9,204 8,289
Decrease in deferred taxes (2,640) (1,287)
Other operating activities 1,199 (1,500)
-------- -------
Net cash provided by operating
activities 64,296 58,326
-------- --------
Cash flows from investing activities:
Acquisition of property, plant and
equipment (38,413) (19,914)
Sale of property, plant and
equipment, net 7,603 4,078
Increase in deferred charges (675) (460)
Increase in computer software costs (1,450) (2,055)
-------- --------
Net cash used in investing activities (32,935) (18,351)
-------- --------
Cash flows from financing activities:
Principal payments under capital
lease obligations (598) (473)
Payments of long-term debt (24,319) (36,309)
Issuance of common stock 31,069 4,894
Purchase of treasury stock (553) (8,729)
Dividends paid (7,057) (6,975)
-------- --------
Net cash used in financing activities (1,458) (47,592)
-------- --------
Net Increase (decrease) in cash and
cash equivalents 29,903 (7,617)
Cash and cash equivalents at beginning of period 53,641 59,722
-------- --------
Cash and cash equivalents at end of period $ 83,544 $ 52,105
======== ========
See accompanying notes to consolidated financial statements.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Supplemental disclosures of cash flow information:
(In thousands)
(UNAUDITED)
THREE MONTHS ENDED
April 1, April 3,
Cash paid during the first quarter for: 2000 1999
------------ -------
Interest (net of amount capitalized,
$574 in 2000 and $364 in 1999) $4,837 $5,587
====== ======
Income taxes $2,107 $2,999
====== ======
Supplemental schedule of noncash investing activities:
The Company sold a majority interest in its internet-based grocery delivery
service through a noncash investment and recapitalization on the part of a
private equity firm (Note 2). In conjunction with this noncash activity,
assets, liabilities and shareholders' equity were effected as follows:
Inventory $ (598)
Other current assets (500)
Property, plant and equipment, net (6,677)
Computer software costs, net (5,714)
Other assets 15,841
Current liabilities 1,097
Deferred income tax liabilities 496
Paid-in capital (3,945)
------
$ 0
======
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 equivalents.
<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 period 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. SALE OF HOMERUNS.COM, INC.
In February 2000, the Company sold a majority interest in HomeRuns.com, Inc.
(HomeRuns), its internet-based grocery delivery service through a
$100,000,000 investment and recapitalization on the part of The Cypress
Group L.L.C., a New York based private equity firm. The Company retained a
minority interest and, subsequent to the sale date, accounted for the
results of this investment using the cost method. The excess of the fair
value of the Company's investment in the recapitalized entity over its
carrying value has been recorded as an increase to paid-in capital due to
the start-up nature of the HomeRuns business. As a result of this
transaction, the Company has an investment position in HomeRuns of $16
million, which is recorded in other assets on the April 1, 2000 balance
sheet.
3. 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.
4. 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 $.5 million in the first quarter of 2000 and $.4 million in the
first quarter of 1999.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
5. PROPERTY, PLANT AND EQUIPMENT
-----------------------------
Property, plant and equipment consists of the following:
(In thousands)
(Unaudited)
April 1, January 1,
2000 2000
---------- --------
Land and improvements $ 166,582 $ 164,068
Buildings 325,546 325,070
Furniture, fixtures & equipment 499,079 505,769
Leasehold interests & improvements 322,917 328,250
Construction in progress 25,686 12,726
---------- ----------
1,339,810 1,335,883
Less accumulated depreciation and
amortization 502,035 494,548
---------- ----------
$ 837,775 $ 841,335
========== ==========
6. LEASED PROPERTY
---------------
Leased property under capital leases consists of the following:
(In thousands)
(Unaudited)
April 1, January 1,
2000 2000
---------- --------
Real property $82,810 $82,810
Less accumulated amortization 32,330 31,274
------- -------
$50,480 $51,536
======= =======
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
SALES
Sales and other revenues rose 0.9% in the first quarter of 2000, to $847
million, an increase of $8 million over the first quarter of 1999. Sales from
supermarkets that were open in both periods presented ("identical store sales")
decreased $20 million or 2.6%. Additional supermarket sales of $21 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 $7 million. Comparable
store sales, which included results from expanded and relocated supermarkets,
decreased 2.3% in the first quarter of 2000.
Sales and other revenues from the Easter holiday will occur in the second
quarter of this year, but were in the first quarter last year. Adjusting for
estimated Easter sales, identical store sales decreased 1.4% and comparable
store sales decreased 1.1%. Management partially attributes these results to
high heating oil and gasoline prices which had a significant effect on the
disposable incomes available to many of our northeastern customers, causing
them to "trade-down" at the supermarket. In addition, adverse weather in the
Southeast and the effects of a number of new Wal-Mart Supercenters that have
opened since last year have negatively affected sales.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
GROSS MARGIN
Gross margins increased in the first quarter of 2000 to 26.6% of sales and
other revenues in comparison to 25.9% in the first quarter of 1999. This
increase is the result of improved selling margins in most
of the Company's marketing territories.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased to 21.6% of sales and
other revenues in the first quarter of 2000 as compared to 21.4% of sales and
other revenues in the first quarter of 1999. As a percentage of sales and
other revenues, this increase is the result of higher payroll and payroll
related expenses coupled with increased utility costs and partially offset by
a reduction in marketing expenses. Payroll and payroll related expenses
exceeded 50% of selling, general and administrative expenses in both years.
The Company incurred higher marketing expenses in the first quarter of 1999
as it undertook programs to build sales in several of its marketing areas.
MERGER RELATED COSTS
Charges for merger related costs of $1 million were incurred in the first
quarter of 2000 as a result of the pending merger with Delhaize America, Inc.
The majority of these costs represent fees for professional services provided
by outside parties. Additional merger related costs will be recorded in
future quarters as expenditures are incurred.
Management has stated that work leading up to the merger continues on
many fronts. The shareholders of both companies have approved the
merger. The merger is being reviewed by the Federal Trade Commission
(FTC) because of overlapping trade areas in the Southeast. The
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
management of both Hannaford Bros. Co. and Delhaize America, Inc. have
jointly determined a number of possible divestiture scenarios that
they feel would be acceptable to the FTC and are pursuing interested
buyers for stores under these scenarios. A closing date for the
merger has not been determined but the joint management team expects
it will occur during the second quarter of 2000.
INTEREST EXPENSE, NET
Net interest expense expressed as a percentage of sales and other revenues
was 0.6% in the first quarter of 2000 versus 0.7% in the first quarter of
1999. This decrease is primarily the result of a decrease in average debt
levels.
INCOME TAXES
The effective income tax rate increased in the first quarter of 2000 to 38.4%
from 37.9% in the first quarter of 1999. This higher effective tax rate is
the result of non-deductible merger related costs incurred by the Company.
Excluding merger costs, the Company's effective tax rate for the first
quarter of 2000 would have approximated 37.9%.
NET EARNINGS AND EARNINGS PER COMMON SHARE
Net earnings increased 12.8% in the first quarter of 2000 to $23 million or
2.7% of sales and other revenues, an increase of approximately $3 million
from 1999 first quarter earnings of $20 million or 2.4% of sales and other
revenues. This increase is primarily the result of increased gross margin,
partially offset by an increase in selling, general and administrative
expenses. Net earnings were negatively impacted by the merger related costs
that were incurred in the first quarter of 2000. Excluding merger related
costs, net earnings for the first quarter of 2000 would have increased 15.4%
from that reported for the first quarter of 1999.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Basic earnings per common share in the first quarter of 2000 were $.53 as
compared to $.47 in the first quarter of 1999, an increase of 12.8%. Diluted
earnings per common share (Note 3) were $.52 in the first quarter of 2000 as
compared to $.47 in the first quarter of 1999, an increase of 10.6%. Before
merger related costs, basic earnings per common share were $.54 in the first
quarter of 2000 as compared to $.47 in the first quarter of 1999, an increase
of 14.9%. Before merger related costs, diluted earnings per common share
increased 12.8% in the first quarter of 2000.
In February 2000, the Company sold a majority interest in HomeRuns.com, Inc.,
its internet-based grocery business (Note 2). This business generated a net
loss of approximately $.04 per share in the first quarter of 2000 and $.05
per share in the first quarter of 1999. As a result of the sale, the Company
will account for the future operating activities of this business under the
cost method.
CAPITAL RESOURCES AND LIQUIDITY
OVERVIEW
Measures of liquidity for the periods presented are as follows:
(Dollars in millions)
April 1, January 1,
2000 2000
-------- -------
Cash and cash equivalents $84 $54
Working capital (FIFO inventory) $85 $75
Unused lines of revolving credit $109 $72
Unused lines of short-term credit $ 1 $ 1
Current ratio (FIFO inventory) 1.32 1.27
The Company continued to maintain a strong capital position at April 1, 2000.
Cash and cash equivalents increased $30 million to $84 million at the end of
the first quarter of 2000. This increase was primarily the result of cash
provided by operating activities partially offset by cash used in investing
activities. Lines of
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
credit represent a continuing source of capital and are available for
purposes of short-term financing. At April 1, 2000, the Company had no
outstanding borrowings on these revolving lines of credit. Exclusive of the
anticipated merger with Delhaize America, Inc., the Company is in a solid
financial position to carry out its current internal expansion and external
growth plans in 2000.
CASH FLOWS FROM OPERATING ACTIVITIES
Cash provided by operating activities was $64 million in the first quarter of
2000, an increase of $6 million over the $58 million provided in the first
quarter of 1999. This increase is primarily attributable to an increase in
cash flows provided by net working capital items coupled with increased net
earnings. With the exception of inventories and their impact upon accounts
payable, the fluctuations within these accounts are part of the Company's
normal business activities. Inventory levels decreased $22 million from
year-end 1999 levels. This reduction was expected and resulted from a
build-up in inventory levels at year-end 1999 as part of the Company's Year
2000 contingency planning. Since Year 2000 infrastructure problems did not
arise, the Company sold its excess inventory as part of its normal business
operations during the first quarter of 2000.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
CASH FLOWS FROM INVESTING ACTIVITIES
Cash used in investing activities increased $15 million in the first quarter
of 2000 to $33 million from $18 million in the first quarter of 1999. This
increase is primarily the result of the Company's increased capital
investment during the period.
Capital investments totaled $40 million in the first quarter of 2000 and were
composed of $38 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 2000 on a capital program that will increase net
retail selling area by 4.1% in 2000. 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 2001. The 2000 capital program is being
financed by internally generated funds, leases and long-term debt.
During the next three quarters of 2000, the Company expects to open 9
supermarkets (5 new stores and 2 expansions in the Northeast and 2 new stores
in the Southeast). This plan is subject to change and review as conditions
warrant and could be affected by Federal Trade Commission determinations
regarding the proposed merger with Delhaize America, Inc.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
CASH FLOWS FROM FINANCING ACTIVITIES
Cash used in financing activities was $1 million in the first quarter of 2000
as compared to $48 million in the first quarter of 1999. This increase in
cash flows of $47 million is principally the result of
increased cash flows on the issuance of common stock coupled with reduced
payments on long-term debt. During the first quarter of 2000, the Company
experienced a significant increase in employee stock plan activity as a
result of the proposed merger with Delhaize America, Inc. The Company issued
580,000 new shares of common stock and 75,000 shares of common stock held in
treasury and received proceeds of $31 million as a result of this activity.
During the first quarter of 2000, the Company made $24 million in payments on
its long-term debt as compared to $36 million in the first quarter of 1999.
This decrease is principally the result of the Company's repayment of $20
million on its revolving lines of credit in the first quarter of 2000
versus $32 million in repayments on revolving lines of credit in the
first quarter of 1999.
<PAGE>
HANNAFORD BROS. CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
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 Company's expected future operations or
earnings, the pending merger with Delhaize America, Inc., 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
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, 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 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>
(d) Not applicable
Item 5: Other Information
A limited review was made of the results of the three-month period ended
April 1, 2000, by PricewaterhouseCoopers LLP, whose report is included in Item
6. Such report is not within the meaning of Section 7 and 11 of the 1933 Act and
the independent accountant's liability under Section 11 does not extend to it.
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulation SK
15 Letter of PricewaterhouseCoopers LLP furnished pursuant
to Regulation SX.
23 Letter of PricewaterhouseCoopers LLP regarding
incorporation by reference to certain forms S-8 of
the Registrant.
27 Financial Data Schedule
(b) There were no reports on Form 8-K filed during the first
quarter.
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 5, 2000 s/Paul A. Fritzson
---------------------- -------------------
Paul A. Fritzson
Executive Vice President
(Chief Financial Officer)
Date May 5, 2000 s/Charles H. Crockett
---------------------- ----------------------
Charles H. Crockett
Assistant Secretary
Exhibit 15
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Hannaford Bros. Co.:
We have reviewed the accompanying consolidated balance sheet of Hannaford Bros.
Co. and Subsidiaries as of April 1, 2000, and the related consolidated
statements of earnings and cash flows for the three-month periods ended April 1,
2000 and April 3, 1999. 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 auditing standards generally accepted in the United States, 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.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated interim financial statements for them
to be in conformity with accounting principles generally accepted in the United
States.
We previously audited in accordance with auditing standards generally accepted
in the United States, the consolidated balance sheet as of January 1, 2000, and
the related consolidated statements of earnings, changes in stockholders' equity
and cash flows for the year then ended, and in our reported dated January 19,
2000 (except for Notes 2 and 3, as to which the date is February 12, 2000) we
expressed an unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of January 1, 2000, is fairly stated in all
material respects in relation to the consolidated balance sheet form which it
has been derived.
s/PricewaterhouseCoopers LLP
Portland, Maine
April 17, 2000
Exhibit 23
May 3, 2000
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 17, 2000 on our review of interim
financial information of Hannaford Bros. Co. and Subsidiaries as of April 1,
2000 and for the three month periods ended April 1, 2000 and April 3, 1999, 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).
s/PricewaterhouseCoopers LLP
Portland, Maine
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