-----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, DvSjlbWlJiMwj00p2RI/y2NUsFzeZuRk6b1J02CmEKiNotqR1bi3G5cQb3d8mf9S LLHHerEtZSkd76jJKY2X+A== 0000950123-02-006978.txt : 20020715 0000950123-02-006978.hdr.sgml : 20020715 20020715173030 ACCESSION NUMBER: 0000950123-02-006978 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020715 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: DE FISCAL YEAR END: 1227 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08056 FILM NUMBER: 02703387 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 y62094ke11vk.txt HANOVER DIRECT, INC. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEARS ENDED DECEMBER 31, 2001 AND 2000 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. 115 RIVER ROAD EDGEWATER, NEW JERSEY 07020 B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: HANOVER DIRECT, INC. 115 RIVER ROAD EDGEWATER, NEW JERSEY 07020 THIS FILING INCLUDES UNAUDITED FINANCIAL STATEMENTS FOR THE PLAN FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001 IN LIEU OF AUDITED FINANCIAL STATEMENTS BECAUSE THE PLAN ELECTED NOT TO HAVE ARTHUR ANDERSEN LLP ISSUE A MANUALLY SIGNED AUDIT REPORT IN RESPECT OF THOSE FINANCIAL STATEMENTS. SEE THE UNAUDITED FINANCIAL STATEMENTS CONTAINED IN THIS FILING. The Plan intends to provide audited financial statements for the fiscal year ended December 31, 2001 by filing an Amendment to this Annual Report on Form 11-K, which will include such audited financial statements and the report of KPMG LLP thereon, as soon as practicable and not later than August 28, 2002. No auditor has opined that the Plan's unaudited financial statements for the fiscal year ended December 31, 2001 present fairly, in all material respects, the financial position, the results of operations, cash flows and the changes in shareholders' equity of the Plan (and, in the case of a registered investment company, the financial highlights) for each of the periods reported in accordance with generally accepted accounting principles. HANOVER DIRECT INC. SAVINGS AND RETIREMENT PLAN (FORMERLY THE HORN AND HARDART COMPANY SAVINGS PLAN) STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS AS OF DECEMBER 31, 2001 AND 2000
DECEMBER 31, --------------------------- 2001 2000 ----------- ----------- ASSETS Fund receivable $ -- $ 12,393 Plan participant loan receivable 624,948 671,528 Investment in fund 20,545,522 21,808,087 Investment in Hanover Direct Inc. Common Stock (at market) 305,850 297,849 ----------- ----------- TOTAL ASSETS 21,476,320 22,789,857 LIABILITIES AND FUND BALANCE Contributions payable to: Hanover Direct, Inc. and subsidiaries (forfeitures) 7,621 136,850 ----------- ----------- NET ASSETS AVAILABLE FOR BENEFITS $21,468,699 $22,653,007 =========== ===========
The accompanying notes are an integral part of this statement. HANOVER DIRECT INC. SAVINGS AND RETIREMENT PLAN (FORMERLY THE HORN AND HARDART COMPANY SAVINGS PLAN) STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED DECEMBER 31, 2001
PLAN TOTAL ------------ ADDITIONS: Dividend income $ 674,471 Interest income on participant loan balances 46,164 Contributions: Participants 2,431,013 Hanover Direct, Inc. and subsidiaries 596,835 ------------ TOTAL ADDITIONS 3,748,483 ------------ DEDUCTIONS: Net depreciation on fund investments $ 1,459,001 Disbursements, withdrawals, terminations and administrative costs 3,311,918 Unallocated forfeitures 54,439 Change in Plan participant loan receivable 105,257 Interfund Transfers 2,176 ------------ TOTAL DEDUCTIONS 4,932,791 ------------ Net decrease (1,184,308) NET ASSETS AVAILABLE FOR BENEFITS: Beginning of the year 22,653,007 ------------ End of the year $ 21,468,699 ============
The accompanying notes are an integral part of this statement. HANOVER DIRECT, INC. SAVINGS AND RETIREMENT PLAN (FORMERLY THE HORN & HARDART COMPANY SAVINGS PLAN) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 AND 2000 1. DESCRIPTION OF THE PLAN The Hanover Direct, Inc. Savings and Retirement Plan, formerly The Horn & Hardart Company Savings Plan (the "Plan"), commenced April 1, 1983. The following description of the Plan provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan's provisions. Participation in the Plan is available to all Eligible Employees of Hanover Direct, Inc. and its subsidiaries (the "Company") that have attained the age of 21 and have credit for at least six months of service (1,000 hours). Eligible Employee does not include anyone subject to a collective bargaining agreement, independent contractor, or a leased employee. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Participants whose annual base salary is under $85,000 may make pre-tax contributions of up to 20% of their total annual compensation ("Employee Contribution"), up to a maximum of $10,500 in 2001 and 2000. The Company matches one-third of these pretax contributions up to 6% of a participant's total annual compensation ("Employer Contribution"). The participants have the right to allocate contributions (Employee and Employer) among any combination of eight funds administered by T. Rowe Price Retirement Plan Services, Inc. ("TRP"), as well as a Hanover Direct, Inc. Stock Fund. A participant whose total annual compensation is in excess of $85,000, or a highly compensated employee ("HCE"), is limited to pre-tax contributions of 5% of their total annual compensation, up to a maximum compensation limit of $170,000. The Company matches one-third of these contributions up to 6%. There were 940 and 1,285 active participants in the Plan at December 31, 2001 and 2000, respectively. According to the Plan, the maximum limitations on employee pre-tax contributions for a non-HCE were $10,500 in 2001 and 2000. The maximum limitations on employee pre-tax contributions for a HCE were $170,000 in 2001 and 2000. A participant will fully vest in the account value of the Employer's Contribution upon the earlier of: the completion of three calendar years of vesting service, retirement or termination after reaching age 65, death while an employee, retirement due to permanent disability, or upon termination of the Plan by the Company. Employee Contributions vest immediately. A participant may elect to withdraw from their voluntary contribution account an amount not to exceed the participant's 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. Forfeitures that can be used to reduce future Employer Contributions amounted to $7,621 and $136,850 at December 31, 2001 and 2000, respectively. Participants are allowed to take out loans ranging from a minimum of $500 to a maximum of 50% of their individual vested account balance or $50,000, whichever is less. The loans can be for a period of up to five years and bear a fixed rate of interest of the prime rate plus one percent, determined at the time of the loan issuance. For a loan to purchase a primary residence, an individual must borrow a minimum of $2,500, and may take up to 30 years to repay the loan. 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. Plan participant loan receivables amounted to $624,948 and $671,528 at December 31, 2001 and 2000, respectively, with interest rates ranging from 7% to 22.55%. Vested benefits payable to terminated employees amounted to $3,562,060 and $4,216,773 at December 31, 2001 and 2000, respectively. The Plan is administered by the Administrative Committee (the "Committee"), which is comprised of five 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. Direct administrative costs of the Plan that were borne by Hanover Direct, Inc. were $40,718 and $50,193 in 2001 and 2000, respectively. Participant Account Each participant's account is credited with participant's and Company's contributions and Plan earnings. Participant's accounts are stated at market value at the end of each business day. The Plan was amended effective July 1, 1999. The amendment resulted in changes to the Plan's eligibility period, enrollment period, contribution maximum for non-HCE participants, maximum annual dollar limit, investment changes, administrative fees, vesting schedule and investment options. The amended Plan was filed with the Internal Revenue Service ("IRS") during 2002. 2. SIGNIFICANT ACCOUNTING POLICIES Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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. 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. Realized gains and losses from security transactions are reported using the moving weighted average method. Dividend income is recorded on the ex-dividend date. Investments held by TRP in the Stable Value Fund, Spectrum Income Fund, Spectrum Growth Fund, New Horizons Fund, Mid-Cap Growth Fund, International Stock Fund, Equity Index 500 Fund, and the Blue Chip Growth Fund are all stated at market value. Basis of Accounting The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles. Benefit payments are recorded when paid. Accounting Pronouncements The Company adopted the provisions of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," and its related amendment in SFAS No. 138,"Accounting for Certain Derivative Instruments and Certain Hedging Activities," as of December 31, 2000. These pronouncements require companies to reflect the fair value of all derivative instruments, including those embedded in other contracts, as assets or liabilities in a company's financial statements. Changes in fair value of derivative instruments is generally reflected in earnings, with the exception of certain hedging transactions, for which the change in fair value may be accounted for as a component of other comprehensive income, provided certain criteria are met as specified in these pronouncements. The Company currently does not utilize derivative instruments or engage in hedging transactions, nor were there any embedded derivative instrument as of December 31, 2001 or 2000 that must be recognized pursuant to these statements. Accordingly, the impact of the adoption of these pronouncements on December 31, 2000 did not have a material impact on the Plan's financial position or result of operations. 3. INVESTMENTS The Plan's participants are given the option to invest in eight funds, in addition to the Company's Stock Fund. These 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 combined with moderate share price fluctuation by investing primarily in domestic bond funds and two foreign bond funds. It may allocate up to 25% of its assets to a stock fund. 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 Mid-Cap Growth Fund provides long-term capital appreciation by investing in companies with superior earnings growth potential that are no longer considered new or emerging but may still be in the dynamic phase of their life cycles. The International Stock Fund seeks to provide capital appreciation through investments in well-established non-U.S. companies. The Equity Index 500 Fund seeks to match the total return of the Standard & Poor's(R) 500 Composite Stock Index ("S&P 500"). The Blue Chip Growth Fund seeks to provide long-term capital growth, with income as a secondary objective. It invests primarily in common stocks of large and medium-sized blue chip companies that have the potential for above-average growth in earnings and are well established in their respective industries. 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, 2001 and 2000, the Stock Fund held 826,621 and 794,263 shares, respectively, at corresponding market values of $305,850 and $297,849. The market value of the individual investments that represent 5% or more of the Plan's total net assets available for plan benefits as of December 31, 2001 and 2000 were as follows:
2001 2000 ---------- ---------- Spectrum Growth Fund $5,371,035 $6,717,439 Stable Value Fund 4,885,316 4,895,185 New Horizons Fund 2,743,586 2,832,531 Spectrum Income Fund 2,194,363 2,211,046 Mid-Cap Growth Fund 1,637,165 1,351,208 Blue Chip Growth Fund 1,604,263 1,458,227 Equity Index 500 Fund 1,402,872 1,347,529
During 2001, the Plan's investments (including gains and losses on investments bought and sold, as well as held during the year) depreciated in value by $(1,459,001) as follows: Mid-Cap Growth Fund $ 5,826 Hanover Direct Inc. Stock Fund (14,295) Spectrum Income Fund (34,667) New Horizons Fund (139,283) Equity Index 500 Fund (184,011) International Stock Fund (210,720) Blue Chip Growth Fund (216,700) Spectrum Growth Fund (665,151) ----------- $(1,459,001) ===========
4. FUND RECEIVABLE The total contribution receivable consists of unallocated Employee and Employer Contributions owed to the Plan as of the Plan year-end. There were contribution receivables of $0 and $12,393 as of December 31, 2001 and 2000, respectively. 5. CONTRIBUTION PAYABLE The contribution payable consists of unvested Employer Contributions forfeited by terminated Plan participants as of the Plan year-end. These forfeited amounts can be used to reduce the Company's contributions to participants in the following Plan year. 6. NET APPRECIATION/(DEPRECIATION) ON FUND INVESTMENTS The net appreciation/(depreciation) of fund investments at December 31, 2001 consists of unrealized depreciation of $(1,156,697) and an aggregate realized loss of $(302,304). The Plan sold investments during the 2001 Plan year with aggregate costs of $5,352,235 resulting in aggregate proceeds of $5,049,931. The realized gain/(loss) on the investments sold is the difference between the market value at the beginning of 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 subject to the provisions of ERISA. Upon termination, contributions by the Company and participants cease and all Company contributions, which had been credited to each participant's account, becomes fully vested. At this time, the Company has not expressed any intention to terminate the Plan. 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. Although the Plan has been amended since receiving the determination letter, the Plan's administrator and the Plan's tax counsel believe the Plan is designed and is currently being operated in compliance with the applicable provision of the IRC. 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 Other than the aforementioned contributions to the Hanover Direct, Inc. Stock Fund which were invested in the Common Stock of the Company (Note 3), there were no transactions with parties-in-interest, as defined by the Employee Retirement Income Security Act of 1974, for the years ended December 31, 2001 and 2000. There were no loans, fixed income obligations or leases, which were either in default or classified as uncollectible, at December 31, 2001 and 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the members of the Administrative Committee of the Plan 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 By: /s/ Brian C. Harriss ---------------------------- Name: Brian C. Harriss Title: Member of the Administrative Committee DATE: July 15, 2002 SCHEDULE I HANOVER DIRECT, INC. SAVINGS AND RETIREMENT PLAN (FORMERLY THE HORN AND HARDART COMPANY SAVINGS PLAN) SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES FOR THE YEAR ENDED DECEMBER 31, 2001
NUMBER OF CURRENT DESCRIPTION SHARES VALUE Stable Value Fund 4,892,937 $ 4,892,937 Spectrum Income Fund 207,015 2,194,363 Spectrum Growth Fund 381,737 5,371,035 New Horizon Fund 121,237 2,743,586 7,621 Mid Cap Growth Fund 41,552 1,637,165 International Stock Fund 63,631 699,302 Equity Index 500 Fund 45,489 1,402,872 Blue Chip Growth Fund 55,377 1,604,263 Hanover Direct Inc. Stock Fund (1) 826,621 305,850 Participants' Loan Accounts (2) 624,948 ----------- TOTAL ASSETS HELD FOR INVESTMENT PURPOSES $21,476,320 ===========
(1) Represents party-in-interest. Common Stock par value is $.6667 per share. (2) Terms of these loans generally range from 1 to 5 years (up to 30 years if used to purchase a primary residence) and bear interest at prime plus one percent. -----END PRIVACY-ENHANCED MESSAGE-----