-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, KQrXkfOSl6zX9z6OZIY277CZiofC45xY1sEq0bzROdtWVceu7fsnYM7h2UjCI7YM Qdtymtwzam3vv/PLwFJ5Ew== 0000045379-94-000020.txt : 19941109 0000045379-94-000020.hdr.sgml : 19941109 ACCESSION NUMBER: 0000045379-94-000020 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19941001 FILED AS OF DATE: 19941108 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANNAFORD BROTHERS CO CENTRAL INDEX KEY: 0000045379 STANDARD INDUSTRIAL CLASSIFICATION: 5411 IRS NUMBER: 010085930 STATE OF INCORPORATION: ME FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07603 FILM NUMBER: 94558135 BUSINESS ADDRESS: STREET 1: 145 PLEASANT HILL RD CITY: SCARBOROUGH STATE: ME ZIP: 04011 BUSINESS PHONE: 2078832911 10-Q 1 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 October 1, 1994 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 October 26, 1994, there were 41,729,599 outstanding shares of Common Stock, $.75 par value, the only authorized class of common stock of the Registrant. INDEX PART I FINANCIAL INFORMATION Page No. Item 1. Financial Statements: Consolidated Balance Sheets, October 1, 1994 and January 1, 1994 3-4 Consolidated Statements of Earnings, Three Months Ended October 1, 1994 and October 2, 1993 5 Consolidated Statements of Earnings, Nine Months Ended October 1, 1994 and October 2, 1993 6 Consolidated Statements of Cash Flows Nine Months Ended October 1, 1994 and October 2, 1993 7-8 Notes and Schedules to Consolidated Financial Statements 9-12 Item 2. Management's Discussion and Analysis of Third Quarter 1994 Results 13-16 PART II - OTHER INFORMATION Item 5. Other Information 17 Item 6. Exhibits and Reports on Form 8K 17 Signatures 17 Exhibit 15 - Letter from Coopers & Lybrand regarding Quarterly Review 18 Exhibit 23 - Letter from Coopers & Lybrand regarding Form S-8 Consent 19 HANNAFORD BROS. CO. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS (Dollars in thousands) (UNAUDITED) October 1, January 1, 1994 1994 Current assets: Cash and cash items $ 18,666 $ 77,496 Short-term investments -- 19,855 Accounts receivable, net 21,883 15,765 Inventories 133,307 129,934 Prepaid expenses 4,811 4,695 Deferred income taxes 7,350 7,920 Total current assets 186,017 255,665 Property, plant and equipment, net 493,793 437,606 Leased property under capital leases, net 52,649 50,070 Investment in financing leases 1,762 1,787 Other assets: Notes receivable 457 2,395 Deferred charges, net 103,901 38,416 Computer software costs, net 8,236 8,790 Miscellaneous assets 578 626 Total other assets 113,172 50,227 $847,393 $795,355 See accompanying notes to consolidated financial statements. HANNAFORD BROS. CO. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY (Dollars in thousands) (UNAUDITED) October 1, January 1, 1994 1994 Current liabilities: Current maturities of long-term debt $ 7,634 $ 7,180 Obligations under capital leases 1,293 1,412 Accounts payable 86,462 79,679 Accrued payroll 18,350 17,323 Other accrued expenses 27,429 29,348 Income taxes 3,509 1,893 Total current liabilities 144,677 136,835 Deferred income tax liabilities 22,896 23,753 Other liabilities 20,759 20,618 Long-term debt 155,763 156,716 Obligations under capital leases 62,887 58,835 Redeemable preferred stock of a subsidiary, par value $100 per share - 1,883 Shareholders' equity: Class A Serial Preferred stock, no par, authorized 2,000,000 shares - - Class B Serial Preferred stock, par value $.01 per share, authorized 28,000,000 shares - - Common stock, par value $.75 per share: Authorized 110,000,000 shares; issued and outstanding 41,712,105 shares at October 1, 1994, and 41,210,774 shares at January 1, 1994 31,284 30,908 Additional paid-in capital 109,407 99,748 Preferred stock purchase rights 417 412 Retained earnings 299,303 265,647 Total shareholders' equity 440,411 396,715 $847,393 $795,355 See accompanying notes to consolidated financial statements. HANNAFORD BROS. CO. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Amounts in thousands except per share data) (UNAUDITED) THREE MONTHS ENDED October 1, October 2, 1994 1993 Sales and other revenues $622,554 $530,064 Cost of sales 470,942 396,939 Gross margin 151,612 133,125 Selling, general and administrative expenses 114,326 100,831 Operating profit 37,286 32,294 Interest expense, net 5,392 4,841 Earnings before income taxes 31,894 27,453 Income taxes 12,792 11,453 Net earnings $ 19,102 $ 16,000 Per share of common stock: Net earnings $ .46 $ .39 Cash dividends $ .095 $ .085 Weighted average number of common shares outstanding (000's) 41,655 41,121 See accompanying notes to consolidated financial statements. HANNAFORD BROS. CO. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (Amounts in thousands except per share data) (UNAUDITED) NINE MONTHS ENDED October 1, October 2, 1994 1993 Sales and other revenues $1,679,848 $1,538,603 Cost of sales 1,268,359 1,154,482 Gross margin 411,489 384,121 Selling, general and administrative expenses 319,811 301,464 Operating profit 91,678 82,657 Interest expense, net 15,337 14,674 Earnings before income taxes 76,341 67,983 Income taxes 30,771 27,728 Earnings before cumulative effect of change in accounting principle 45,570 40,255 Cumulative effect to January 3, 1993 of change in income tax accounting - 2,100 Net earnings $ 45,570 $ 42,355 Per share of common stock: Earnings before cumulative effect of change in accounting principle $ 1.10 $ .98 Cumulative effect to January 3, 1993 of change in income tax accounting - .05 Net earnings $ 1.10 $ 1.03 Cash dividends $ .285 $ .255 Weighted average number of common shares outstanding (000's) 41,478 41,008 See accompanying notes to consolidated financial statements. HANNAFORD BROS. CO. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (UNAUDITED) NINE MONTHS ENDED October 1, October 2, 1994 1993 Cash flows from operating activities: Net income $ 45,570 $ 42,355 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 45,894 41,926 Cumulative effect of accounting change - (2,100) Decrease in inventories 5,488 2,726 (Increase) decrease in receivables and prepayments 293 (3,600) Increase (decrease) in accounts payable and accrued expenses 230 (12,833) Increase (decrease) in income taxes payable 1,616 (2,404) Decrease in deferred taxes (287) (1,144) Other operating activities (2,208) (1,493) Net cash provided by operating activities 96,596 63,433 Cash flows from investing activities: Acquisition of Wilson's Supermarkets, net of cash acquired (110,007) - Acquisition of property, plant and equipment (53,672) (44,828) Sale of property, plant and equipment, net 2,351 1,223 Increase in deferred charges (1,800) (3,492) Increase in computer software costs (1,825) (2,601) (Increase) decrease in short-term investments 19,855 (25,008) Net cash used in investing activities (145,098) (74,706) Cash flows from financing activities: Principal payments under capital lease obligations (705) (1,017) Proceeds from issuance of long-term debt 3,800 - Issuance of common stock 8,035 7,266 Payments of long-term debt (9,549) (8,277) Dividends paid (11,909) (10,638) Net cash used for financing activities (10,328) (12,666) Net decrease in cash and cash items (58,830) (23,939) Cash and cash items at beginning of period 77,496 94,789 Cash and cash items at end of period $ 18,666 $ 70,850 See accompanying notes to consolidated financial statements. HANNAFORD BROS. CO. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Supplemental disclosures of cash flow information On July 26, 1994, the Company purchased the capital stock of Boney Wilson & Sons, Inc.,and the majority of the assets owned by Wilson Brothers Partnership for approximately $120,454,000. In conjunction with the acquisition, liabilities were assumed and common stock and a promissory note were issued as follows: (in thousands) Total cost of acquisition $126,256 Less: Liabilities assumed 5,802 Issuance of common stock 2,000 Promissory note 4,500 Cash acquired 3,947 Cash paid for acquisition $110,007 (in thousands) (UNAUDITED) NINE MONTHS ENDED October 1, October 2, Cash paid during the first three quarters for: 1994 1993 Interest (net of amount capitalized, $1,307 in 1994 and $1,137 in 1993) $16,294 $16,323 Income taxes $29,442 $31,277 Supplemental disclosure of non-cash investing and financing activity. Capital lease obligations of $5,383,000 and $3,155,000 were incurred during the nine month period ended October 1, 1994 and October 2, 1993 respectively, when the Company entered into leases for certain improved real estate. Disclosure of accounting policy For the purposes of the Consolidated Statements of Cash Flows, the Company considers all highly liquid debt instruments purchased with maturities of three months or less at time of purchase to be cash items. 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. Earnings per share of common stock have been determined by dividing net earnings available to common shareholders by the weighted average number of shares of common stock outstanding. The assumed exercise of existing employee stock options has been excluded since it does not result in any material dilution. Net earnings available to common shareholders is equal to net earnings reduced by preferred stock dividends of $47,000 for the three months ended October 2, 1993, $74,000 for the nine months ended October 1, 1994 and $172,000 for the nine months ended October 2, 1993. All of the remaining outstanding shares of preferred stock were redeemed in the second quarter of 1994 (Note 7) so there were no preferred dividends paid in the third quarter of 1994. 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. 2. ACQUISITION OF WILSON'S SUPERMARKETS On July 26, 1994, the Company acquired Boney Wilson & Sons, Inc. (Wilson's) and the majority of assets owned by Wilson Brothers Partnership, a partnership which owned certain real estate, the majority of which was leased to Wilson's and used in the ordinary course of business. Wilson's operates 20 supermarkets in southeastern North Carolina and northeastern South Carolina. The purchase also included sites for five additional supermarkets, one of which was opened on September 21, 1994, and two of which are under construction. The acquisition has been accounted for as a purchase, and accordingly the assets acquired and liabilities assumed have been recorded at their estimated fair values on the date of acquisition. The results of HANNAFORD BROS. CO. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) operations of Wilson's are included in the Consolidated Statements of Earnings from June 19, 1994, the effective date of ownership. The total cost of the acquisition, including assumed liabilities, is approximately $126.3 million, which exceeds the fair value of the acquired net assets by approximately $67.8 million. The excess will be recorded as goodwill and amortized utilizing the straight line method over 20 years. Included within the assets acquired was approximately $3.9 million of cash and $4.5 million of cash advances to certain wholesalers. Proforma unaudited results of operations of the Company, assuming the acquisition had occurred on January 1, 1994, and January 2, 1993, are as follows: Unaudited Nine Months Ended October 1 October 2 (In thousands except per share data) 1994 1993 Net sales $1,773,930 $1,678,133 Earnings before cumulative effect of change in accounting principle $ 46,406 $ 41,870 Net earnings $ 46,406 $ 43,970 Per share of common stock: Earnings before cumulative effect of change in accounting principle $ 1.12 $ 1.01 Cumulative effect of change in accounting principle $ -- $ .05 Net earnings $ 1.12 $ 1.06 The foregoing proforma data is not necessarily indicative of what would have occurred had the acquisition been consummated at the beginning of each nine month period, nor of future operations of the combined companies. 3. CHANGE IN METHOD OF ACCOUNTING FOR INCOME TAXES Effective January 3, 1993, the Company adopted STATEMENT OF FINANCIAL ACCOUNTING STANDARDS (SFAS) NO. 109 - ACCOUNTING FOR INCOME TAXES (the Statement). The Statement requires a liability method to be used in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Prior to the adoption of the Statement, income HANNAFORD BROS. CO. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) tax expense was determined using the deferred method. Deferred tax expense was based on items of income and expense reported in different years in the financial statements and tax returns and were measured at the tax rate in effect in the year the difference originated. As permitted by the Statement, the Company has elected not to restate the financial statements of any prior periods, the impact of which would not be material. The cumulative effect of this change for periods prior to January 3, 1993 is $2.1 million or $.05 per share and is shown separately in the Consolidated Statement of Earnings for the nine months ended October 2, 1993. 4. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consists of the following: (in thousands) (Unaudited) October 1, January 1, 1994 1994 Land and improvements $ 73,096 $ 55,699 Buildings 198,377 175,894 Furniture, fixtures & equipment 284,157 252,474 Leasehold interests & improvements 164,782 145,595 Construction in progress 13,482 16,789 733,894 646,451 Less accumulated depreciation and amortization 240,101 208,845 $493,793 $437,606 5. LEASED PROPERTY Leased property under capital leases consists of the following: (in thousands) (Unaudited) October 1, January 1, 1994 1994 Real property $69,689 $65,151 Less accumulated amortization 17,040 15,081 $52,649 $50,070 HANNAFORD BROS. CO. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 6. LONG-TERM DEBT During the first three quarters of 1994, the Company extinguished certain debt, collateralized by real estate and equipment, held by insurance companies and by an Industrial Development Agency, totalling $3,742,000. These loans had terms ranging from 7 to 25 years and interest rates between 8.75% and 10.375%. In October 1994, the Company extinguished certain debt, secured by real estate and held by a group of insurance companies, totalling $13,175,000. This loan had a term of 20 years and an interest rate of 13.7%. On July 26, 1994, the Company signed a promissory note for $4,500,000 as part of its purchase of Wilson's Supermarkets. The note carries an interest rate of 6% and a term of 5 years. During the first three quarters of 1994 the Company reduced its unused, uncommitted short term lines of credit from $38 million with five banks to $28 million with four banks. Of this amount, approximately $8 million is reserved to support outstanding letters of credit which guarantee payment of certain insurance claims and premiums. On October 1, 1994 the Company had outstanding $3,800,000 on its revolving lines of credit. 7. REDEEMABLE PREFERRED STOCK OF A SUBSIDIARY On April 21, 1994, the Company redeemed 18,834 shares of a Series B Voting Preferred Stock of its subsidiary. The shares had a par value of $100 and were redeemed at $108 per share, or a total of $2,034,000. HANNAFORD BROS. CO. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THIRD QUARTER 1994 RESULTS RESULTS OF OPERATIONS Sales and other revenues rose 9.2% for the first three quarters of 1994, to $1,679.8 million, an increase of $141.2 million over the first three quarters of 1993. Retail sales increased $144.9 million or 11.3% to $1,614.6 million, reflecting an increase of $16.1 million or 1.2% in sales from supermarkets that were open in both periods presented ("comparable store sales") and additional sales of $128.8 million from the net impact of new, expanded and closed stores as well as the acquisition of Wilson's Supermarkets in July, 1994. Other sales and revenues, which include trucking, wholesale, real estate and miscellaneous retail operations, decreased $3.7 million. In the third quarter of 1994, sales and other revenues were $622.6 million, an increase of $92.5 million or 17.4% over those reported for the same period in 1993. Retail sales increased $93.3 million or 18.4% to $599.5 million. Comparable store sales increased $8.6 million or 1.8%, while the net impact of new, expanded and closed stores as well as the acquisition of Wilson's Supermarkets, resulted in additional sales of $84.7 million. Other sales and revenues decreased $0.8 million during the quarter. Excluding the sales and other revenues from Wilson's Supermarkets, the Company's sales and other revenues were up 5.7% for the third quarter and 5.1% for the nine months. Gross margins decreased in the first nine months of 1994 to 24.5% of sales and other revenues from 25.0% in the first nine months of 1993. For the third quarter of 1994, gross margins were 24.4% versus 25.1% for the third quarter of 1993. This decrease in margins continues a trend that began in the second half of 1993. These decreases reflect the ongoing competitive pressures throughout the Company's marketing territories. The Company continues to focus on maintaining a competitive pricing strategy in its marketing areas by passing operating efficiencies on to its customers in the form of lower prices. The third quarter decrease also reflects lower gross margins earned by Wilson's Supermarkets. Selling, general and administrative expenses decreased to 19.0% of sales and other revenues in the first nine months of 1994 as compared to 19.6% in the comparable period of 1993. This continues a significant downward trend that began in 1992 when first nine months' selling, general and HANNAFORD BROS. CO. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) MANAGEMENT'S DISCUSSION AND ANALYSIS OF THIRD QUARTER 1994 RESULTS administrative expenses were 20.0% of sales and other revenues. For the third quarter of 1994, selling, general and administrative expenses were 18.4% of sales and other revenues versus 19.0% for the third quarter of 1993. Payroll and payroll related expenses, which exceeded 50% of total selling, general, and administrative expenses in all periods presented, decreased as a percentage of sales and other revenues when comparing the first nine months of 1994 with the first nine months of 1993 and when comparing the third quarter of 1994 with the third quarter of 1993. This resulted from continuing cost containment efforts relating to salaries and wages and employer-related insurance costs. The third quarter reduction of selling, general and administrative expenses expressed as a percentage of sales was also favorably impacted by the operations of Wilson's Supermarkets. The combined federal and state income tax rate was 40.3% for the first nine months of 1994, compared to 40.8% for the first nine months of 1993. The higher effective rate in 1993 is due primarily to a temporary reduction in 1993 of certain state income tax credits. The effective income tax rate was 40.1% in the third quarter of 1994 versus 41.7% in the third quarter of 1993. The higher effective rate in the third quarter of 1993 was due to a retroactive increase in the federal corporate income tax rate coupled with the temporary reduction of certain state income tax credits. Net earnings increased 7.6% in the first nine months of 1994 to $45.6 million or 2.7% of sales and other revenues, an increase of $3.2 million from 1993 first nine months earnings of $42.4 million or 2.7% of sales and other revenues. During the first quarter of 1993, the Company adopted, as required, SFAS NO. 109 - ACCOUNTING FOR INCOME TAXES (Note 3). The cumulative effect of this adjustment, which increased net earnings by $2.1 million or $.05 per share, was reflected in the 1993 first nine months results. Excluding the change in accounting, net earnings for the first nine months of 1994 increased 13.2% over 1993 first nine month results. Third quarter 1994 net earnings were $19.1 million or 3.1% of sales and other revenues as compared to $16.0 million or 3.0% of sales and other revenues in the third quarter of 1993. These improvements reflect the impact of reduced selling, general and administrative expenses expressed as a percentage of sales, offset by a reduction in gross margins. CAPITAL RESOURCES AND LIQUIDITY The current ratio (FIFO basis) at October 1, 1994, was 1.39 while working capital (FIFO basis) at October 1, 1994 was $56.7 million, or 6.6% of total assets. On January 1, 1994, the current ratio (FIFO basis) was 1.98 while working capital (FIFO basis) was $133.6 million, or 16.8% of total assets. HANNAFORD BROS. CO. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) MANAGEMENT'S DISCUSSION AND ANALYSIS OF THIRD QUARTER 1994 RESULTS These decreases in current ratio and working capital are the result of the Company's acquisition of Wilson's Supermarkets (Note 2). The Company values the majority of its inventories using the LIFO method. The current cost of inventories exceeded the LIFO valuation by approximately $15.4 million on October 1, 1994 and $14.8 million at January 1, 1994. The Company's liquidity position is stronger than indicated by stated working capital and current ratios because of available unused lines of revolving credit of $46 million and available lines of short-term credit of $20 million on October 1, 1994. Cash and cash items decreased $58.8 million to $18.7 million at October 1, 1994 from $77.5 million at January 1, 1994. This decrease is primarily the result of the Company's acquisition of Wilson's Supermarkets. The cash used for this acquisition was partially provided by cash from operating activities in the first three quarters of 1994. Cash provided by operating activities was $96.6 million in the first nine months of 1994, an increase of $33.2 million over the $63.4 million provided in the first nine months of 1993. This increase is due primarily to decreases in inventories and receivables coupled with an increase in accounts payable. In addition, depreciation and amortization increased $4.0 million in the first nine months of 1994 over the first nine months of 1993. Cash used in investing activities increased $70.4 million during the first nine months of 1994 to $145.1 million from $74.7 million in the first nine months of 1993. This increase is primarily the result of acquiring Wilson's Supermarkets. The acquisition, net of the shift in short-term investments used to finance it, accounted for $65.1 million of the increase. Capital expenditures totalled $100.1 million during the period and were composed of $53.7 million in additions of property, plant and equipment, $41.0 million of property, plant and equipment in the acquisition of Wilson's Supermarkets and $5.4 in non-cash capital lease additions. In January 1994, the Company opened a new supermarket in Saratoga Springs, New York, with approximately 48,000 square feet of retail selling space. In February 1994, the Company opened a new supermarket in Rotterdam, New York, with approximately 47,000 square feet of retail selling space. In May 1994, the Company opened a new supermarket in Bennington, Vermont, with approximately 38,000 square feet of retail selling space. In June 1994, the Company opened two new supermarkets, one in Kingston, New York, with approximately 47,000 square feet of retail selling space and one in Oxford, Maine, with approximately 38,000 square feet of retail selling space, which replaced two smaller outdated facilities in the same marketing area. In addition, during June 1994, the Company held a grand reopening for an expanded supermarket in HANNAFORD BROS. CO. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) MANAGEMENT'S DISCUSSION AND ANALYSIS OF THIRD QUARTER 1994 RESULTS Rumford, Maine. In September 1994, the Company opened a new supermarket in Fayetteville, North Carolina, with approximately 29,000 square feet of retail selling space. The construction of this store was significantly completed by Wilson's Supermarkets prior to the Company's acquisition. During the next three months, the Company expects to open four new supermarkets. Including the acquisition of Wilson's Supermarkets (Note 2) and expansion plans in the southeastern United States, the Company expects to spend in the range of $120 million in 1994 for capital expenditures. This program, which is subject to continuing change and review, is primarily composed of new supermarket construction and the expansion or relocation of currently existing supermarkets. Including the stores acquired in the Wilson's acquisition, net square footage of retail selling space is expected to increase by approximately 28% by year-end 1994. The 1994 capital program is expected to be financed by cash and cash items, internally generated funds, lines of credit and leases. The acquisition of Wilson's Supermarkets (Note 2) was financed by cash and cash items, the Company's common stock and a promissory note. This acquisition will have no adverse impact on the Company's ability to fund its other planned capital expenditures. In addition to this acquisition, the Company is negotiating options and acquiring land to control other supermarket sites in North Carolina and southern Virginia. Cash used for financing activities was $10.3 million in the first nine months of 1994 as compared to $12.7 million in the first nine months of 1993. The Company continues to maintain a solid capital structure. Management believes that maintaining such financial flexibility provides a significant competitive advantage and allows the Company to be opportunistic in terms of acquisitions and expansions. PART II Item 5: Other Information A limited review was made of the results of the three-month and nine-month periods ended October 1, 1994, by Coopers & Lybrand. Item 6: Exhibits and Reports on Form 8-K (a) A letter from Coopers & Lybrand furnished pursuant to Regulation S-X is filed as Exhibit 15. (b) A letter from Coopers & Lybrand furnished pursuant to Rule 436(c) under the Securities Act of 1933 is filed as Exhibit 23. (c) On August 5, 1994, a Form 8-K was filed reporting under Item 2, the acquisition of Wilson's Supermarkets, a chain of 20 stores headquartered in Wilmington, NC. Also included in this filing under Item 7 were the financial statements for the acquired business for its year ended December 31, 1993. On September 30, 1994, an amendment to the above mentioned Form 8-K was filed including under Item 7 the financial statements of Wilson's Supermarkets through June 18, 1994, the effective date of the acquisition, and the required financial information. 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 November 8, 1994 s/Norman E. Brackett Norman E. Brackett Senior Vice President (Chief Financial Officer) Date November 8, 1994 s/Charles H. Crockett Charles H. Crockett Assistant Secretary EX-15 2 Exhibit 15 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors Hannaford Bros. Co.: We have reviewed the accompanying consolidated balance sheet of Hannaford Bros. Co. and subsidiaries as of October 1, 1994, and the related consolidated statements of earnings and cash flows for the three-month and nine-month periods ended October 1, 1994 and October 2, 1993. 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 review rocedures 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. 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/Coopers & Lybrand L.L.P. Portland, Maine October 17, 1994 EX-23 3 Exhibit 23 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 October 17, 1994, on our review of interim financial information of Hannaford Bros. Co. and subsidiaries for the three-month and nine-month periods ended October 1, 1994, and included in the Company's quarterly report on Form 10-Q for the quarter then ended is incorporated by reference in the Registration Statements on Form S-8 (Numbers 2-77902, 2-77903, 2-98387, 33-1281, 33-22666, 33-31624 and 33-45273). 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/Coopers & Lybrand L.L.P. Portland, Maine October 31, 1994 EX-27 4
5 1000 9-MOS DEC-31-1994 OCT-01-1994 18,666 0 22,111 228 133,307 186,017 733,894 240,101 847,393 144,677 0 31,284 0 0 409,127 847,393 1,679,848 1,679,848 1,268,359 1,268,359 319,811 0 15,337 76,341 30,771 45,570 0 0 0 45,570 1.10 1.10
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