FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 3, 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 1-6905
RUDDICK CORPORATION
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-0905940
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2000 Two First Union Center
Charlotte, North Carolina 28282
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (704) 372-5404
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 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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding Shares
Class As of August 5, 1994
Common Stock 23,294,951 shares
<PAGE>
RUDDICK CORPORATION
INDEX
PAGE NO.
PART I. FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS -
JULY 3, 1994 AND OCTOBER 3, 1993 2
CONSOLIDATED CONDENSED STATEMENTS OF
INCOME - THREE MONTHS AND NINE MONTHS
ENDED JULY 3, 1994 AND JUNE 27, 1993. 3
CONSOLIDATED CONDENSED STATEMENTS OF
CASH FLOWS - NINE MONTHS ENDED
JULY 3, 1994 AND JUNE 27, 1993 4
NOTES TO CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS 5
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 6-10
PART II. OTHER INFORMATION
ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURES 11
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RUDDICK CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
July 3, October 3,
1994 1993
ASSETS (Unaudited) (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and Temporary Cash Investments $ 13,453 $ 12,392
Accounts Receivable, Net 66,944 58,757
Inventories 180,153 171,142
Other 11,464 15,327
________ ________
Total Current Assets 272,014 257,618
PROPERTY, NET 289,842 273,683
INVESTMENTS AND OTHER ASSETS 59,198 55,514
________ ________
Total $ 621,054 $ 586,815
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes Payables $ 5,036 $ 2,918
Current Portion of Long-Term Debt 5,988 5,989
Accounts Payable 107,416 104,518
Income Taxes Payable 3,947 3,740
Other Accrued Liabilities 42,106 45,157
________ ________
Total Current Liabilities 164,493 162,322
________ ________
LONG-TERM DEBT AND DEFERRED
LIABILITIES 166,669 149,753
________ ________
SHAREHOLDERS' EQUITY:
Capital Stock
Preference -- 486
Common 60,362 62,523
Retained Earnings 231,466 213,713
Cumulative Translation Adjustments (1,936) (1,982)
________ ________
Shareholders' Equity 289,892 274,740
________ ________
Total $ 621,054 $ 586,815
</TABLE>
PAGE 2
<PAGE>
RUDDICK CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JULY 3, JUNE 27, JULY 3, JUNE 27,
1994 1993 1994 1993
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
NET SALES
American & Efird $ 71,590 $ 66,984 $ 202,452 $ 194,621
Harris Teeter 401,792 344,167 1,175,663 1,029,039
Jordan Graphics 13,192 13,214 38,907 40,816
________ ________ _________ _________
Total 486,574 424,365 1,417,022 1,264,476
OPERATING PROFIT
American & Efird 7,721 7,804 19,439 22,667
Harris Teeter 10,350 9,176 27,377 25,541
Jordan Graphics 116 520 (219) 1,979
Ruddick Investment 399 185 850 449
________ ________ _________ _________
Total 18,586 17,685 47,447 50,636
OTHER COSTS AND DEDUCTIONS
Interest expense, net 2,058 1,942 6,174 6,104
Other expense 1,856 1,466 5,112 4,139
________ ________ _________ _________
Total 3,914 3,408 11,286 10,243
Income Before Taxes and Cumulative
Effect of Accounting Change 14,672 14,277 36,161 40,393
Taxes 5,421 5,519 13,201 15,612
________ ________ _________ _________
Income Before Cumulative Effect
of Accounting Change 9,251 8,758 22,960 24,781
Cumulative Effect of
Accounting Change -- -- -- 3,869
________ ________ _________ _________
NET INCOME $ 9,251 $ 8,758 $ 22,960 $ 28,650
AVERAGE NUMBER OF SHARES OF
COMMON STOCK AND COMMON
STOCK EQUIVALENTS OUTSTANDING:
Primary 23,529,825 23,776,739 23,658,181 23,832,458
Fully Diluted 23,529,851 23,776,593 23,658,767 23,834,889
NET INCOME PER SHARE-
PRIMARY AND FULLY DILUTED:
Income Before Cumulative Effect
of Accounting Change $0.39 $0.37 $0.97 $1.04
Cumulative Effect of
Accounting Change -- -- -- $0.16
NET INCOME PER SHARE $0.39 $0.37 $0.97 $1.20
DIVIDENDS DECLARED PER SHARE:
Common $0.07 $0.07 $0.21 $0.19
$.56 Convertible Preference $0.10 $0.14 $0.38 $0.42
</TABLE>
PAGE 3
<PAGE>
RUDDICK CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JULY 3, JUNE 27,
1994 1993
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOW FROM INCOME $ 60,085 $ 51,036
Decrease (Increase) in Current Assets (13,335) (9,501)
Increase (Decrease) in Current Liabilities 2,170 10,130
_________ __________
NET CASH PROVIDED BY OPERATING ACTIVITIES 48,920 51,665
INVESTING ACTIVITIES
Purchase of Assets (51,470) (34,576)
Cash Proceeds from Sale of Assets 2,779 2,273
Other, Net (2,138) (1,103)
___________ __________
NET CASH USED IN INVESTING ACTIVITIES (50,829) (33,406)
FINANCING ACTIVITIES
Proceeds (Repayments) of Long Term Borrowings 19,200 (8,400)
Payment of Principal on Long-Term Debt (4,333) (6,405)
Dividends (4,883) (4,429)
Borrowings (Repayments) on COLI, Net (4,581) 581
Other, Net (2,433) (2,036)
___________ __________
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 2,970 (20,689)
INCREASE (DECREASE) IN BALANCE SHEET CASH 1,061 (2,430)
BALANCE SHEET CASH AT BEGINNING OF PERIOD 12,392 20,427
___________ __________
BALANCE SHEET CASH AT END OF PERIOD $ 13,453 $ 17,997
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash Paid During the Year for:
Interest $ 6,153 $ 6,063
Income Taxes $ 10,205 $ 16,984
</TABLE>
PAGE 4
<PAGE>
RUDDICK CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
IN THE OPINION OF MANAGEMENT, THE INFORMATION FURNISHED
REFLECTS ALL ADJUSTMENTS (CONSISTING ONLY OF NORMAL
RECURRING ACCRUALS) NECESSARY TO PRESENT FAIRLY THE
RESULTS FOR THE INTERIM PERIODS PRESENTED.
AS OF MAY 31, 1994, THE COMPANY REDEEMED THE REMAINING
5,257 SHARES OF ITS $.56 CONVERTIBLE PREFERENCE STOCK THAT
HAD NOT BEEN TENDERED FOR CONVERSION INTO COMMON STOCK
ON OR BEFORE MAY 23, 1994, AS REQUIRED. THE REDEMPTION
PRICE OF SUCH STOCK WAS $10.10 PER SHARE INCLUSIVE OF THE
PRO RATA DIVIDEND OF $.10 PER SHARE.
PAGE 5
<PAGE>
ITEM 2 Management's Discussion
and Analysis of Financial Condition and Results of Operations
Results of Operations
The following table shows net sales and operating
profit for each of Ruddick Corporation's subsidiaries for the quarters
and nine months ended July 3, 1994 and June 27, 1993:
(In Thousands) Quarter Ended Nine Months Ended
July 3, June 27, July 3, June 27,
1994 1993 1994 1993
Net Sales
American & Efird $ 71,590 $ 66,984 $ 202,452 $ 194,621
Harris Teeter 401,792 344,167 1,175,663 1,029,039
Jordan Graphics 13,192 13,214 38,907 40,816
Total $486,574 $424,365 $1,417,022 $1,264,476
Operating Profit
American & Efird $ 7,721 $ 7,804 $ 19,439 $ 22,667
Harris Teeter 10,350 9,176 27,377 25,541
Jordan Graphics 116 520 (219) 1,979
Ruddick Investment 399 185 850 449
Total $ 18,586 $17,685 $ 47,447 $ 50,636
For the Three Months Ended July 3, 1994 and June 27, 1993
Consolidated sales of $487 million in the third quarter of fiscal
1994 increased 14.7% over the $424 million reported for the comparable
quarter last year. Total operating profit of $18.6 million was 5.1%
ahead of last year. Net income after taxes was $9.3 million, an
increase of 5.6% over the $8.8 million reported last year.
Fully diluted and primary earnings per share were $.39 in the
third quarter of fiscal 1994 compared to $.37 for the comparable period last
year.
In the third quarter of fiscal 1994, American & Efird
sales of $71.6 million increased 6.9% over the $67.0 million reported for
the comparable period last year. The increase in sales occurred primarily in
industrial thread, which sales were strong in the quarter due to improved
business conditions in most markets served by A&E. Operating profit of $7.7
million declined slightly from last year's operating profit of $7.8
million. Sales margins declined when compared to last year as pricing remained
competitive. Although a relatively small contributor to total sales, consumer
division sales were improved in spite of poor business conditions among fabric
retailers. International subsidiaries achieved sales increases in most
markets. However, international division profits were down due primarily to
poor business conditions in Europe and the Far East, the costs of consolidations
in Canada, and expenses associated with start-up activities in Mexico and
the Dominican Republic.
PAGE 6
<PAGE>
Harris Teeter sales in the third fiscal quarter of
$401.8 million increased 16.7% over the $344.2 million reported for the same
period last year. Net sales for stores in operation during both periods
increased 9.7%. The increase in sales was the result of new stores and
strong feature oriented merchandising, which provided a significant increase
in customer count. Operating profit of $10.4 million increased 12.8% over the
$9.2 million reported for the comparable period last year. Gross profit
increases more than offset higher operating expenses, resulting in the
improved operating profit. Sales improvements in the Columbia, South
Carolina market and improved store operations in the Atlanta, Georgia market
resulted in a less adverse effect to the quarter's results as compared to the
first two quarters of fiscal 1994. One replacement store was opened
in the quarter and 141 were in operation at the end of the quarter compared
to 135 a year ago.
Jordan Graphics sales of $13.2 million were about equal to the
amount reported for the comparable period last year. Sales increases occurred
in stock forms, custom forms, laser and labels but declined in commercial and
sales of product purchased outside. The decline in operating profit to $116
thousand is largely attributable to lower margins, a result of continuing
excess capacity in the industry. Significant efforts are being expended by
Jordan Graphics to increase sales and improve operating efficiencies.
Ruddick Investment recorded an operating profit in the third
fiscal quarter of $399 thousand compared to $185 thousand reported for the
comparable quarter last year. This increase is largely attributable
to additional rental income from the Morrocroft Village shopping center in
Charlotte, North Carolina.
For the Nine Months Ended July 3, 1994 and June 27, 1993
Consolidated sales for the nine months ended July 3, 1994 of
$1.42 billion increased 12.1% over the $1.26 billion reported for the first
nine months in fiscal 1993. American & Efird and Harris Teeter
reported sales increases and Jordan Graphics, a decrease. Operating profit
of $47.4 million was down 6.3% from the $50.6 million reported for the
comparable period last year, with Harris Teeter and Ruddick
Investment reporting increases, and American & Efird and Jordan Graphics
reporting decreases. Net income of $23.0 million was down from $24.8 million
reported last year before adjustment for the cumulative effect of a change
in accounting principle. Net income for the nine months ended June 27, 1993,
has been restated to $28.7 million to reflect the adoption in the first fiscal
quarter last year of Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes". Fully diluted per share earnings for the
first nine months this year were $.97. For the comparable period last year,
fully diluted per share earnings were $1.20 after reflecting a $.16 favorable
effect of the accounting change.
American & Efird sales of $202.5 million for the first nine
months this year increased 4.0% over the comparable period last year. Sales
have improved each successive quarter this fiscal year as business
conditions have improved in most of the major market segments that A&E serves.
Home furnishings, automotive and consumer products markets have shown strength
in recent months. Operating profits year to date were reduced from the prior
year, primarily the result of lower profit margins reflecting price competition,
a less favorable product mix, unfavorable manufacturing variances due to
lower volume in several plants during the first fiscal quarter of 1994, and
costs of some operating disruptions associated with modernization programs,
primarily in the first two fiscal quarters of 1994. International division
profits were down due primarily to
PAGE 7
<PAGE>
lower sales resulting from poor business conditions in Europe and the Far East,
the costs of consolidations in Canada, and expenses associated with start-up
activities in Mexico and the Dominican Republic.
Harris Teeter sales of $1.2 billion for the nine months ended
July 3, 1994 were 14.2% higher than for the same period last year, primarily
the result of additional volume generated by strong feature oriented
merchandising which provided a significant increase in customer count. Net
sales for stores in operation during both periods increased 6.9%. Operating
profit this year was up 7.2% from the comparable period last year. Although
improvements in the Columbia, South Carolina market and improved operations
in the Atlanta, Georgia store were achieved in the third fiscal quarter,
these operations continue to adversely affect operating profit. However,
progress is being made in these two markets and improving results in such
markets are expected to continue. Four new stores were opened during this
period, one store was closed, and one store was replaced. There were 141 in
operation at July 3, 1994 compared to 135 a year ago.
Jordan Graphics sales of $38.9 million for the nine months
ended July 3, 1994 decreased 4.7% from the comparable period last year.
Jordan Graphics reported an operating loss of $219 thousand for the
nine months ended July 3, 1994, compared to an operating profit of $2.0
million last year. When compared to last year, sales were generally lower
in all product lines except commercial and laser, although improvement
was noted in the third quarter in stock forms, custom forms, laser and
labels. The reduction in operating profit was the result of lower sales and
lower margins, a result of underutilized manufacturing capacity industry
wide. Significant efforts are being expended by Jordan Graphics to increase
sales and improve operating efficiencies.
Ruddick Investment had no significant sales of assets during
the nine months ended July 3, 1994, and the increased operating profit was
largely attributable to increased rental income from the Morrocroft
Village shopping center in Charlotte, North Carolina.
Following the October 3, 1993 fiscal year end, the Company
adopted a broadly based Corporate Owned Life Insurance (COLI) program. For
the nine months ended July 3, 1994, the COLI program increased
administrative expense and reduced the provision for income taxes, but had
no significant effect on net income.
Financial Condition, Capital Resources and Liquidity
Ruddick has an overall financial goal of earning a 15% return
on beginning shareholders' equity. At the same time, Ruddick seeks to limit
long-term debt (including capital leases and all current portions) so as
to constitute no more than 40% of capital employed, which includes
long-term debt and shareholders' equity. As of July 3, 1994, this
percentage was 29.0% compared to 27.5% at October 3, 1993.
The Company's principal source of liquidity has been revenues
from operations. The Company also has the ability to borrow up to an
aggregate of $60 million under three established revolving bank loans.
The maximum amount outstanding under these credit facilities during the
quarter ended July 3, 1994 was $45.6 million. The $45.6 million outstanding
at quarter end was an increase of $8.4 million from the end of the
March quarter. Borrowings and repayments under these facilities are of the
same nature as short-term credit lines; however, due to the nature and
PAGE 8
<PAGE>
terms of the agreements allowing up to seven years for repayment, all
borrowings under these facilities are classified as long-term debt. The
Company also has the ability to borrow up to $10 million under a short-term
credit line with one bank, and there was no amount outstanding at quarter
end.
Working capital of $107.5 million at July 3, 1994, increased
$12.2 million from October 3, 1993, largely the result of increases in
inventories and accounts receivable with only a modest increase in notes and
accounts payable. The current ratio was 1.7 at July 3, 1994, and
1.6 at October 3, 1993.
Covenants in certain of the Company's long-term debt agreements
limit the total indebtedness which the Company may incur. With a $60 million
revolving credit facility in place, management believes its liquidity to be
adequate for at least the foreseeable future.
Restructuring Charge
In the fourth quarter of fiscal 1993, net income was reduced by a
one-time before-tax charge of $5,264 thousand ($3,422 thousand after income
tax effect) for the costs associated with a marketing strategy of
replacing, over the next few years, a number of smaller, less competitive
Harris Teeter stores with larger stores offering increased variety and greater
emphasis on perishables and drawing from a larger marketing area. The
restructuring reserve has been recorded in other noncurrent liabilities.
At the time of adoption of the strategic plan by company management on
September 13, 1993, a total of twelve (12) existing stores were identified for
replacement with the larger, more competitive store formats. The plan
established target dates for the completion of construction of replacement
stores and, therefore, projected dates for the abandonment of the operations
of the existing store(s) in each case. Management believes the projected dates
to be reasonable as the basis for determination of the costs to be incurred
for the abandoned existing properties.
The restructuring charges do not include provisions for suboptimal
performance, allocated overhead, or other indirect costs. The restructuring
reserve has been calculated to include only the direct costs associated
with (1) the write off of the projected remaining book value, net of
anticipated salvage, if any, of store equipment and leasehold improvements to
be abandoned and (2) the commitments for continuing lease payments at the
abandoned store site, net of historical sublease patterns. Management
anticipates that on average fifty percent of the operating loss associated
with each store closing will be incurred against the reserve in the year of
the store closing and the balance of store associated losses will be incurred
within four years thereafter. Such store closings are planned to occur during
fiscal years ending 1994 through 1996.
During the first two fiscal quarters of 1994, no stores were closed
under the new marketing strategy. In the quarter ended July 3, 1994, one
store was closed resulting in an initial reserve charge of $61 thousand.
While management expects reserve charges in future quarters to be far more
significant, it is not expected that such charges will be material in any
single quarter. Further, the financial projections of the results of this
strategy indicate that the effect on operating results of any
fiscal year will not be material.
PAGE 9
<PAGE>
Regarding the estimated effect on liquidity, the restructuring
will have no material effect since only approximately one-half of all future
reserve charges are cash outlays, i.e. only those charges for continuing rent
commitments at abandoned sites. Further, management has included in its
capital plans and cash projections the expected capital expenditures required
to affect the restructuring to larger stores, and management believes the
Company's capital resources to be adequate to complete such restructuring.
PAGE 10
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
Exhibit No. Description of Exhibit
11 Statement Re: Computation of
per share earnings
(B) REPORTS ON FORM 8-K - None
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.
RUDDICK CORPORATION
DATE: August 17, 1994 /s/ R. N. Brigden
R. N. BRIGDEN
VICE PRESIDENT - FINANCE
(PRINCIPAL FINANCIAL OFFICER)
PAGE 11
<PAGE>
EXHIBIT INDEX
Exhibit No.
(per Item 601
Description of Sequential
Of Reg. S-K) Exhibit Page No.
11 Statement Re: Computation of
Per Share Earnings
<PAGE>
EXHIBIT 11
RUDDICK CORPORATION
STATEMENT REGARDING COMPUTATION OF PER SHARE
EARNINGS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
July 3, June 27,
1994 1993
<S> <C> <C>
NET INCOME PER SHARE COMPUTED AS FOLLOWS:
PRIMARY:
1. Net Income $ 22,960,000 $ 28,650,000
<C> <C>
2. Weighted Average Common Shares
Outstanding 23,143,430 23,098,439
3. Incremental Shares Relating to $.56
Convertible Preference Shares 260,869 403,784
4. Incremental Shares Under Stock Options
Computed Under the Treasury Stock
Method Using the Average Market Price
of Issuer's Stock During the Periods 253,882 330,235
5. Weighted Average Common Shares and <C> <C>
Common Equivalent Shares Outstanding 23,658,181 23,832,458
<C> <C>
6. Net Income Per Share
(Item 1 Divided by Item 5) $ 0.97 $ 1.20
<C> <C>
FULLY DILUTED:
1. Net Income $ 22,960,000 $ 28,650,000
2. Weighted Average Common Shares
Outstanding 23,143,430 23,098,439
3. Incremental Shares Relating to $.56
Convertible Preference Shares 260,869 403,784
4. Incremental Shares Under Stock Options
Computed Under the Treasury Stock
Method Using the Higher of the
Average or Ending Market Price of
Issuer's Stock at the End of the
Periods 254,468 332,666
5. Weighted Average Common Shares and <C> <C>
Common Equivalent Shares Outstanding 23,658,767 23,834,889
<C> <C>
6. Net Income Per Share
(Item 1 Divided by Item 5) $ 0.97 $ 1.20
<C> <C>
</TABLE>
<PAGE>
