SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 3, 1998. Commission File No. 0-6080
F O O D L I O N, INC.
(Exact name of registrant as specified in its charter)
Incorporated in North Carolina 56-0660192
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
P.O. Box 1330, 2110 Executive Drive
Salisbury, North Carolina 28145-1330
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code--
(704) 633-8250
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, par value $.50 per share
Class B Common Stock, par value $.50 per share
(Title of Class)
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K ( 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.[x]
The aggregate market value of the voting and non-voting stock held by
non-affiliates of the Registrant based on the price of such stock at the
close of business on March 27, 1998 was $1,189,646,901 and $1,527,553,425,
respectively. For purposes of this report and as used
herein,the term "non-affiliate" includes all shareholders of the Registrant
other than Directors, executive officers, and other senior management of the
Registrant and persons holding more than five per cent of the outstanding
voting stock of the Registrant.
Outstanding shares of common stock of the Registrant as of March 27, 1998.
Class A Common Stock - 236,467,986
Class B Common Stock - 232,727,364
Exhibit index is located on sequential page 17 hereof.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference in this Form
10-K:
1. Annual Report to Shareholders for the year ended January 3, 1998
are incorporated by reference in Part II hereof.
2. Proxy Statement for the 1998 Annual Meeting of Shareholders of the
Company to be held on May 7, 1998, are incorporated by reference in
Part III hereof.
PART I
Item 1. Business.
Food Lion, Inc. (the "Company") engages in one line of business, the
operation of retail food supermarkets principally in the southeastern United
States. The Company was incorporated in North Carolina in 1957 and maintains
its corporate headquarters in Salisbury, North Carolina.
The Company's stores, which are operated under the name of "Food Lion,"
and "Kash n' Karry", sell a wide variety of groceries, produce, meats, dairy
products, seafood, frozen food, deli/bakery and non-food items such as health
and beauty aids and other household and personal products. The Company offers
nationally and regionally advertised brand name merchandise as well as products
manufactured and packaged for the Company under the private labels of "Food
Lion" and "Kash n' Karry." The Company offers over 20,000 Stock Keeping Units
(SKU's) in its Food Lion locations and over 30,000 in its Kash n' Karry
locations. The Company's current prototype is a 38,000 square foot model.
The products sold by the Company are purchased through a centralized buying
department at the Company's headquarters. The centralization of the buying
function allows the management of the Company to establish long-term
relationships with many vendors providing various alternatives for sources of
product supply.
The business in which the Company is engaged is highly competitive and
characterized by low profit margins. The Company competes with national,
regional and local supermarket chains, supercenters, discount food stores,
single unit stores, convenience stores and warehouse clubs. The Company will
continue to develop and evaluate new retailing strategies that will respond to
its customers' needs. Seasonal changes have no material effect on the operation
of the Company's supermarkets.
As of January 3, 1998, 1,157 supermarkets were in operation as follows:
Delaware 10 North 394
Carolina
Florida 188 Pennsylvania 7
Georgia 56 South 106
Carolina
Kentucky 13 Tennessee 78
Maryland 38 Virginia 251
West Virginia 16
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As of March 27, 1998, the Company had opened 14 supermarkets since January 3,
1998, closed 4 supermarkets, relocated 3 supermarkets and had signed leases
for 23 supermarkets which are expected to open in either 1998 or 1999.
Warehousing and distribution facilities, including its transportation
fleet, are owned and operated by the Company and are located in Green Cove
Springs and Plant City, Florida; Salisbury and Dunn, North Carolina;
Greencastle,Pennsylvania; Elloree, South Carolina; Clinton, Tennessee; and
Disputanta, Virginia.
As of January 3, 1998, the Company employed 31,128 full-time and 52,743
part-time employees.
The following table shows the number of stores opened, closed and relocated and
the number of stores open at the end of each year for the past three years.
# Stores # Stores #Stores # Stores Opened
Opened Closed Relocated Year-end
1997 164 (1) (94) (25) 1,157
1996 64 ( 3) (22) 1,112
1995 47 ( 1) (12) 1,073
(1) Includes 100 stores acquired from Kash n' Karry
Item 2. Properties.
Supermarkets operated by the Company in the southeastern United States
average 31,200 square feet in size. The Company's current prototype retail
format is a 38,000 square foot model with a deli/bakery department. All of the
Company's supermarkets are self-service stores which have off-street parking
facilities. With the exception of 66 owned operating supermarkets, the Company
occupies its various supermarket premises under lease agreements providing for
initial terms of up to 30 years, with options generally ranging from five to
twenty years.
At the end of 1997 the Company had $99.4 million (book value) in property
held for sale.
The following table identifies the location and square footage of distribution
centers and office space operated by the Company as of January 3, 1998.
Location of
Property Square Footage
Distribution Center #1 Salisbury, NC 1,630,233
Distribution Center #2 Disputanta, VA 1,123,718
Distribution Center #3 Elloree, SC 1,098,612
Distribution Center #4 Dunn, NC 1,224,652
Distribution Center #5 Green Cove Springs, FL 832,109
Distribution Center #6 Clinton, TN 833,042
Distribution Center #7 Greencastle, PA 1,236,124
Distribution Center #8 Plant City, FL 759,546
Corporate Headquarters Salisbury, NC 271,592
9,009,628
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Item 3. Legal Proceedings.
Longman et al. v. Food Lion, Inc. and Tom E. Smith, 4:92 CV 696 (M.D.N.C.)
(complaint filed November 12, 1992, and amended January 23, 1993) ("Longman");
and
Feinman et al. v. Food Lion, Inc. and Tom E. Smith, 4:92 CV 705 (M.D.N.C.)
(complaint filed November 13, 1992) ("Feinman").
The Longman and Feinman actions assert claims against the Company and Tom E.
Smith under Section 10(b) of the Securities Exchange Act of 1934, as amended,
and Rule 10b-5 for securities fraud and claims of common law fraud and negligent
misrepresentation. The actions have been consolidated for discovery and trial
purposes and the court has granted class certification motions, certifying a
single class composed of those persons who purchased common stock of the Company
from May 7, 1990 through November 5, 1992 and were damaged thereby. Merits
discovery has concluded in the actions. The Company and Mr. Smith filed motions
for summary judgment on all claims and plaintiffs filed a motion for summary
judgment on certain affirmative defenses asserted by the Company and Mr. Smith.
The court held a hearing on the summary judgement motions in February 1998, and
took the motions under advisement. The actions seek compensatory damages,
plaintiffs' attorneys' fees and costs, punitive damages, prejudgment interest
and certain other relief. Based on currently available information, the Company
believes that any resulting liability will not have a material adverse effect on
the financial condition or results of operations of the Company.
In re Food Lion, Inc. Fair Labor Standards Act "Effective Scheduling"
Litigation,
MDL Docket No. 929, pursuant to which a number of actions against the Company
were transferred by the Multi-District Litigation Panel to the United States
District Court for the Eastern District of North Carolina for pretrial
proceedings (the "Multi-District Action"). In general, the actions involved
claims seeking payment under the Fair Labor Standards Act for alleged
uncompensated overtime hours, liquidated damages, additional contributions to
the Company's profit-sharing plan, costs and attorneys' fees. The pretrial
proceedings are complete and pursuant thereto, a number of claims were
dismissed. Other cases settled (North Carolina, 1994 and 1995; Virginia, 1993
and 1994;Tennessee, 1994;and Florida, 1997) in an aggregate amount
(inclusive of attorneys' fees where awarded) not material to the Company's
financial condition or results of operations. Approximately 67 claims
dismissed from the North Carolina cases were consolidated and certified
for appeal to the United States Court of Appeals for the Fourth Circuit.
The Fourth Circuit held in abeyance its decision on these appeals
pending entry of a final Order as to all other claims previously
dismissed in the Multi-District Action so that dismissed claims from
other states may be joined and consolidated in the current appeal to
the Fourth Circuit. Approximately eight claims dismissed from the South
Carolina and Florida cases were added to this appeal.Oral argument was held in
the Fourth Circuit in January 1998. The remaining cases involve the claims of
approximately 111 plaintiffs in South Carolina. These 111 cases were tentatively
settled in the first quarter of 1998 in an aggregate amount that is not material
to the Company's financial condition or results of operations, and in the same
period a petition for attorneys' fees was filed with respect to the Florida
claims. Based on currently available information, the Company believes that any
resulting liability from this litigation will not have a material adverse effect
on the financial condition or results of operations of the Company.
-4-
Item 4. Submission of Matters to a Vote of Security Holders.
This item is not applicable.
Executive Officers of the Registrant
The names and ages of the current executive officers of the Company and their
positions as of March 1, 1998, are set forth below. The footnotes following the
table below include the business experience during the past five years for each
executive officer who has been employed by the Company for fewer than five
years. Unless otherwise indicated by footnote, each of the executive officers
served in various managerial capacities with the Company over the past five
years. None of the executive officers named below is related to any other
executive officer or director by blood, marriage or adoption. Officers serve at
the discretion of the Board of Directors.
Name and all Positions with Age Year First Year First
the Company Held at March Elected Elected to
1, 1998 Officer Present
Office
Tom E. Smith 56 1974 1981
President and Chief
Executive Officer
Joseph C. Hall, Jr. 48 1988 1995
Senior Vice President and
Chief Operating Officer
R. William McCanless 40 1993 1996
Senior Vice President,
Chief Administrative
Officer
and Secretary
Pamela K. Kohn 33 1995 1997
Senior Vice President of
Merchandising
Jay J. Abraham 1 41 1994 1994
Vice President of Marketing
A. Edward Benner, Jr. 56 1980 1996
Vice President and Chief
Information Officer
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Robert J. Brunory 43 1994 1994
Vice President
Procurement/Category
Management
Mike Byars 39 1997 1997
Vice President
of Operations, Food Lion,
Kash n'Karry Division
Larry A. Cooper 2 49 1996 1996
Vice President of
Distribution
W. Bruce Dawson 45 1995 1995
Vice President of
Operations/
Northern Division
Keith M. Gehl 39 1997 1997
Vice President of Real
Estate and
Store Development
Carol Herndon 35 1991 1994
Corporate Controller and
Director of Accounting
Richard James 38 1997 1997
Director of Finance and
Treasurer
Darrell Johnson 45 1997 1997
Vice President of Human
Resources
Laura Kendall 3 46 1997 1997
Vice President of Finance
and Chief Financial Officer
Dave Morgan 47 1997 1997
Vice President of
Operations/
Southern Division
Lester C. Nail 4 38 1995 1995
Vice President Legal
Affairs
and Assistant Secretary
Tom Robinson 37 1997 1997
Vice President of
Operations/
Central Division
Natalie Taylor 38 1997 1997
Vice President of Diversity
-6-
1 Prior to joining Food Lion, Mr. Abraham was Vice President of Marketing,
Weight Watchers Company, a wholly owned subsidiary of the H.J. Heinz Company.
2 Mr. Cooper was Vice President of Distribution at Ralphs Grocery Company prior
to his employment at Food Lion.
3 Ms. Kendall served as the Chief Financial Officer for F & M Distributors
prior to joining Food Lion. From 1995 until March of 1997, she was the
presiding officer overseeing the liquidation process for F&M Distributors.
4 Prior to joining Food Lion in 1995, Mr. Nail served as Corporate Counsel to
Wal-Mart Stores, Inc.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
The information pertaining to the Class A and Class B Common Stock price
range, dividends and record holders discussed beneath the headings "Market Price
of Common Stock" and "Dividends Declared Per Share of Common Stock" in the
Annual Report to Shareholders for the year ended January 3, 1998, is hereby
incorporated by reference.
Item 6. Selected Financial Data.
The information set forth beneath the heading "Ten Year Summary of
Operations" in the Annual Report to Shareholders for the year ended January 3,
1998, is hereby incorporated by reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The information set forth beneath the heading "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Annual Report
to Shareholders for the year ended January 3, 1998, is hereby incorporated by
reference.
Item 8. Financial Statements and Supplementary Data.
The financial statements, including the accompanying notes and results by
quarter, set forth beneath the headings "Consolidated Statements of Income",
"Consolidated Balance Sheets", "Consolidated Statements of Cash Flows",
"Consolidated Statements of Shareholders' Equity", "Notes to Consolidated
Financial Statements" and "Results by Quarter" in the Annual Report to
Shareholders for the year ended January 3, 1998, are hereby incorporated by
reference.
-7-
Item 9. Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure.
This item is not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information pertaining to nominees for election as directors set forth
beneath the heading "Election of Directors" in the Proxy Statement for the 1997
Annual Meeting of Shareholders to be held May 7, 1998 is incorporated by
reference. Information concerning the Company's executive officers is contained
under the heading "Executive Officers of the Registrant" in Part I of this
report.
Item 11. Executive Compensation.
The information pertaining to executive compensation set forth beneath the
heading "Report of the Senior Management Compensation Committee, Stock Option
Committee and Board of Directors" in the Proxy Statement for the 1998 Annual
Meeting of Shareholders to be held on May 7, 1998, is hereby incorporated by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The information pertaining to security ownership of certain beneficial
owners and management set forth beneath the heading "Security Ownership of
Certain Beneficial Owners and Management" in the Proxy Statement for the 1998
Annual Meeting of Shareholders to be held on May 7, 1998, is hereby incorporated
by reference.
Item 13. Certain Relationships and Related Transactions.
The information relating to certain relationships and related transactions
set forth beneath the headings "Employment Plans and Agreements - Low Interest
Loan Plan" and "Compensation Committee Interlocks and Insider Participation" in
the Proxy Statement for the 1998 Annual Meeting of Shareholders to be held May
7, 1998, is hereby incorporated by reference.
-8-
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) The following documents are filed as part of this report:
1. Financial Statements:
The following financial statements are incorporated by
reference in Item 8 hereof from the Annual Report to
Shareholders for the year ended January 3, 1998:
ANNUAL REPORT
PAGE NO.
Consolidated Statements of Income for the years
ended January 3, 1998, December 28, 1996 and
December 30, 1995 20
Consolidated Balance Sheets, as of January 3,
1998 and December 28, 1996 21
Consolidated Statements of Cash Flows for the
years ended January 3, 1998, December 28, 1996
and December 30, 1995 22
Consolidated Statements of Shareholders' Equity
for the years ended January 3, 1998,
December 28, 1996 and December 30, 1995 23
Notes to Consolidated Financial Statements 24-29
Results by Quarter (unaudited) 31
10-K
PAGE NO.
2. Financial Statement Schedules:
Report of Independent Accountants 16
All other schedules are omitted since the required information is not
applicable or is not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the financial
statements and notes thereto.
-9-
With the exception of the financial statements listed in the above index,
the information referred to in Items 5, 6, 7 and the supplementary quarterly
financial information referred to in Item 8, all of which is included in the
1997 Annual Report to Shareholders of Food Lion, Inc. and incorporated by
reference into this Form 10-K Annual Report, the 1997 Annual Report to
Shareholders is not to be deemed "filed" as part of this report.
3. Exhibits:
Exhibit No.
3(a) Articles of Incorporation, together with all
amendments thereto (through May 5, 1988)
(incorporated by reference to Exhibit 3(a) of the
Company's Annual Report on Form 10-K dated March
24, 1992)
3(b) Bylaws of the Company effective May 4,1995
(incorporated by reference to Exhibit 3(b)
of the Company's Annual Report on Form 10-K
dated March 27, 1997)
4(a) Indenture dated as of August 15, 1991 between
the Company and the Bank of New York, Trustee,
providing for the issuance of an unlimited amount
of Debt Securities in one or more series (incorpo-
rated by reference to Exhibit 4(a) of the Company's
Annual Report on Form 10-K dated March 24, 1992)
4(b) Form of Food Lion, Inc. Medium Term Note (Global
Fixed Rate) (incorporated by reference to Exhibit
4(b) of the Company's Annual Report on Form 10-K
dated March 24, 1992)
10(a) Low Interest Loan Plan (incorporated by reference
to Exhibit 19(a) of the Company's Report on Form
8-K dated October 27, 1986)
10(b) Form of Deferred Compensation Agreement
(incorporated by reference to Exhibit 19(b) of
the Company's Report on Form 8-K dated October 27,
1986)
10(c) Form of Salary Continuation Agreement (incorporated
by reference to Exhibit 19(c) of the Company's
report on Form 8-K dated October 27, 1986)
10(d) 1994 Shareholders' Agreement dated as of the 15th
day of September 1994 among Etablissements Delhaize
Freres et Cie "Le Lion" S.A., Delhaize The Lion
America, Inc., and the Company (incorporated by
reference to Exhibit 10 of the Company's Report on
Form 8-K dated October 7, 1994)
-10-
10(e) Proxy Agreement dated January 4, 1991 between
Etablissements Delhaize Freres et Cie "Le Lion"
S.A. and Delhaize The Lion, America, Inc.
(incorporated by reference to Exhibit 10(e) of
the Company's Annual Report on Form 10-K dated
March 25, 1991)
10(f) Employment Agreement dated August 1, 1991 between
the Company and Tom E. Smith (incorporated by
reference to Exhibit 10(h) of the Company's Annual
Report on Form 10-K dated March 24, 1992)
10(g) Stock Purchase Agreement dated June 30, 1981
between the Company and Ralph W. Ketner
(incorporated by reference to Exhibit 10(j) of
the Company's Annual Report on Form 10-K dated
April 1, 1987)
10(h) Amended and Restated Food Lion, Inc. 1983
Employee Stock Option Plan (incorporated by
reference to Exhibit 10(k) of the Company's Annual
Report on Form 10-K dated March 24, 1992)
10(i) 1991 Employee Stock Option Plan of Food Lion,
Inc. (incorporated by reference to Exhibit 10(l) of
the Company's Annual Report on Form 10-K dated
March 24, 1992)
10(j) Split Dollar Life Insurance Agreement between the
Company and Tom E. Smith (incorporated by
reference to Exhibit 10(o) of the Company's
Annual Report on Form 10-K dated April 1, 1987)
10(k) Split Dollar Life Insurance Agreement between the
Company and Tom E. Smith issued May 25, 1988
(incorporated by reference to Exhibit 10(w) of the
Company's Annual report on Form 10-K dated March
20, 1989)
10(l) Letter Agreement dated May 10, 1990 between the
Company and Ralph W. Ketner (incorporated by
reference to Exhibit 10(q) of the Company's Annual
Report on Form 10-K dated March 25, 1991)
10(m) U.S. Distribution Agreement dated August 20, 1991
between the Company and Goldman, Sachs & Co. and
Merrill Lynch & Co. relating to the sale of up to
$300,000,000 in principal amount of the Company's
Medium-Term Notes (incorporated by reference to
Exhibit 10(p) of the Company's Annual Report on
Form 10-K dated March 24, 1992)
10(n) License Agreement between the Company and
Etablissements Delhaize Freres Et Cie "Le Lion"
S.A. dated January 1, 1983(incorporated by
reference to Exhibit 10(t) of the Company's
Annual Report on Form 10-K dated March 31, 1994)
-11-
10(o) 1996 Employee Stock Incentive Plan of Food Lion,
Inc.(incorporated by reference to Exhibit 10(a)
of the Company's Quarterly Report on Form 10-Q
dated July 30, 1996)
10(p) Key Executive Annual Incentive Bonus Plan
(incorporated by reference to Exhibit 10(b)
of the Company's Quarterly Report on Form
10-Q dated July 30, 1996)
10(q) Profit Sharing Restoration Plan effective as
of May 4, 1995(incorporated by reference to
Exhibit 10(c) of the Company's 10-Q A dated
August 13, 1996)
10(r) Supplemental Executive Retirement Plan effective
as of May 4, 1995 (incorporated by reference to
Exhibit 10(d) of the Company's 10-Q A dated
August 13, 1996)
10(s) Employee Severance Agreement dated September 5,
1996 between the Company and Dan A. Boone
(incorporated by reference to Exhibit 10 of the
Company's Quarterly Report on Form 10-Q dated
October 16, 1996)
10(t) Employment Agreement dated as of February 27,1997
between Joseph C. Hall,Jr. and the Company
(incorporated by reference to Exhibit 10(w) of
the Company's Annual Report on Form 10-K dated
March 27, 1997)
10(u) Employment Agreement dated as of February 27,1997
between R. William McCanless and the Company
(incorporated by reference to Exhibit 10(x) of the
Company's Annual Report on Form 10-K dated
March 27, 1997)
10(v) Agreement and Plan of Merger dated as of October
31, 1996 among the Company, KK Acquisition Corp.
and Kash n' Karry Food Stores, Inc. (incorporated
by reference to Exhibit 2 of the Company's Report
on Form 8-K dated October 31, 1996)
10(w) Stockholders' Agreement, dated as of October 31,
1996, among the Company, KK Acquisition Corp.,
Kash n' Karry Food Stores, Inc. and the stockholders
of Kash n' Karry Food Stores, Inc.signatory thereto
(incorporated by reference to Exhibit 10 of the
Company's Report on Form 8-K dated October 31,1996)
10(x) $700,000,000 Revolving Credit Facility dated as of
December 16, 1996 among the Company and various banks,
and Chase Manhattan Bank, as Administrative Agent,
and Wachovia Bank of North Carolina, N.A., as
Documentation Agent (incorporated by reference to
Exhibit 10(aa) of the Company's Annual Report on
Form 10-K dated March 27, 1997)
-12-
10(y) License agreement, dated as of June 19, 1997,
among the Company, Kash n' Karry Food Stores, Inc.,
and Etablissements Delhaize Freres Et Cie "Le Lion" S.A.
(incorporated by reference to Exhibit 10(a) of the
Company's Quarterly Report on Form 10-Q dated
July 25, 1997)
10(z) Food Lion Inc. and The Bank of New York, Trustee,
First Supplement Indenture dated as of April 21, 1997
(incorporated by reference to Exhibit 10(a) of the
Company's Quarterly Report on Form 10-Q dated
May 2, 1997)
10(aa) Underwriting Agreement dated as of April 16, 1997
between Food Lion, Inc. and Salomon Brothers, Inc.
for itself and as representative for NationsBanc
Capital Markets Inc.(incorporated by reference to
Exhibit 10(b) of the Company's Quarterly Report
on Form 10-Q dated May 2, 1997)
10(ab) Credit Agreement dated as of December 15, 1997, among
the Company the lenders party thereto, The Chase
Manhattan Bank, as Administrative Agent, and Wachovia
Bank , N.A., as Documentation Agent.
10(ac) Deferral Agreement and Election, dated as of December
18, 1997, by and between Tom E. Smith and the Company.
10(ad) Employment Agreement, dated as of October 1, 1997,
between Pamela K. Kohn and the Company.
10(ae) Employment Agreement, dated as of October 1, 1997,
between A. Edward Benner and the Company.
10(af) Agreement, dated as of January 4, 1998, between
Etablissements Delhaize Freres et Cie "Le Lion"
S.A. and the Company.
11 Computation of Earnings Per Share
13 Annual Report to Shareholders for the year
ended January 3, 1998
21 Subsidiaries of Registrant
23 Consent of Independent Accountants
27 Financial Data Schedules
99 Undertaking of the Company to file exhibits
pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K
(b) Reports on Form 8-K:
The Company did not file a report on Form 8-K for the period ended
January 3, 1998.
-13-
Pursuant to the requirements of Section 13 or 15(d) 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.
Date:04/08/98 By Tom E. Smith
Tom E. Smith
President, Chief Executive
Officer, Principal
Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
Date: 04/08/98 By Tom E. Smith
Tom E. Smith
President, Chief Executive
Officer, Principal
Executive Officer and Director
Date:4/08/98 By Pierre-Olivier Beckers
Pierre-Olivier Beckers
Director
Date: By
Dr. Jacqueline K. Collamore
Director
Date: 4/08/98 By Jean-Claude Coppieters t Wallant
Jean-Claude Coppieters t Wallant
Director
Date: By
William G. Ferguson
Director
Date: By
Dr. Bernard Franklin
Director
Date: 04/08/98 By Joseph C. Hall
Joseph C. Hall
Senior Vice President of Operations
Director
Date:04/08/98 By Margaret H. Kluttz
Margaret H. Kluttz
Director
Date: By
Philippe Stroobant
Director
Date:4/08/98 By Gui de Vaucleroy
Gui de Vaucleroy
Director
-14-
Date: By
R.William McCanless
Chief Administrative Officer
and Secretary
Date:04/08/98 By Laura Kendall
Laura Kendall
Vice President of Finance
Chief Financial Officer
Principal Financial Officer
-15-
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders of Food Lion, Inc.:
We have audited the consolidated financial statements of Food Lion, Inc.
and subsidiaries as of January 3, 1998 and December 28, 1996, and for each of
the three fiscal years in the period ended January 3, 1998, which financial
statements are included on pages 20 through 30 of the 1997 Annual Report
to Shareholders of Food Lion,Inc., incorporated by reference herein.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements 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 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 consolidated financial position of Food Lion, Inc.
and subsidiaries, as of January 3, 1998 and December 28, 1996, and the
consolidated results of their operations and their cash flows for each of the
three fiscal years in the period ended January 3, 1998, in conformity with
generally accepted accounting principles.
As discussed in Note 17, the 1996 financial statements have been revised to
reflect adjustments related to store closing reserves.
Charlotte, North Carolina
February 10, 1998
COOPERS & LYBRAND, L.L.P.
-16-
EXHIBIT INDEX
to
ANNUAL REPORT ON FORM 10-K of
Food Lion, Inc.
For Year Ended January 3, 1998
Sequential
Exhibit No. Description Page No.
3(a) Articles of Incorporation, together with all
amendments thereto (through May 5, 1988)
(incorporated by reference to Exhibit 3(a)
of the Company's Annual Report on Form 10-K
dated March 24, 1992)
3(b) Bylaws of the Company effective May 4, 1995
(incorporated by reference to Exhibit 3(b)
of the Company's Annual Report on Form 10-K
dated March 27, 1997)
4(a) Indenture dated as of August 15, 1991 between the
Company and the Bank of New York, Trustee,
providing for the issuance of an unlimited amount
of Debt Securities in one or more series
(incorporated by reference to Exhibit 4(a) of the
Company's Annual Report on Form 10-K dated March
24, 1992)
4(b) Form of Food Lion, Inc. Medium Term Note (Global
Fixed Rate) (incorporated by reference to Exhibit 4(b)
of the Company's Annual Report on Form 10-K dated
March 24, 1992)
10(a) Low Interest Loan Plan (incorporated by reference to
Exhibit 19(a) of the Company's Report on Form 8-K
dated October 27, 1986)
10(b) Form of Deferred Compensation Agreement
(incorporated by reference to Exhibit 19(b) of the
Company's Report on Form 8-K dated October 27, 1986)
10(c) Form of Salary Continuation Agreement (incorporated
by reference to Exhibit 19(c) of the Company's Report
on Form 8-K dated October 27, 1986)
10(d) 1994 Shareholders' Agreement dated as of the 15th day
of September 1994 among Etablissements Delhaize Freres
et Cie "Le Lion" S.A., Delhaize The Lion America, Inc.,
and the Company (incorporated by reference to Exhibit 10
of the Company's Report on Form 8-K dated October 7, 1994)
10(e) Proxy Agreement dated January 4, 1991 between
Etablissements Delhaize Freres et Cie "Le Lion"
S.A. and Delhaize The Lion America, Inc. (incorporated
by reference to Exhibit 10(e) of the Company's Annual
Report on form 10-K dated March 25, 1991)
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10(f) Employment Agreement dated August 1, 1991 between
the Company and Tom E. Smith (incorporated by
reference to Exhibit 10(h) of the Company's Annual
Report on Form 10-K dated March 24, 1992)
10(g) Stock Purchase Agreement dated June 30, 1981 between
the Company and Ralph W. Ketner (incorporated by
reference to Exhibit 10(j) of the Company's Annual
Report on Form 10-K dated April 1, 1987)
10(h) Amended and Restated Food Lion, Inc. 1983 Employment
Stock Option Plan (incorporated by reference to
Exhibit 10(k) of the Company's Annual Report on Form
10-K dated March 24, 1992)
10(i) 1991 Employee Stock Option Plan of Food Lion, Inc.
(incorporated by reference to Exhibit 10(l) of the
Company's Annual Report on Form 10-K dated March 24,
1992)
10(j) Split Dollar Life Insurance Agreement between the
Company and Tom E. Smith (incorporated by reference
to Exhibit 10(o) of the Company's Annual Report on
Form 10-K dated April 1, 1987)
10(k) Split Dollar Life Insurance Agreement between
the Company and Tom E. Smith issued May 25, 1988
(incorporated by reference to Exhibit 10(w) of
the Company's Annual report on Form 10-K dated
March 20, 1989)
10(l) Letter Agreement dated May 10, 1990 between the
Company and Ralph W. Ketner (incorporated by
reference to Exhibit 10(q) of the Company's
Annual Report on Form 10-K dated March 25, 1991)
10(m) U.S. Distribution Agreement dated August 20, 1991
between the Company and Goldman, Sachs & Co and
Merrill Lynch & Co. relating to the sale of up to
$300,000,000 in principal amount to the Company's
Medium-Term Notes (incorporated by reference to
Exhibit 10(p) of the Company's Annual Report on
Form 10-K dated March 24, 1992)
10(n) License Agreement between the Company and
Etablissements Delhaize Freres Et Cie "Le Lion" S.A.
dated January 1, 1983 (incorporated by reference to
Exhibit 10(t) of the Company's Annual Report on Form
10-K dated March 31, 1994)
10(o) 1996 Employee Stock Incentive Plan of Food Lion, Inc.
(incorporated by reference to Exhibit 10(a) of the
Company's Quarterly Report on Form 10-Q dated July 30, 1996)
10(p) Key Executive Annual Incentive Bonus Plan (incorporated
by reference to Exhibit 10(b) of the Company's Quarterly
Report on Form 10-Q dated July 30, 1996)
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10(q) Profit Sharing Restoration Plan effective as of May 4,
1995 (incorporated by reference to Exhibit 10(c) of the
Company's 10-Q A dated August 13, 1996)
10(r) Supplemental Executive Retirement Plan effective as of
May 4, 1995 (incorporated by reference to Exhibit 10(d)
of the Company's 10-Q A dated August 13, 1996)
10(s) Employee Severance Agreement dated September 5, 1996
between the Company and Dan A. Boone (incorporated by
reference to Exhibit 10 of the Company's Quarterly Report
on Form 10-Q dated October 16, 1996)
10(t) Employment Agreement dated as of February 27,1997
between Joseph C. Hall,Jr. and the Company (incorporated by
reference to Exhibit 10(w) of the Company's Annual Report
on Form 10-K dated March 27, 1997)
10(u) Employment Agreement dated as of February 27,1997
between R. William McCanless and the Company (incorporated
by reference to Exhibit 10(x) of the Company's Annual Report
on Form 10-K dated March 27, 1997)
10(v) Agreement and Plan of Merger dated as of October 31, 1996
among the Company, KK Acquisition Corp. and Kash n' Karry
Food Stores, Inc. (incorporated by reference to Exhibit 2 of
the Company's Report on Form 8-K dated October 31, 1996)
10(w) Stockholders' Agreement, dated as of October 31, 1996,
among the Company, KK Acquisition Corp., Kash n' Karry
Food Stores, Inc. and the stockholders of Kash n' Karry
Food Stores, Inc. signatory thereto (incorporated by
reference to Exhibit 10 of the Company's Report on Form
8-K dated October 31,1996)
10(x) $700,000,000 Revolving Credit Facility dated as of
December 16, 1996 among the Company and various banks,
and Chase Manhattan Bank, as Administrative Agent, and
Wachovia Bank of North Carolina, N.A., as Documentation
Agent (incorporated by reference to Exhibit 10(aa) of
the Company's Annual Report on Form 10-K dated March
27, 1997)
10(y) License agreement, dated as of June 19, 1997, among
the Company, Kash n' Karry Food Stores, Inc., and
Etablissements Delhaize Freres Et Cie "Le Lion" S.A.
(incorporated by reference to Exhibit 10(a) of the
Company's Quarterly Report on Form 10-Q dated
July 25, 1997)
10(z) Food Lion Inc. and The Bank of New York, Trustee, First
Supplement Indenture dated as of April 21, 1997
(incorporated by reference to Exhibit 10(a) of the
Company's Quarterly Report on Form 10-Q dated
May 2, 1997)
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10(aa) Underwriting Agreement dated as of April 16, 1997
between Food Lion, Inc. and Salomon Brothers, Inc.
for itself and as representative for NationsBanc
Capital Markets Inc.(incorporated by reference to
Exhibit 10(b) of the Company's Quarterly Report
on Form 10-Q dated May 2, 1997)
10(ab) Credit Agreement dated as of December 15, 1997,
among the Company the lenders party thereto, The
Chase Manhattan Bank, as Administrative Agent,
and Wachovia Bank, N.A., as Documentation Agent.
10(ac) Deferral Agreement and Election, dated as of
December 18, 1997, by and between Tom E. Smith and
the Company.
10(ad) Employment Agreement, dated as of October 1,1997,
between Pamela K. Kohn and the Company.
10(ae) Employment Agreement, dated as of October 1,1997,
between A. Edward Benner and the Company.
10(af) Agreement, dated as of January 4, 1998, between
Etablissements Delhaize Freres et Cie "Le Lion"
S.A. and the Company.
11 Computation of Earnings Per Share
13 Annual Report to Shareholders for the year ended
January 3,1998
21 Subsidiaries of Registrant
23 Consent of Independent Accountants
27 Financial Data Schedules
99 Undertaking of the Company to file exhibits pursuant
to Item 601(b)(4)(iii)(A) of Regulation S-K
(b) Reports on Form 8-K:
The Company did not file a report on Form 8-K for the period ended
January 3, 1998.
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