SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the plan fiscal year ended July 31, 1997.
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period from __________ to __________.
Commission File No. 1-11555
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
HOMELAND STORES, INC.
EMPLOYEE STOCK BONUS PLAN
B. Name of the issuer of the securities held pursuant to the plan
and the address of its principal executive office:
HOMELAND HOLDING CORPORATION
2601 Northwest Expressway, Suite 1100E
Oklahoma City, OK 73112
1. Financial Statements. The financial statements and related
information filed as part of this Report are set forth after the signature
page hereof.
2. Exhibit. The following exhibit is filed as part of this Report:
Exhibit No. Description
----------- -----------
23.1 Consent of Coopers & Lybrand, L.L.P.
(included in Exhibit 23.1 to the
Registrant's Registration Statement on
Form S-8 relating to the Homeland
Stores, Inc. Employee Stock Bonus
Plan)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Homeland Stores, Inc. Employee Stock Bonus Plan Committee has duly caused
this Annual Report to be signed by the undersigned, thereunto duly authorized.
HOMELAND STORES, INC. EMPLOYEE STOCK
BONUS PLAN COMMITTEE
By: /s/ Larry W. Kordisch
Larry W. Kordisch
Member of the Committee
Date: May 8, 1998
HOMELAND STORES, INC.
EMPLOYEE STOCK BONUS PLAN
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT ACCOUNTANTS
FOR THE YEAR ENDED JULY 31, 1997
Report of Independent Accountants
To the Homeland Stores, Inc.
Employee Stock Bonus Plan Committee
We have audited the accompanying statement of net assets available for plan
benefits as of July 31, 1997, and the related statement of changes in net
assets available for plan benefits for the year then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audit.
We conducted our audit 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 audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan
as of July 31, 1997, and the changes in net assets available for plan benefits
for the year then ended in conformity with generally accepted accounting
principles.
Oklahoma City, Oklahoma
May 5, 1998
Homeland Stores, Inc. Employee Stock Bonus Plan
Statement of Net Assets Available for Plan Benefits
As of July 31, 1997
Assets:
Employer contribution receivable $ 467,827
Net assets available for plan benefits $ 467,827
The accompanying notes are an integral part of these financial statements.
Homeland Stores, Inc. Employee Stock Bonus Plan
Statement of Changes in Net Assets Available for Plan Benefits
For the year ended July 31, 1997
Additions:
Employer contributions $ 467,827
Net increase 467,827
Net assets available for plan benefits:
Beginning of year -
End of year $ 467,827
The accompanying notes are an integral part of these financial statements.
Homeland Stores, Inc. Employee Stock Bonus Plan
Notes to Financial Statements
1. Description of the Plan
General
Homeland Stores, Inc. (the "Company") established the Homeland Stores,
Inc. Employee Stock Bonus Plan (the "Plan") effective as of August 2,
1996 ("Effective Date"). The Plan, which is maintained pursuant to
collective bargaining agreements entered into in August 1996, provides
for employees covered under the collective bargaining agreements an
opportunity to participate in the growth of the Company through ownership
of Common Stock of Homeland Holding Corporation (the "Common Stock").
The Plan is a defined contribution plan and contributions made are held
in each participant's account in a trust. The benefit that a participant
receives depends on the amount of contribution made by each participant
and the Company and the performance of the Common Stock. The Plan is
subject to the provisions of the Employee Retirement Income Security Act
of 1974 ("ERISA").
Contributions
There are four ways that contributions may be made to the Plan by the
participant and/or the Company. They are:
(1) Required Company Contributions:
The Company is required to make a contribution to the Plan of
58,025 shares of Common Stock as soon as practical after the
Effective Date and in each of the next two Plan years.
Participants employed on a full-time basis for the entire Plan
year receive a per capita allocation of shares. Part-time
participants employed on a continuous basis since February 1
of the respective Plan year and full-time participants
employed on a continuous basis since February 1, but after the
beginning of the respective Plan year, will receive one-half
of the allocation received by full-time employees employed the
entire Plan year.
(2) Participant and Company Matching Contributions:
Beginning on the first anniversary of the Effective Date and
for three years thereafter, participants may make pre-tax
contributions, subject to certain tax law limitations, in an
amount equal to their ratable share of the equivalent of the
fair value of 43,519 shares of Common Stock each year. The
Company will match 33 1/3% of each participant's pre-tax
contribution in the form of Common Stock. The matching
contributions are credited to each participant's account at
the end of each month. All employees covered by the
collective bargaining agreements are eligible to make
participant contributions beginning February 1 and August 1 of
each Plan year subsequent to the participant's initial
employment date as a union employee.
Homeland Stores, Inc. Employee Stock Bonus Plan
Notes to Financial Statements
1. Description of the Plan, continued
(3) Contingent Company Contributions:
If the Company's earnings before the deductions of interest,
taxes, depreciation and amortization ("EBITDA") exceeds $25.0
million in the first year ending on the anniversary of the
collective bargaining agreements, $27.5 million the second
year ending on the anniversary of the collective bargaining
agreements, and $30.25 million in the third year ending on the
anniversary of the collective bargaining agreements, then the
Company shall make additional contributions to the Plan of
58,025 shares of Common Stock in each of those years in which
the targets are achieved. The allocation of these shares is
the same as described above for Required Company Contributions.
(4) Discretionary Company Contributions:
The Company, at its sole discretion, may make additional
contributions of cash or Common Stock whenever it desires.
The allocation of such contributions is the same as described
above for Required Company Contributions.
Vesting
Each participant's account, including participant and allocated Company
contributions, is always 100% vested and non-forfeitable, including the
earnings thereon.
Distribution of Benefits
No distribution from the Plan will be made until a participant retires,
dies (in which case payment shall be made to the participant's
beneficiary), or otherwise terminates employment with the Company, or
upon termination of the Plan, except that distribution of the participant's
account shall commence in any event no later than April 1 following the
end of the calendar year in which the participant reaches 70 1/2,
regardless of whether the participant is employed on such date.
Distributions are made in lump-sum payments or installment payments made
over a period of two years, unless the participant is at least age 70 1/2,
in which case the participant may elect installment payments over their
life expectancy. Distributions are made in cash or, if the participant
elects, in the form of Common Stock plus cash for any fractional shares.
Voting Rights
Each participant is entitled to exercise voting rights with respect
to the Common Stock allocated to his or her account.
Homeland Stores, Inc. Employee Stock Bonus Plan
Notes to Financial Statements
1. Description of the Plan, continued
Plan termination
Although the Company has not expressed any intent to do so, the
Company reserves the right, through its board of directors, to
terminate the Plan at any time. Upon termination of the Plan, the
account of each participant will be distributed as prescribed by the
Plan. If the Company is sold or merged into another company within
the first three years of the Plan, the Company shall contribute
additional Common Stock at that time such that the Company's total
contribution of shares will be 522,222 shares of Common Stock, plus
any Discretionary Company Contributions.
Administration of the Plan
Certain administrative duties are performed by officers or employees
of the Company and none of the officers or employees receieve
compensation from the Plan. The custodial bank agent processes
distribution payments. All administrative fees incurred during the
Plan year were paid by the Company.
2. Summary of Significant Accounting Policies
Use of Estimates
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 net assets
available for benefits at the date of the financial statements and
the reported amounts of changes in net assets available for benefits
during the reporting period. Actual results could differ from those
estimates.
Risks and Uncertainties
The Plan provides for investment of assets in the common stock of the
Company. As such, those assets are exposed to various market risks.
Due to the level of uncertainty related to changes in the value of
common stock of the Company, it is at least reasonably possible that
changes in the near term would materially affect participants' account
balances and the amounts reported in the statement of assets and the
statement of changes in net assets available for plan benefits.
Tax Status
The Internal Revenue Service ("IRS") has determined and informed
the Company by letter dated as of April 1, 1998, that the Plan, as
amended, is qualified and the trust established under the Plan is
tax-exempt, under the appropriate section of the IRS Code.
Homeland Stores, Inc. Employee Stock Bonus Plan
Notes to Financial Statements
3. Employer Contribution Receivable
As of the end of the Plan year, the Company had not established the
trust account to maintain the Common Stock to be held by the Plan.
Accordingly, the Required Company Contribution for the first Plan
year has been reported as an employer contribution receivable in the
statement of net assets. The receivable is valued based on the
required number of shares to be contributed at the fair value of the
Common Stock, as determined by the quoted market price, on July 31,
1997.
The Company did not achieve the EBITDA target for the first Plan year
pursuant to the Contingent Company Contributions component of the
Plan and no Discretionary Company Contributions were made for the
Plan year ended July 31, 1997.
