-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VWHu3RZGDBhNpkjhRpSJTB27i7kJ1ZBviodMLjwSqOB6yZhSu1eXhfohJDwiiWdF KCN4F5lzdf/oI76TdrDK5A== 0000950123-98-006330.txt : 19980630 0000950123-98-006330.hdr.sgml : 19980630 ACCESSION NUMBER: 0000950123-98-006330 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980629 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANOVER DIRECT INC CENTRAL INDEX KEY: 0000320333 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CATALOG & MAIL-ORDER HOUSES [5961] IRS NUMBER: 138053260 STATE OF INCORPORATION: NV FISCAL YEAR END: 1227 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-08056 FILM NUMBER: 98656749 BUSINESS ADDRESS: STREET 1: 1500 HARBOR BLVD CITY: WEEHAWKEN STATE: NJ ZIP: 07087 BUSINESS PHONE: 2018653800 MAIL ADDRESS: STREET 1: 1500 HARBOR BLVD CITY: WEEHAWKEN STATE: NJ ZIP: 07087 FORMER COMPANY: FORMER CONFORMED NAME: HORN & HARDART CO /NV/ DATE OF NAME CHANGE: 19920703 11-K 1 FORM 11-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K ANNUAL REPORT Pursuant to Section 15(d) of the Securities and Exchange Act of 1934 For the fiscal years ended December 31, 1997 and 1996 Commission file number 1-12082 A. Full Title of the plan and the address of the plan, if different from that of the issuer named below: HANOVER DIRECT, INC. SAVINGS AND RETIREMENT PLAN c/o Hanover Direct, Inc. 1500 Harbor Boulevard Weehawken, New Jersey 07087 B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: Hanover Direct, Inc. 1500 Harbor Boulevard Weehawken, New Jersey 07087 2 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Administrative Committee of Hanover Direct, Inc. Savings and Retirement Plan: We have audited the accompanying statements of net assets available for benefits of Hanover Direct, Inc. Savings and Retirement Plan (the "Plan"), formerly The Horn & Hardart Company Savings Plan, as of December 31, 1997 and 1996, and the related statement of changes in net assets available for benefits for the year ended December 31, 1997. These financial statements and the schedules referred to below are the responsibility of the Plan's Management. Our responsibility is to express an opinion on these financial statements and schedules 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 the Plan's 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 net assets available for benefits of the Plan as of December 31, 1997 and 1996, and the changes in net assets available for benefits for the year ended December 31, 1997, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets held for investment purposes and reportable transactions are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. New York, New York ARTHUR ANDERSEN LLP June 11, 1998 3 HANOVER DIRECT, INC. SAVINGS AND RETIREMENT PLAN (formerly The Horn & Hardart Company Savings Plan) STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS DECEMBER 31, 1997 AND 1996
1997 --------------------------------------------------------------------------------------- Stable Spectrum Spectrum New International Hanover Value Income Growth Horizons Stock Direct, Inc. Fund Fund Fund Fund Fund Stock Fund Total --------------------------------------------------------------------------------------- ASSETS: Fund receivable $ 24,198 $ 9,908 $ 22,741 $ 18,736 $ 6,381 $ 1,131 83,095 Plan participant loan receivable 446,640 -- -- -- -- -- 446,640 Unallocated contributions -- -- -- -- -- -- -- Investment in Fund 4,016,561 2,182,790 6,846,725 1,423,975 490,074 -- 14,960,125 Investment in Hanover Direct, Inc. Common Stock (at market) - T. Rowe Price -- -- -- -- -- 622,060 622,060 --------------------------------------------------------------------------------------- Total assets 4,487,399 2,192,698 6,869,466 1,442,711 496,455 623,191 16,111,920 LIABILITIES AND FUND BALANCE: Contributions payable to: Hanover Direct, Inc and Subs (Forfetures) 161,982 -- -- -- -- -- 161,982 --------------------------------------------------------------------------------------- Net assets available for benefits $4,325,417 $2,192,698 $6,869,466 $1,442,711 $496,455 $623,191 15,949,938 ======================================================================================= 1996 -------------------------------------------------------------------------------------- Stable Spectrum Spectrum New International Hanover Value Income Growth Horizons Stock Direct, Inc. Fund Fund Fund Fund Fund Stock Fund Total -------------------------------------------------------------------------------------- ASSETS: Fund receivable $ -- $ -- $ -- $ -- $ -- $ -- $ -- Plan participant loan receivable 411,083 411,083 Unallocated contributions Investment in Fund 4,079,812 2,127,453 6,130,853 829,618 294,855 13,462,591 Investment in Hanover Direct, Inc. Common -- Stock (at market) - T. Rowe Price 169,969 169,969 -------------------------------------------------------------------------------------- Total assets 4,490,895 2,127,453 6,130,853 829,618 294,855 169,969 14,043,643 LIABILITIES AND FUND BALANCE: Contributions payable to: -- Hanover Direct, Inc and Subs (Forfetures) 130,302 130,302 -------------------------------------------------------------------------------------- Net assets available for benefits $4,360,593 $2,127,453 $6,130,853 $829,618 $294,855 $ 169,969 $13,913,341 ======================================================================================
The accompanying notes are an integral part of these statements. 4 HANOVER DIRECT, INC. SAVINGS AND RETIREMENT PLAN (formerly The Horn & Hardart Company Savings Plan) STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1997
Stable Spectrum Spectrum New International Hanover Value Income Growth Horizons Stock Direct, Inc. Plan Fund Fund Fund Fund Fund Stock Fund Totals ------------------------------------------------------------------------------------------- INCREASE IN NET ASSETS: Interest/dividend income $ 235,027 $ 156,609 $ 694,841 $ 34,596 $ 26,010 $ -- $ 1,147,083 Change in plan participant loan receivable (11,756) (26,784) (82,977) 24,937 11,444 990 (84,146) Contributions Participants 847,134 200,218 443,971 416,746 162,354 14,882 2,085,305 Hanover Direct, Inc. and subsidiaries (net of credited forfeitures of $0 in 1997) 146,859 56,551 118,255 109,010 42,918 4,141 477,734 Interfund transfers (76,278) (41,979) 45,875 66,054 31,590 (25,262) -- ------------------------------------------------------------------------------------------- Total additions 1,140,986 344,615 1,219,965 651,343 274,316 (5,249) 3,625,976 ------------------------------------------------------------------------------------------- DECREASE IN NET ASSETS: Disbursements, withdrawals, terminations and administrative costs 1,183,272 355,544 787,544 121,914 49,001 21,514 2,518,789 Unallocated forfeitures (7,110) 7,817 22,214 5,716 2,709 334 31,680 Net change in depreciation (appreciation) on fund investments -- (83,991) (328,406) (89,380) 21,006 (480,319) (961,090) ------------------------------------------------------------------------------------------- Total deductions (additions) 1,176,162 279,370 481,352 38,250 72,716 (458,471) 1,589,379 ------------------------------------------------------------------------------------------- Net increase (decrease) (35,176) 65,245 738,613 613,093 201,600 453,222 2,036,597 NET ASSETS AVAILABLE FOR BENEFITS, beginning of year 4,360,593 2,127,453 6,130,853 829,618 294,855 169,969 13,913,341 ------------------------------------------------------------------------------------------- NET ASSETS AVAILABLE FOR BENEFITS, end of year $4,325,417 $2,192,698 $6,869,466 $1,442,711 $496,455 $ 623,191 $15,949,938 ===========================================================================================
The accompanying notes are an integral part of this statement. 5 HANOVER DIRECT, INC. SAVINGS AND RETIREMENT PLAN (formerly The Horn & Hardart Company Savings Plan) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1997 and 1996 1. DESCRIPTION OF THE PLAN The Hanover Direct, Inc. Savings and Retirement Plan (the "Plan"), formerly The Horn & Hardart Company Savings Plan, commenced April 1, 1983. Participation in the Plan is available to all eligible employees of Hanover Direct, Inc. and its subsidiaries (the "Company") who have attained the age of 21, have credit for not less than one year of service (1,000 hours), and have applied for participation in the Plan. Participants whose annual base salary is under $66,000 may make pretax contributions of up to 10% of their total annual compensation ("Employee Contribution"). The Company matches one-third of these pretax contributions up to 6% of their total annual compensation ("Employer Contribution"). These same participants may contribute an additional amount up to 10% of their total annual compensation on a voluntary basis ("Voluntary Contribution"). The Voluntary Contributions are not tax-deferred and therefore, are considered to be an after-tax contribution. Voluntary Contributions are not matched by the Company. The participants have the right to elect that contributions (Employee, Employer, and Voluntary Contributions) be allocated to any combination of six funds. During the first quarter of 1996, the six funds were Fixed Income Fund, Hanover Direct, Inc. Stock Fund, a party in interest, Conservative Bond Fund, Capital Growth Fund, Conservative Equity Fund, and a Balanced Value Fund. Paine Webber Trust Company ("PWTC") served as trustee of these funds. As of April 1, 1996 the Plan's assets became administered by T. Rowe Price Retirement Plan Services, Inc. ("TRP"). As of April 1, 1996 and during 1997 the following five funds were available: Stable Value Fund, Spectrum Income Fund, Spectrum Growth Fund, New Horizons Fund and International Stock Fund. The Hanover Direct, Inc. Stock Fund also remains available to participants and is entrusted to TRP. A participant whose total annual compensation is in excess of $66,000, or a highly compensated employee ("HCE"), is limited to pretax contributions of 5% of their total annual compensation. The Company matches one-third of these contributions. No Voluntary Contributions are permitted by an HCE. The maximum limitation on employee pretax contributions was $9,500 for both years. The HCE maximum compensation limit for contributions for 1997 and 1996 was $160,000 and $150,000, respectively. The Plan elected to maintain a 5% maximum contribution level on HCEs, limiting this group to a maximum contribution of $8,000 and $7,500 for 1997 and 1996, respectively. 5 6 There were 1,112 and 1,155 participants in the Plan at December 31, 1997 and 1996, respectively. A participant will become 100% vested in the account value of the Employer's Contribution upon the earlier of: the completion of five calendar years of vesting service, retirement or termination after reaching age 62, death while an employee, or because of permanent disability. Participants are fully vested in their Employee Contributions immediately. A participant may elect to withdraw from his/her Voluntary Contribution account an amount not to exceed his/her vested account value. Forfeitures by reason of termination, withdrawal or lapse of participation are used to reduce the Company's contribution for that particular year. In 1996, forfeitures amounted to $130,302. No portion of this total was utilized to reduce Employer Contributions during 1996, however, they were used to reduce Employer Contributions to participants in 1997. In 1997, total forfeitures amounted to $161,982, none of which was utilized to reduce Employer Contributions during 1997. Participants are allowed to take out loans of up to 50% of their individual vested balance as of the most current Plan valuation. The minimum loan is $500 while the maximum is $50,000. The loans can be for a period between one to five years, in whole year increments, bearing a fixed rate of interest of the prime rate plus one percent, determined at the time of loan issuance. Each participant can have only one loan outstanding at any one time and the loan can be repaid before the end of the original term. The Plan participant loan receivable amounted to $446,640 and $411,083 at December 31, 1997 and 1996, respectively, with interest rates ranging from 7% to 10%. Vested benefits payable to terminated employees at December 31, 1997 amounted to $810,692. The Plan is administered by the Administrative Committee (the "Committee") which is comprised of three persons who serve at the sole discretion of the Company's Board of Directors without compensation from the Plan. The Committee has general authority to control and manage the operation and administration of the Plan, including authority to appoint and remove trustees and to adopt rules interpreting or implementing the Plan. Administrative costs of the Plan that were borne by Hanover Direct, Inc. were $10,174 and $36,730 in 1997 and 1996, respectively. As of April 1, 1996, certain administrative costs of the Plan are borne by participants of the Plan and amounted to $33,360 in 1997. These costs are included in disbursements, withdrawals, terminations and administrative costs. 2. SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of financial statements in conformity with generally accepted accounting 6 7 principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Investment Valuation and Income Recognition Investments in the Company's common stock are stated at market value as determined by reference to published market data. Purchases and sales of securities are recorded on a trade date basis, and interest is recorded on the accrual basis. In 1996, investments held by PWTC in the Fixed Income Fund, Conservative Bond Fund, Balanced Value Fund, Conservative Equity Fund, and Capital Growth Fund are stated at market value. In 1996 and 1997, investments held by TRP in the Stable Value Fund, Spectrum Income Fund, Spectrum Growth Fund, New Horizons Fund, International Stock Fund and the Company's Stock Fund are stated at market value. Purchases and sales of securities are recorded on a trade date basis. Realized gains and losses from security transactions are reported using the moving weighted average method. Basis of Accounting The accompanying financial statements have been prepared on the accrual basis of accounting. 3. INVESTMENTS On April 1, 1996, the Company transferred the Plan funds from PWTC to TRP. The Plan's participants were given the option to invest in five new funds, in addition to the Company's Stock Fund. The PWTC funds were transferred to the TRP funds in such a way as to consistently invest participant funds into funds with like investment strategies. These new funds are as follows: The Stable Value Fund is a common trust fund which invests in investment contracts selected by TRP which are reported at their estimated fair value. The Spectrum Income Fund seeks a high level of current income consistent with moderate share price fluctuation by investing primarily in domestic and foreign bond funds. It may allocate up to 25% of its assets to stock funds. The Spectrum Growth fund seeks long-term capital appreciation and growth of income, with current income as a secondary objective. It invests primarily in domestic stock funds and also in a foreign stock fund. The New Horizons Fund provides long-term capital growth by investing primarily in common stocks of small rapidly growing companies. The International Stock Fund seeks to provide capital appreciation through investment in well-established non-US companies. Contributions to the Hanover Direct, Inc. Stock Fund were invested in the common stock of the Company, a party in interest. As of December 31, 1997 and 1996, the stock fund held 207,353 and 226,626 shares, respectively, at corresponding market values of $622,060 and $169,969. The stock price at June 10, 1998 was $3.00 per share. All of the above-mentioned investments exceed 5% of the Plan's net assets available for benefits as of December 31, 1997 with the exception of the International Stock Fund and the Hanover Direct, Inc. Stock Fund. 7 8 4. CONTRIBUTION RECEIVABLE The contribution receivable consists of unallocated Employee and Employer Contributions owed to the fund as of the plan year-end. There were no such receivables at December 31, 1996. For 1997, there were contributions receivable of $83,095. The unallocated Employee and Employer contributions owed to the fund for 1997 were received by the fund in January 1998. 5. CONTRIBUTION PAYABLE The December 31, 1996 contribution payable consists of unvested Employer Contributions forfeited by terminated Plan participants. The forfeited amounts were used to reduce the Company's contributions to participants in 1997. 6. NET DEPRECIATION (APPRECIATION) ON FUND INVESTMENTS The net depreciation/(appreciation) of fund investments at December 31, 1997 consists of unrealized appreciation of approximately $863,000 and an aggregate realized gain of approximately $99,000. The Plan sold investments during the 1997 Plan year with approximate aggregate costs of $2.16 million, resulting in aggregate proceeds of approximately $2.23 million. The realized gain/loss on the investments sold is the difference between the market value at the beginning of the Plan year (or on the purchase date if purchased during the Plan year) and the date of sale. 7. PLAN TERMINATION The Plan may be terminated at any time at the Company's sole discretion, although the Company has not expressed any intention to do so currently. Upon termination, contributions by the Company and participants cease and all Company contributions which had been credited to each participant's account become fully vested immediately. 8. TAX STATUS The Plan has received a favorable determination letter from the Internal Revenue Service stating that the Plan, as of October 6, 1994, is qualified under Section 401(k) of the Internal Revenue Code and, accordingly, is exempt from federal income taxes. The Plan was amended and restated during the year ended December 31, 1989 to reflect the impact of the Tax Reform Act of 1986 and the Technical and Miscellaneous Revenue Act of 1988. 9. OTHER INFORMATION There were no transactions with parties-in-interest, as defined by the Employee Retirement Income Securities Act of 1974, for the years ended December 1997 and 1996. There were no loans, fixed income obligations or leases which were either in default or classified as uncollectable at December 31, 1997 and 1996. 8 9 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the members of the Administrative Committee have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. HANOVER DIRECT, INC. SAVINGS AND RETIREMENT PLAN DATE: June 29, 1998 By: /s/ Larry Svoboda ----------------------------------- Larry Svoboda Senior Vice President Chief Financial Officer 10 HANOVER DIRECT, INC. SAVINGS AND RETIREMENT PLAN (formerly The Horn & Hardart Company Savings Plan) FORM 5500 - ITEM 27A SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AS OF DECEMBER 31, 1997
Current Description Cost Value ----------- ------------------------ INVESTMENT IN: STABLE VALUE PORTFOLIO - T. Rowe Price Retirement Plan Services, Inc. $ 4,016,561 $ 4,016,561 SPECTRUM INCOME PORTFOLIO - T. Rowe Price Retirement Plan Services, Inc. 2,105,002 2,182,790 SPECTRUM GROWTH PORTFOLIO - T.Rowe Price Retirement Plan Services, Inc. 6,579,992 6,846,725 NEW HORIZONS PORTFOLIO - T. Rowe Price Retirement Plan Services, Inc. 1,341,877 1,423,975 INTERNATIONAL STOCK PORTFOLIO - T. Rowe Price Retirement Plan Services, Inc. 514,406 490,074 HANOVER DIRECT, INC. COMMON STOCK(1) 161,769 622,060 PLAN PARTICIPANT LOAN RECEIVABLE(2) 446,640 446,640 ------------------------ TOTAL ASSETS HELD FOR INVESTMENT PURPOSES $15,166,247 $16,028,825 ========================
(1) Represents party in interest. Common stock par value is $.667 per share. (2) Terms of these loans generally range from 1 to 5 years and bear interest ranging from 7.0% to 10.0%. 11 HANOVER DIRECT, INC. SAVINGS AND RETIREMENT PLAN (formerly The Horn & Hardart Company Savings Plan) FORM 5500 - ITEM 27D SCHEDULE OF REPORTABLE TRANSACTIONS (1) FOR THE YEAR ENDED DECEMBER 31, 1997 SERIES OF TRANSACTIONS
Identity of Expense Party Number Purchase Selling Lease Incurred With Involved Description of Shares Price (2) Price (2) Rental Transaction - ----------------------------------------------------------------- -------------------------------------------------------- T. Rowe Price Retirement Plan Services, Inc. Investment in Stable Value Fund 1,042,506 $ 1.00 $ -- $ -- $ -- T. Rowe Price Retirement Plan Services, Inc. Investment in Stable Value Fund 1,143,089 -- 1.00 -- T. Rowe Price Retirement Plan Services, Inc. Investment in Spectrum Growth Fund 88,144 16.03 -- -- -- T. Rowe Price Retirement Plan Services, Inc. Investment in Spectrum Growth Fund 1,065,574 0.94 Identity of Party Current Net Involved Cost Value Gain - ------------------------------- -------------------------------- T. Rowe Price Retirement Plan Services, Inc. $1,042,506 $1,042,506 $ -- T. Rowe Price Retirement Plan Services, Inc. 1,143,089 1,143,089 -- T. Rowe Price Retirement Plan Services, Inc. 1,412,687 1,412,990 (303) T. Rowe Price Retirement Plan Services, Inc. 943,976 1,003,311 (59,335)
INDIVIDUAL TRANSACTIONS
Identity of Expense Party Number Purchase Selling Lease Incurred With Involved Description of Shares Price (2) Price (2) Rental Transaction - ----------------------------------------------------------------- -------------------------------------------------------- T. Rowe Price Retirement Plan Services, Inc. Investment in Stable Value Fund 854,537 $ -- $ 1.00 $ -- $ -- T. Rowe Price Retirement Plan Services, Inc. Investment in Spectrum Growth Fund 44,399 15.65 T. Rowe Price Retirement Plan Services, Inc. Investment in Spectrum Growth Fund 47,763 -- 16.13 -- -- Identity of Party Current Net Involved Cost Value Gain - ------------------------------- -------------------------------- T. Rowe Price Retirement Plan Services, Inc. $854,537 $854,537 -- T. Rowe Price Retirement Plan Services, Inc. 694,841 694,841 -- T. Rowe Price Retirement Plan Services, Inc. 724,087 770,454 (46,367)
(1) Defined as five percent of Plan net assets at beginning of Plan year. (2) Average price 12 EXHIBIT 1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report included in this Form 11-K, into Hanover Direct, Inc.'s (formerly The Horn & Hardart Company) previously filed Registration Statement File No. 2-94286. New York, New York ARTHUR ANDERSEN LLP June 29, 1998 EX-99.1 2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS 1 EXHIBIT 1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report included in this Form 11-K, into Hanover Direct, Inc.'s (formerly The Horn & Hardart Company) previously filed Registration Statement File No. 2-94286. New York, New York ARTHUR ANDERSEN LLP June 29, 1998 -----END PRIVACY-ENHANCED MESSAGE-----