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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended: September 28, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (No Fee Required)
For the transition period from __________ to __________
Commission File Number: 1-6905
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RUDDICK CORPORATION
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NORTH CAROLINA 56-0905940
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
2000 TWO FIRST UNION CENTER, CHARLOTTE, NORTH CAROLINA 28282
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (704) 372-5404
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS: NAME OF EXCHANGE ON WHICH REGISTERED:
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COMMON STOCK NEW YORK STOCK EXCHANGE, INC.
RIGHTS TO PURCHASE SERIES A JUNIOR
PARTICIPATING ADDITIONAL PREFERRED STOCK NEW YORK STOCK EXCHANGE, INC.
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K 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.
The aggregate market value of the voting stock held by nonaffiliates of the
Registrant as of December 5, 1997, was $550,123,789.
As of December 5, 1997, the Registrant had outstanding 46,676,296 shares of
Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I and II: Certain portions of the Annual Report to Shareholders for the
fiscal year ended September 28, 1997 (with the exception of those portions which
are specifically incorporated by reference in this Form 10-K and included as
Exhibit 13 hereto, the Annual Report to Shareholders for the fiscal year ended
September 28, 1997, is not deemed to be filed or incorporated by reference as
part of this report).
Part III: Definitive Proxy Statement dated December 18, 1997, as filed pursuant
to Section 14 of the Securities Exchange Act of 1934 in connection with the 1998
Annual Meeting of Shareholders. (With the exception of those portions which are
specifically incorporated by reference in this Form 10-K, the Proxy Statement is
not deemed to be filed or incorporated by reference as part of this report.)
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RUDDICK CORPORATION
AND CONSOLIDATED SUBSIDIARIES
Form 10-K for the Fiscal Year ended September 28, 1997
TABLE OF CONTENTS
PAGE
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PART I
Item 1. Business .................................................. 1
Item 2. Properties ................................................ 3
Item 3. Legal Proceedings ......................................... 5
Item 4. Submission of Matters to a Vote of Security Holders ....... 5
Item 4A. Executive Officers of the Registrant ...................... 5
PART II
Item 5. Market for Registrant's Common Equity and Related
Shareholder Matters ....................................... 6
Item 6. Selected Financial Data ................................... 6
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations ....................... 6
Item 7A. Quantitative and Qualitative Discussion about
Market Risk ............................................... 6
Item 8. Financial Statements and Supplementary Data ............... 6
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure ....................... 7
PART III
Item 10. Directors and Executive Officers of the Registrant ........ 7
Item 11. Executive Compensation .................................... 7
Item 12. Security Ownership of Certain Beneficial Owners and
Management ................................................ 7
Item 13. Certain Relationships and Related Transactions ............ 7
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K ............................................... 8
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PART I
ITEM 1. BUSINESS
Ruddick Corporation (the "Registrant") is a holding company
which, through its wholly-owned subsidiaries, is engaged in two primary
businesses: Harris Teeter, Inc. ("Harris Teeter") operates a regional chain of
supermarkets in five southeastern states and American & Efird, Inc. ("A&E")
manufactures and distributes primarily industrial thread, but also manufactures
and distributes consumer sewing thread.
At September 28, 1997, the Registrant and its subsidiaries had
total consolidated assets of $885,243,000 and had approximately 19,700
employees. The principal executive offices of the Registrant are located at 2000
Two First Union Center, Charlotte, North Carolina 28282.
Ruddick Corporation, which is incorporated under North
Carolina law, was created in 1968 through the consolidation of the predecessor
companies of A&E and Ruddick Investment Company. In 1969, the Registrant
acquired Harris Teeter. Also in 1969, the Registrant acquired the predecessor of
Jordan Graphics, Inc. ("Jordan Graphics"), the assets of which were sold to The
Reynolds and Reynolds Company in January, 1996. In addition, as of the beginning
of fiscal year 1996, Ruddick Investment Company redefined its business and
emphasis is now on the development of selected sites for Harris Teeter stores.
Venture capital investment holdings will continue to be managed but future
equity investment will be limited. Due to continued growth of the Harris Teeter
and A&E businesses, Ruddick Investment's relative size to the consolidated
Company has declined and it is no longer considered an operating company. For
certain other information regarding the Company's venture capital and real
estate holdings, see the Note entitled "Investments" of the Notes to
Consolidated Financial Statements of Ruddick Corporation and Subsidiaries in the
Registrant's 1997 Annual Report to Shareholders (the "1997 Annual Report"),
which information is incorporated herein by reference.
The two businesses in which the Registrant engages through its
operating subsidiaries, together with certain financial information and
competitive aspects of such businesses, are discussed separately below. For
certain other information regarding industry segments, see the Note entitled
"Industry Segment Information" of the Notes to Consolidated Financial Statements
of Ruddick Corporation and Subsidiaries in the 1997 Annual Report.
The only foreign operations conducted by the Registrant are
through A&E. Neither of the two businesses engaged in by the Registrant would be
characterized as seasonal.
The Registrant employs twenty-two people, including four
executives who formulate and implement overall corporate objectives and
policies. The Registrant's employees perform functions in a number of areas
including finance, accounting, audit, insurance, reporting, employee benefits
and public and shareholder relations. The Registrant assists its subsidiaries in
developing long-range goals, in strengthening management personnel and skills
and in financing operations. Management of each subsidiary is responsible for
implementing operating policies and reports to management of the Registrant.
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HARRIS TEETER
Harris Teeter operates supermarkets in North Carolina (93),
South Carolina (22), Virginia (14), Georgia (7), and Tennessee (2) for sales of
groceries, produce, meat and seafood, delicatessen items, bakery items, wines
and non-food items such as health and beauty care, floral and other products
normally offered for sale in supermarkets. Harris Teeter has a program in place
whereby each retail store will undergo a remodel every eight years. Harris
Teeter remodeled twelve stores during fiscal 1997 and expects to remodel
twenty-three stores in fiscal 1998. In addition, thirteen new stores were opened
and nine older, less profitable, stores were sold or closed in fiscal 1997. As
of fiscal year end, Harris Teeter had 138 stores in operation. Its principal
offices and cold storage perishable distribution facilities are located near
Charlotte, North Carolina, and its dry grocery and frozen storage distribution
facilities are located in Greensboro, North Carolina. Both distribution
facilities are currently undergoing major expansion and are expected to function
as full-service facilities in early 1998. Harris Teeter produces some dairy
products, but buys most of the products it sells, including its private label
brands. Harris Teeter's sales constituted 84% of the Registrant's consolidated
sales in fiscal 1997 (86% in 1996 and 85% in 1995).
The supermarket industry is highly competitive. Harris Teeter
competes with local, regional, and national food chains, some of which are
larger in terms of assets and sales, as well as with independent merchants.
Principal competitive factors include store location, price, service,
convenience, cleanliness, product quality and product variety. No one customer
or group of customers has a material effect upon the business of Harris Teeter.
At fiscal year end, Harris Teeter employed approximately 8,600
persons full-time and 7,500 part-time. Warehouse employees and drivers at Harris
Teeter's warehouse near Charlotte, North Carolina are represented by a union,
but Harris Teeter is not party to a collective bargaining agreement covering
such employees. Harris Teeter considers its employee relations to be good.
A & E
A&E is a leading manufacturer and distributor of sewing
thread, produced from natural and synthetic fibers, for worldwide industrial and
consumer markets. Manufacturers of apparel and other products rely on A&E
industrial sewing thread to manufacture their products. The apparel market is
made up of many categories servicing both genders and diverse age groups,
including jeanswear, underwear, menswear, womenswear, outerwear, intimate
apparel, workwear and childrenswear. A&E also manufactures thread for a wide
variety of nonapparel products, including home furnishings, automotive,
footwear, upholstered furniture, sporting goods, caps and hats, gloves, leather
products, medical products and tea bag strings. The company's sales are
primarily industrial sewing thread products, which are sold to manufacturers
through A&E's employed sales representatives, commissioned agents and
distributors. In addition, A&E produces the SIGNATURE line of consumer sewing
thread, which is sold through independent retail outlets. A&E also distributes
sewing supplies manufactured by other companies. A&E's sales constituted 16% of
the Registrant's consolidated sales in fiscal 1997 (14% in 1996 and 15% in
1995).
Headquartered in Mt. Holly, North Carolina, the company
operates 13 modern manufacturing facilities in North Carolina. These facilities
have been designed for flexibility and efficiency to accommodate changing
customer product demands. In addition to the six dyeing and finishing and seven
spinning plants in North Carolina, A&E operates 19 distribution centers in the
U.S. and one in Puerto Rico.
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A&E also has wholly-owned operations in Belgium, Canada, Costa
Rica, England, Guatemala, Hong Kong, Ireland, Korea, Mexico and Malaysia, a
majority-owned joint venture in China and minority interests in joint ventures
in the Dominican Republic and Honduras. These facilities include eight dyeing
and finishing operations, one spinning operation and 12 additional distribution
centers. The value of total assets in consolidated operations at the end of
fiscal 1997 was approximately $75 million. Management expects to continue to
expand foreign production and distribution operations, primarily through
additional joint ventures.
The domestic order backlog, believed to be firm, as of the end
of the 1997 fiscal year was approximately $13,941,000 versus $14,390,000 at the
end of the preceding fiscal year. The majority of the order backlog is expected
to be filled within three weeks of fiscal year end. The international order
backlog is not material. A&E has approximately 8,600 domestic and 4,700
international customer accounts which are active. In fiscal 1997, no single
customer accounted for more than 7% of total net sales and the ten largest
accounted for approximately 20% of total net sales.
A&E purchases cotton from domestic cotton merchants. There is
presently a sufficient supply of cotton worldwide and in the domestic market.
Synthetic fibers are bought from the principal American synthetic fiber
producers and are currently available in an adequate supply.
There are no material patents, licenses, franchises, or
concessions held by A&E. Research and Development expenditures were
approximately $328,000 and $304,000 in fiscal 1997 and fiscal 1996,
respectively, none of which were sponsored by customers. Three employees are
engaged in this activity on a full-time basis.
The industrial sewing thread industry is highly competitive.
A&E is believed to be the largest producer in the domestic industrial thread
market. Principal competitors include Coats American, Inc., Barbour Threads,
Inc. and imported products sold primarily through distributors. Principal
competitive factors include quality, service and price.
A&E employed approximately 3,600 persons worldwide as of the
end of fiscal 1997. A&E considers its employee relations to be good.
ITEM 2. PROPERTIES
The executive offices of the Registrant are located in
approximately 8,100 square feet of leased space in a downtown office tower at
2000 Two First Union Center, Charlotte, North Carolina 28282.
Harris Teeter owns its principal offices, which consist of
116,000 square feet of space located on a 10 acre tract of land near Charlotte,
North Carolina. Harris Teeter also owns a 104 acre tract east of Charlotte where
its cold storage distribution facility is located. This facility contains
approximately 176,000 square feet, most of which is equipped to store
refrigerated or perishable goods. Harris Teeter also owns a 49 acre tract in
Greensboro, North Carolina, where its dry grocery and frozen goods warehouses
are located. The dry grocery warehouse contains approximately 547,000 square
feet and the frozen goods warehouse contains approximately 130,000 square feet.
Harris Teeter owns an 18,050 square foot milk processing plant located on 8.3
acres of land in Charlotte, North Carolina and an 81,900 square foot milk
processing and ice cream manufacturing facility located on 4.7 acres of land in
High Point, North Carolina. Harris Teeter operates its retail stores primarily
from leased properties. The base annual rentals on leased store and warehouse
properties as of September 28, 1997 aggregated approximately $46,388,000 net of
sublease rentals of approximately $896,000. In addition to the base rentals, the
majority of the
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lease agreements provide for additional annual rentals based on 1% of the amount
by which annual store sales exceed a predetermined amount. During the fiscal
year ended September 28, 1997, the additional rental amounted to approximately
$941,000. Harris Teeter's supermarkets range in size from approximately 15,000
square feet to 66,000 square feet, with an average size of approximately 38,000
square feet. The following table sets forth selected statistics with respect to
Harris Teeter stores for each of the last three fiscal years:
HARRIS TEETER STORE DATA
<TABLE>
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1995 1996 1997
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<S> <C> <C> <C>
Stores Open at End of Period 139 134 138
Average Weekly Net Sales Per Store* $ 234,656 $ 259,160 $ 272,924
Average Square Footage Per Store 33,678 36,273 38,076
Average Square Footage Per New Store 47,348 57,610 50,191
Opened During Period
Total Square Footage at End 4,681,204 4,860,546 5,254,457
of Period
</TABLE>
* Computed on the basis of aggregate sales of stores open for a full year.
A&E's principal offices and thirteen domestic manufacturing
plants are all owned by A&E and are all located in North Carolina. Manufacturing
plants and related warehouse facilities have an aggregate of 2,225,093 square
feet of floor space and an insured value of $526,872,000. A&E has the capacity
to produce annually approximately 42,750,000 pounds of industrial sewing thread
and has a dyeing capacity of approximately 46,900,000 pounds per year.
Capacities are based on 168 hours of operations per week.
A&E owns one distribution center and leases another eighteen
scattered throughout its domestic markets at an approximate annual rent of
$1,559,000.
Through subsidiaries, A&E also owns five international
manufacturing and/or distribution facilities with an aggregate of 312,972 square
feet of floor space and an insured value of $21,312,326. A&E leases another 15
international facilities with an aggregate of 263,253 square feet of floor space
and an approximate annual rent of $1,061,000. The subsidiaries which are engaged
in manufacturing have a sewing thread dyeing capacity of approximately
12,400,000 pounds per year. Capacities are based on 168 hours of operations per
week. In addition to its subsidiaries, A&E also has minority interests in two
joint ventures.
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ITEM 3. LEGAL PROCEEDINGS
The Registrant has entered into an Administrative Order on
Consent with Region IV of the United States Environmental Protection Agency,
together with 14 other parties who have been designated potentially responsible
parties, to perform a remedial investigation/feasibility study at the Leonard
Chemical Company Superfund site in Rock Hill, South Carolina. The Registrant's
potential liability is based on the alleged disposal of waste material at this
Superfund site by Pargo, Inc. Pargo, Inc. was a wholly owned subsidiary of the
Registrant from 1969 to 1972. The Registrant has agreed to participate in the
remedial investigation/feasibility study on the condition that its share of the
costs does not exceed 1.8% of the total plus an additional payment of $4,680 for
costs previously incurred by other parties. The Registrant estimates that, based
on current information, the total cost of the remedial investigation/feasibility
study should be approximately $1,500,000. Under the interim allocation of costs
agreed to by the parties to the Administrative Order on Consent, the
Registrant's share is 1.155% of the total cost. The Registrant does not believe
that this proceeding will have a material effect on its business or financial
condition.
The Registrant and its subsidiaries are involved in various
matters from time to time in connection with their operations, including various
environmental matters. These matters considered in the aggregate have not had,
nor does the Registrant expect them to have, a material effect on the
Registrant's business or financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The following list contains the name, age, positions and
offices held, and period served in such positions or offices for each of the
executive officers of the Registrant.
R. Stuart Dickson, age 68, has been Chairman of the Executive
Committee since February 1994. Prior to that time he had been
Chairman of the Board of the Registrant since its formation in
October 1968.
Alan T. Dickson, age 66, has been Chairman of the Board since
February 1994. Prior to that time he had been President of the
Registrant since its formation in October 1968.
Thomas W. Dickson, age 42, has been President of the
Registrant since February 1997. Prior to that time, and
beginning in February 1996, he served as Executive Vice
President of the Registrant. He also served as A&E's President
from February 1994 to August 1996 and Executive Vice President
from 1991 to 1994.
Richard N. Brigden, age 58, has been Vice President-Finance of
the Registrant since December 1983.
Fred J. Morganthall, II, age 46, was elected President of
Harris Teeter on October 30, 1997. Prior to that time, and
beginning in October 1996, he served as Executive Vice
President of Harris Teeter. He was also Harris Teeter's Senior
Vice President of Operations from
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October 1995 to October 1996, Vice President of Operations
from April 1994 to October 1995 and Vice President of Sales
and Distribution from October 1992 to April 1994.
Fred A. Jackson, age 47, has been President of A&E since
August 1996. Prior to that time, for more than five years, he
served as its Senior Vice President-Industrial Thread Sales.
The executive officers of the Registrant and its subsidiaries
are elected annually by their respective Boards of Directors. R. Stuart Dickson
and Alan T. Dickson are brothers. Thomas W. Dickson is the son of R. Stuart
Dickson and the nephew of Alan T. Dickson. No other executive officer has a
family relationship with any other executive officer or director or nominee for
director as close as first cousin.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The information required for this item is incorporated herein
by reference to the following sections of the Registrant's 1997 Annual Report:
information regarding the principal market for Common Stock, number of
shareholders of record, market price information per share of Common Stock and
dividends declared per share of Common Stock for each quarterly period in the
1997 and 1996 fiscal years is incorporated by reference to the Note headed
"Quarterly Information (Unaudited)" to the Notes to Consolidated Financial
Statements; and information regarding restrictions on the ability of the
Registrant to pay cash dividends is incorporated by reference to "Management's
Discussion and Analysis of Financial Condition and Results of Operations-Capital
Resources and Liquidity" and the Note headed "Long-Term Debt" to the Notes to
Consolidated Financial Statements.
ITEM 6. SELECTED FINANCIAL DATA
The information required for this item, for each of the last
five fiscal years, is incorporated herein by reference to the section headed
"Eleven-Year Financial and Operating Summary" in the Registrant's 1997 Annual
Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required for this item is incorporated herein
by reference to the section headed "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Registrant's 1997 Annual
Report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCUSSION ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements of the Registrant,
including the Report of Independent Public Accountants thereon, are incorporated
herein by reference from the Registrant's 1997 Annual Report.
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The required supplementary financial information is
incorporated herein by reference from the Note headed "Quarterly Information
(Unaudited)" of the Notes to Consolidated Financial Statements in the
Registrant's 1997 Annual Report.
The financial statement schedules required to be filed
herewith, and the Report of Independent Public Accountants thereon, are listed
under Item 14(a) of this Report and filed herewith pursuant to Item 14(d) of
this Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item with respect to
executive officers is set forth above in Part I, Item 4A. The other information
required by this item is incorporated herein by reference to the sections
entitled "Election of Directors" and "Section 16(a) Beneficial Ownership
Reporting Compliance" in the Registrant's Proxy Statement dated December 18,
1997, filed with the Securities and Exchange Commission with respect to the
Registrant's 1998 Annual Meeting of Shareholders (the "1998 Proxy Statement").
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated herein
by reference to the sections entitled "Election of Directors -Directors' Fees
and Attendance" and "Executive Compensation" in the Registrant's 1998 Proxy
Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated herein
by reference to the sections entitled "Principal Shareholders" and "Election of
Directors-Beneficial Ownership of Company Stock" in the Registrant's 1998 Proxy
Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated herein
by reference to the section entitled "Certain Transactions" in the Registrant's
1998 Proxy Statement.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report:
(1) Financial Statements: The following report and financial
statements are incorporated herein by reference to the
Registrant's 1997 Annual Report:
Consolidated Balance Sheets, September 28, 1997 and September
29, 1996
Statements of Consolidated Income and Retained Earnings for
the fiscal years ended September 28, 1997, September 29, 1996
and October 1, 1995
Statements of Consolidated Cash Flows for the fiscal years
ended September 28, 1997, September 29, 1996 and October 1,
1995
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
(2) Financial Statement Schedules: The following report and
financial statement schedules are filed herewith:
Report of Independent Public Accountants for
each of the fiscal years in the three year
period ended September 28, 1997 Page S-1
Schedule II - Valuation and Qualifying
Accounts and Reserves Page S-2
All other schedules are omitted as the required information is
inapplicable or the information is presented in the
consolidated financial statements or related notes thereto.
(3) Index to Exhibits: The following exhibits are filed with this
report or, as noted, incorporated by reference herein.
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<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description of Exhibit Page
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<S> <C> <C>
3.1 Restated Articles of Incorporation of the Registrant, incorporated *
herein by reference to Exhibit 3.1 of the Registrant's Quarterly
Report on Form 10-Q for the quarterly period ended March 29,
1992 (Commission File No. 1-6905).
3.2 Amended and Restated Bylaws of the Registrant, incorporated *
herein by reference to Exhibit 3.2 of the Registrant's Annual
Report on Form 10-K for the fiscal year ended September
27, 1992 (Commission File No. 1-6905).
4.1 Revolving Credit Agreements for an aggregate of $100,000,000, *
entered into as of February 15, 1995, by and between the Registrant
and each of First Union National Bank of North Carolina,
NationsBank, National Association (formerly NationsBank,
National Association (Carolinas)) and Wachovia Bank of North
Carolina, N.A., incorporated herein by reference to Exhibits 4.1, 4.2
and 4.3 of the Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended April 2, 1995 (Commission File No. 1-6905).
4.2 $50,000,000 6.48% Series A Senior Notes due March 1, 2011 and *
$50,000,000 Private Shelf Facility dated March 1, 1996 between
Ruddick Corporation and The Prudential Insurance Company
of America, incorporated herein by reference to Exhibit 4.1 of
the Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1996 (Commission File No. 1-6905).
4.3 $50,000,000 7.55% Senior Series B Notes due July 15, 2017 +
(filed herewith) and $50,000,000 7.72% Series B Senior Notes
due April 15, 2017 under the Note Purchase and Private Shelf
Agreement dated April 15, 1997 between Ruddick Corporation
and The Prudential Insurance Company of America, incorporated
herein by reference to Exhibit 4.1 of the Registrant's Quarterly
Report on Form 10-Q for the quarterly period ended June 29, 1997
(Commission File No. 1-6905).
The Registrant has certain other long-term debt, but has not filed
the instruments evidencing such debt as part of Exhibit 4 as none of
such instruments authorize the issuance of debt exceeding 10 percent
of the total consolidated assets of the Registrant. The Registrant
agrees to furnish a copy of each such agreement to the Commission
upon request.
10.1 Description of Incentive Compensation Plans, incorporated *
herein by reference to Exhibit 10.1 of the Registrant's Annual
Report on Form 10-K for the fiscal year ended September
29, 1996 (Commission No. 1-6905).**
</TABLE>
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<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description of Exhibit Page
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<S> <C> <C>
10.2 Supplemental Executive Retirement Plan of Ruddick *
Corporation, as amended and restated, incorporated herein
by reference to Exhibit 10.3 of the Registrant's Annual Report
on Form 10-K for the fiscal year ended September 30, 1990
(Commission File No. 1-6905).**
10.3 Resolutions adopted by the Board of Directors of the Registrant *
and the Plan's Administrative Committee with respect to benefits
payable under the Registrant's Supplemental Executive Retirement
Plan to Alan T. Dickson and R. Stuart Dickson, incorporated herein
by reference to Exhibit 10.3 of the Registrant's Annual Report on
Form 10-K for the fiscal year ended September 29, 1991
(Commission File No. 1-6905).**
10.4 Deferred Compensation Plan for Key Employees of Ruddick *
Corporation and subsidiaries, as amended and restated, incorporated
herein by reference to Exhibit 10.5 of the Registrant's Annual
Report on Form 10-K for the fiscal year ended September 30, 1990
(Commission File No. 1-6905).**
10.5 1982 Incentive Stock Option Plan, as amended and restated, *
incorporated herein by reference to Exhibit 10.5 of the Registrant's
Annual Report on Form 10-K for the fiscal year ended October 2,
1994 (Commission File No. 1-6905).**
10.6 1988 Incentive Stock Option Plan, incorporated herein by reference *
to Exhibit 10.6 of the Registrant's Annual Report on Form 10-K
for the fiscal year ended October 2, 1994 (Commission File No.
1-6905).**
10.7 1993 Incentive Stock Option and Stock Appreciation Rights Plan, *
incorporated herein by reference to Exhibit 10.7 of the Registrant's
Annual Report on Form 10-K for the fiscal year ended October 3,
1993 (Commission File No. 1-6905).**
10.8 Ruddick Corporation Incentive Stock Option Agreement between *
the Registrant and Thomas W. Dickson dated November 12, 1992,
incorporated herein by reference to Exhibit 10.7 of the Registrant's
Annual Report on Form 10-K for the fiscal year ended September
29, 1996 (Commission No. 1-6905).**
10.9 Ruddick Corporation Incentive Stock Option Agreement between *
the Registrant and Fred A. Jackson dated November 12, 1992,
incorporated herein by reference to Exhibit 10.8 of the Registrant's
Annual Report on Form 10-K for the fiscal year ended September
29, 1996 (Commission No. 1-6905).**
</TABLE>
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<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description of Exhibit Page
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<S> <C> <C>
10.10 Ruddick Corporation Incentive Stock Option Agreement between *
the Registrant and John W. Copeland dated November 12, 1992,
incorporated herein by reference to Exhibit 10.9 of the Registrant's
Annual Report on Form 10-K for the fiscal year ended September
29, 1996 (Commission No. 1-6905).**
10.11 Ruddick Corporation Incentive Stock Option Agreement between *
the Registrant and Thomas W. Dickson dated November 18, 1993,
incorporated herein by reference to Exhibit 10.11 of the Registrant's
Annual Report on Form 10-K for the fiscal year ended September
29, 1996 (Commission No. 1-6905).**
10.12 Ruddick Corporation Incentive Stock Option Agreement between *
the Registrant and Thomas W. Dickson dated November 15, 1995,
incorporated herein by reference to Exhibit 10.12 of the Registrant's
Annual Report on Form 10-K for the fiscal year ended September
29, 1996 (Commission No. 1-6905).**
10.13 Ruddick Corporation Incentive Stock Option Agreement between *
the Registrant and Fred A. Jackson dated November 18, 1993,
incorporated herein by reference to Exhibit 10.13 of the Registrant's
Annual Report on Form 10-K for the fiscal year ended September
29, 1996 (Commission No. 1-6905).**
10.14 Ruddick Corporation Incentive Stock Option Agreement between *
the Registrant and Fred A. Jackson dated November 15, 1995,
incorporated herein by reference to Exhibit 10.14 of the Registrant's
Annual Report on Form 10-K for the fiscal year ended September
29, 1996 (Commission No. 1-6905).**
10.15 Ruddick Corporation Incentive Stock Option Agreement between *
the Registrant and R. N. Brigden dated November 15, 1995,
incorporated herein by reference to Exhibit 10.16 of the Registrant's
Annual Report on Form 10-K for the fiscal year ended September
29, 1996 (Commission No. 1-6905).**
10.16 Description of the Registrant's Long Term Key Management *
Incentive Program, incorporated herein by reference to Exhibit 10.7
of the Registrant's Annual Report on Form 10-K for the fiscal year
ended September 29, 1991 (Commission File No. 1-6905).**
10.17 Ruddick Corporation Irrevocable Trust for the Benefit of Participants *
in the Long Term Key Management Incentive Program, incorporated
herein by reference to Exhibit 10.9 of the Registrant's Annual Report
on Form 10-K for the fiscal year ended September 30, 1990
(Commission File No. 1-6905).**
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description of Exhibit Page
------ ---------------------- ----
<S> <C> <C>
10.18 Rights Agreement dated November 15, 1990 by and between the *
Registrant and Wachovia Bank of North Carolina, N.A., incorporated
herein by reference to Exhibit 4.1 to the Registrant's Current Report
on Form 8-K dated November 21, 1990 (Commission File No. 1-6905).
10.19 Ruddick Corporation Senior Officers Insurance Program Plan *
Document and Summary Plan Description, incorporated herein
by reference to Exhibit 10.10 of the Registrant's Annual Report
on Form 10-K for the fiscal year ended September 27, 1992
(Commission File No. 1-6905).**
10.20 Ruddick Corporation Nonstatutory Stock Option Agreement *
Between the Registrant and John R. Belk, incorporated herein
by reference to Exhibit 10.1 of the Registrant's Quarterly Report
on Form 10-Q for the quarterly period ended June 29, 1997
(Commission File No. 1-6905).**
10.21 Ruddick Corporation Nonstatutory Stock Option Agreement *
Between the Registrant and Edwin B. Borden, Jr., incorporated herein
by reference to Exhibit 10.2 of the Registrant's Quarterly Report
on Form 10-Q for the quarterly period ended December 29, 1996
(Commission File No. 1-6905).**
10.22 Ruddick Corporation Nonstatutory Stock Option Agreement *
Between the Registrant and Beverly F. Dolan, incorporated herein
by reference to Exhibit 10.3 of the Registrant's Quarterly Report
on Form 10-Q for the quarterly period ended December 29, 1996
(Commission File No. 1-6905).**
10.23 Ruddick Corporation Nonstatutory Stock Option Agreement *
Between the Registrant and Roddey Dowd, Sr., incorporated herein
by reference to Exhibit 10.4 of the Registrant's Quarterly Report
on Form 10-Q for the quarterly period ended December 29, 1996
(Commission File No. 1-6905).**
10.24 Ruddick Corporation Nonstatutory Stock Option Agreement *
Between the Registrant and James E.S. Hynes, incorporated herein
by reference to Exhibit 10.5 of the Registrant's Quarterly Report
on Form 10-Q for the quarterly period ended December 29, 1996
(Commission File No. 1-6905).**
10.25 Ruddick Corporation Nonstatutory Stock Option Agreement *
Between the Registrant and Hugh L. McColl, Jr., incorporated herein
by reference to Exhibit 10.6 of the Registrant's Quarterly Report
on Form 10-Q for the quarterly period ended December 29, 1996
(Commission File No. 1-6905).**
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description of Exhibit Page
------ ---------------------- ----
<S> <C> <C>
10.26 Ruddick Corporation 1995 Comprehensive Stock Option Plan, *
incorporated herein by reference to Exhibit 10.1 of the Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended June
30, 1996 (Commission File No. 1-6905).**
10.27 Ruddick Corporation Nonstatutory Stock Option Agreement Between *
the Registrant and Edwin B. Borden, Jr., incorporated herein by reference
to Exhibit 10.3 of the Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1996 (Commission File No. 1-6905).**
10.28 Ruddick Corporation Nonstatutory Stock Option Agreement Between *
the Registrant and Beverly F. Dolan, incorporated herein by reference to
to Exhibit 10.4 of the Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1996 (Commission File No. 1-6905).**
10.29 Ruddick Corporation Nonstatutory Stock Option Agreement Between *
the Registrant and Roddey Dowd, Sr., incorporated herein by reference to
Exhibit 10.5 of the Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1996 (Commission File No. 1-6905).**
10.30 Ruddick Corporation Nonstatutory Stock Option Agreement Between *
the Registrant and James E.S. Hynes, incorporated herein by reference to
Exhibit 10.6 of the Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1996 (Commission File No. 1-6905).**
10.31 Ruddick Corporation Nonstatutory Stock Option Agreement Between *
the Registrant and Hugh L. McColl, Jr., incorporated herein by reference to
Exhibit 10.7 of the Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1996 (Commission File No. 1-6905).**
11 Statement Regarding the Computation of Per Share Earnings. +
13 Ruddick Corporation 1997 Annual Report to Shareholders: +
Consolidated Financial Statements on pages 17 to 29 and sections
headed "Management's Discussion and Analysis of Financial Condition
and Results of Operations" (pages 13 to 16) and "Eleven-Year
Financial and Operating Summary" (pages 30 to 31) only.
21 List of Subsidiaries of the Registrant. +
23 Consent of Independent Public Accountants. +
</TABLE>
13
<PAGE> 16
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description of Exhibit Page
------ ---------------------- ----
<S> <C> <C>
27 Financial Data Schedule. +
</TABLE>
- ------------------------
* Incorporated by reference.
** Indicates management contract or compensatory plan required to be filed
as an Exhibit.
+ Indicates exhibits filed herewith and follow the signature pages.
(b) Reports on Form 8-K.
The Registrant did not file any reports on Form 8-K during the three
months ended September 28, 1997.
14
<PAGE> 17
SIGNATURES
Pursuant to the requirements of Section 13 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
(Registrant)
By: /s/ Thomas W. Dickson
-------------------------------
Thomas W. Dickson, President
Dated: December 18, 1997
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 and in the capacities and on the date indicated:
Name Title Date
---- ----- ----
/s/ Thomas W. Dickson President and Director December 18, 1997
- ---------------------------- (Principal Executive Officer)
Thomas W. Dickson
/s/ Richard N. Brigden Vice President-Finance December 18, 1997
- ---------------------------- (Principal Financial Officer)
Richard N. Brigden
/s/ Douglas A. Stephenson Treasurer December 18, 1997
- ---------------------------- (Principal Accounting Officer)
Douglas A. Stephenson
/s/ John R. Belk Director December 18, 1997
- ----------------------------
John R. Belk
/s/ Edwin B. Borden, Jr. Director December 18, 1997
- ----------------------------
Edwin B. Borden, Jr.
/s/ John W. Copeland Director December 18, 1997
- ----------------------------
John W. Copeland
/s/ Alan T. Dickson Chairman of the Board December 18, 1997
- ---------------------------- and Director
Alan T. Dickson
/s/ R. Stuart Dickson Chairman of the Executive December 18, 1997
- ---------------------------- Committee and Director
R. Stuart Dickson
15
<PAGE> 18
Name Title Date
---- ----- ----
/s/ Beverly F. Dolan Director December 18, 1997
- ----------------------------
Beverly F. Dolan
/s/ Roddey Dowd, Sr. Director December 18, 1997
- ----------------------------
Roddey Dowd, Sr.
/s/ James E. S. Hynes Director December 18, 1997
- ----------------------------
James E. S. Hynes
/s/ Hugh L. McColl. Jr. Director December 18, 1997
- ----------------------------
Hugh L. McColl, Jr.
16
<PAGE> 19
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Ruddick Corporation:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in Ruddick Corporation's annual
report to shareholders incorporated in this Form 10-K, and have issued our
report thereon dated October 22, 1997. Our audit was made for the purpose of
forming an opinion on those statements taken as a whole. The schedule listed in
Item 14(a)(2) is the responsibility of the Company's management and is presented
for purposes of complying with the Securities and Exchange Commission's rules
and is not part of the basic financial statements. This schedule has been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, fairly states in all material respects the
financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
Charlotte, North Carolina,
October 22, 1997.
S-1
<PAGE> 20
SCHEDULE II
RUDDICK CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE FISCAL YEARS ENDED
OCTOBER 1, 1995, SEPTEMBER 29, 1996
AND SEPTEMBER 28, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------------------------------------------------------------------------------------------------------------------------------
ADDITIONS
BALANCE CHARGED TO BALANCE
AT BEGINNING COSTS AND AT END
DESCRIPTION OF FISCAL YEAR EXPENSES DEDUCTIONS OF PERIOD
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FISCAL YEAR ENDED OCTOBER 1, 1995:
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY -
ALLOWANCE FOR DOUBTFUL ACCOUNTS $1,862 $ 152 $ 287* $1,727
====== ====== ====== ======
FISCAL YEAR ENDED SEPTEMBER 29, 1996:
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY -
ALLOWANCE FOR DOUBTFUL ACCOUNTS $1,727 $ 428 $ 757* $1,398
====== ====== ====== ======
FISCAL YEAR ENDED SEPTEMBER 28, 1997:
RESERVES DEDUCTED FROM ASSETS
TO WHICH THEY APPLY -
ALLOWANCE FOR DOUBTFUL ACCOUNTS $1,398 $1,704 $1,097* $2,005
====== ====== ====== ======
</TABLE>
* Represents accounts receivable balances written off as uncollectible,
less recoveries.
S-2
<PAGE> 1
EXHIBIT 4.3
RUDDICK CORPORATION
7.55% SENIOR SERIES B NOTE DUE JULY 15, 2017
No. R-4
ORIGINAL PRINCIPAL AMOUNT: $5,000,000
ORIGINAL ISSUE DATE: July 15, 1997
INTEREST RATE: 7.55%
INTEREST PAYMENT DATES: January 15, April 15, July 15, October 15
FINAL MATURITY DATE: July 15, 2017
PRINCIPAL PREPAYMENT DATE AND AMOUNTS: N/A
FOR VALUE RECEIVED, the undersigned, RUDDICK CORPORATION (herein called
the "Company"), a corporation organized and existing under the laws of the State
of North Carolina, hereby promises to pay to THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, or registered assigns, the principal sum of FIVE MILLION DOLLARS
($5,000,000) on July 15, 2017 with interest (computed on the basis of a 360-day
year--30-day month) (a) on the unpaid balance thereof at the Interest Rate per
annum specified above, payable on each Interest Payment Date specified above and
on the Final Maturity Date specified above, commencing with the Interest Payment
Date next succeeding the date hereof, until the principal hereof shall have
become due and payable, and (b) on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of Yield Maintenance Amount and
any overdue payment of interest, payable on each Interest Payment Date as
aforesaid (or, at the option of the registered holder hereof, on demand), at a
rate per annum from time to time equal to the greater of (i) 2% over the
Interest Rate specified above or (ii) 2% over the rate of interest publicly
announced by Morgan Guaranty Trust Company of New York from time to time in New
York City as its Prime Rate.
Payments of principal, Yield-Maintenance Amount payable, if any, and
interest are to be made at the main office of The Bank of New York in New York
City or at such other place as the holder hereof shall designate to the Company
in writing, in lawful money of the United States of America.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to a Note Purchase and Private Shelf Agreement, dated
as of April 15, 1997 (herein called the "Agreement"), between the Company, on
the one hand, and The Prudential Insurance Company of America and each
Prudential Affiliate (as defined in the Agreement) which becomes party thereto,
on the other hand, and is entitled to the benefits thereof.
This Note is subject to optional prepayment, in whole or from time to
time in part, on the terms specified in the Agreement.
<PAGE> 2
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
for the then outstanding principal amount will be issued to, and registered in
the name of, the transferee. Prior to due presentment for registration of
transfer, the Company may treat the person in whose name this Note is registered
as the owner hereof for the purpose of receiving payment and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
In case an Event of Default shall occur and be continuing, the
principal of this Note may be declared or otherwise become due and payable in
the manner and with the effect provided in the Agreement.
The Company and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default, notice of intent to accelerate, notice of acceleration (to the extent
set forth in the Agreement), protest and diligence in collecting.
Should any debt represented by this Note be collected at law or in
equity, or in bankruptcy or other proceedings, or should this Note be placed in
the hands of attorneys for collection, the Company agrees to pay, in addition to
the principal, Yield-Maintenance Amount, if any, and interest due and payable
hereon, all costs of collecting or attempting to collect this Note, including
reasonable attorneys' fees and expenses (including those incurred in connection
with any appeal).
Capitalized terms used and not otherwise defined herein shall have the
meanings (if any) provided in the Agreement.
This Note is intended to be performed in the State of New York and
shall be construed and enforced in accordance with the internal law of such
State. AS PROVIDED IN PARAGRAPH 11N OF THE AGREEMENT, THE COMPANY SUBMITS TO THE
JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK LOCATED IN NEW YORK
COUNTY, NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK IN ANY ACTION OR PROCEEDING RELATING TO THIS NOTE.
RUDDICK CORPORATION
By: /s/ Douglas A. Stephenson
-----------------------------
Title: Treasurer
<PAGE> 3
RUDDICK CORPORATION
7.55% SENIOR SERIES B NOTE DUE JULY 15, 2017
No. R-3
ORIGINAL PRINCIPAL AMOUNT: $45,000,000
ORIGINAL ISSUE DATE: July 15, 1997
INTEREST RATE: 7.55%
INTEREST PAYMENT DATES: January 15, April 15, July 15, October 15
FINAL MATURITY DATE: July 15, 2017
PRINCIPAL PREPAYMENT DATE AND AMOUNTS: N/A
FOR VALUE RECEIVED, the undersigned, RUDDICK CORPORATION (herein called
the "Company"), a corporation organized and existing under the laws of the State
of North Carolina, hereby promises to pay to THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, or registered assigns, the principal sum of FORTY-FIVE MILLION DOLLARS
($45,000,000.00) on July 15, 2017 with interest (computed on the basis of a
360-day year--30-day month) (a) on the unpaid balance thereof at the Interest
Rate per annum specified above, payable on each Interest Payment Date specified
above and on the Final Maturity Date specified above, commencing with the
Interest Payment Date next succeeding the date hereof, until the principal
hereof shall have become due and payable, and (b) on any overdue payment
(including any overdue prepayment) of principal, any overdue payment of Yield
Maintenance Amount and any overdue payment of interest, payable on each Interest
Payment Date as aforesaid (or, at the option of the registered holder hereof, on
demand), at a rate per annum from time to time equal to the greater of (i) 2%
over the Interest Rate specified above or (ii) 2% over the rate of interest
publicly announced by Morgan Guaranty Trust Company of New York from time to
time in New York City as its Prime Rate.
Payments of principal, Yield-Maintenance Amount payable, if any, and
interest are to be made at the main office of The Bank of New York in New York
City or at such other place as the holder hereof shall designate to the Company
in writing, in lawful money of the United States of America.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to a Note Purchase and Private Shelf Agreement, dated
as of April 15, 1997 (herein called the "Agreement"), between the Company, on
the one hand, and The Prudential Insurance Company of America and each
Prudential Affiliate (as defined in the Agreement) which becomes party thereto,
on the other hand, and is entitled to the benefits thereof.
This Note is subject to optional prepayment, in whole or from time to
time in part, on the terms specified in the Agreement.
<PAGE> 4
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
for the then outstanding principal amount will be issued to, and registered in
the name of, the transferee. Prior to due presentment for registration of
transfer, the Company may treat the person in whose name this Note is registered
as the owner hereof for the purpose of receiving payment and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
In case an Event of Default shall occur and be continuing, the
principal of this Note may be declared or otherwise become due and payable in
the manner and with the effect provided in the Agreement.
The Company and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default, notice of intent to accelerate, notice of acceleration (to the extent
set forth in the Agreement), protest and diligence in collecting.
Should any debt represented by this Note be collected at law or in
equity, or in bankruptcy or other proceedings, or should this Note be placed in
the hands of attorneys for collection, the Company agrees to pay, in addition to
the principal, Yield-Maintenance Amount, if any, and interest due and payable
hereon, all costs of collecting or attempting to collect this Note, including
reasonable attorneys' fees and expenses (including those incurred in connection
with any appeal).
Capitalized terms used and not otherwise defined herein shall have the
meanings (if any) provided in the Agreement.
This Note is intended to be performed in the State of New York and
shall be construed and enforced in accordance with the internal law of such
State. AS PROVIDED IN PARAGRAPH 11N OF THE AGREEMENT, THE COMPANY SUBMITS TO THE
JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK LOCATED IN NEW YORK
COUNTY, NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK IN ANY ACTION OR PROCEEDING RELATING TO THIS NOTE.
RUDDICK CORPORATION
By: /s/ Douglas A. Stephenson
-----------------------------
Title: Treasurer
<PAGE> 1
EXHIBIT 11
RUDDICK CORPORATION
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------
SEPTEMBER 28, SEPTEMBER 29,
1997 1996
----------- -----------
<S> <C> <C>
NET INCOME PER SHARE COMPUTED AS FOLLOWS:
PRIMARY:
1. NET INCOME $47,730,519 $42,802,071
=========== ===========
2. WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 46,548,800 46,420,098
3. INCREMENTAL SHARES UNDER STOCK OPTIONS COMPUTED UNDER
THE TREASURY STOCK METHOD USING THE AVERAGE MARKET
PRICE OF ISSUER'S STOCK DURING THE PERIODS 283,609 198,852
----------- -----------
4. WEIGHTED AVERAGE COMMON SHARES AND
COMMON EQUIVALENT SHARES OUTSTANDING 46,832,409 46,618,950
=========== ===========
5. NET INCOME PER SHARE (ITEM 1 DIVIDED BY ITEM 4) $ 1.02 $ .92
=========== ===========
FULLY DILUTED:
1. NET INCOME $47,730,519 $42,802,071
=========== ===========
2. WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 46,548,800 46,420,098
3. 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 323,985 232,338
----------- -----------
4. WEIGHTED AVERAGE COMMON SHARES AND
COMMON EQUIVALENT SHARES OUTSTANDING 46,872,785 46,652,436
=========== ===========
5. NET INCOME PER SHARE (ITEM 1 DIVIDED BY ITEM 4) $ 1.02 $ .92
=========== ===========
</TABLE>
<PAGE> 1
EXHIBIT 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - FISCAL 1997 COMPARED
TO FISCAL 1996
For fiscal year 1997, consolidated sales of $2.3 billion increased 7.4% over
the $2.14 billion reported in fiscal 1996. Consolidated net income of $47.7
million was up 11.5% from the $42.8 million reported last year. On a per share
basis, earnings were $1.02 for fiscal 1997, an increase of 10.9% when compared
to $.92 reported in fiscal 1996. Fiscal 1997 consolidated operating profit
increased 14.1% due to record profitability at American & Efird.
In fiscal 1997, the 11.5% increase in net income was achieved despite a
rise in the Company's effective income tax rate to 33% (31% in 1996), driven by
a combination of reduced tax benefits from Company owned life insurance
("COLI") and higher relative pre-tax income from operations. The favorable tax
attributes of COLI will continue to diminish as a result of 1996 federal tax
legislation which will phase out policy interest deductions by 1999.
HARRIS TEETER, INC. Sales advanced by 5% in fiscal 1997. In the supermarket
industry environment, where intense competition shows no signs of abating,
Harris Teeter sales for stores in operation in both periods were marginally
ahead by 0.1% in fiscal 1997, compared to 3.9% in fiscal 1996. Sales increases
were primarily due to an 8% expansion in store square footage over the course
of the year, increased advertising and promotion and the successful system-wide
rollout of the new customer loyalty card (the VIC Card) introduced in 1996.
Grocery sales grew by 4% and accounted for 36% of the sales increase. Dairy,
meat, produce and frozen products had sales increases ranging from 4% to 10%
and accounted for 44% of the sales increase. Operating profit fell by 6% to
$45.7 million in fiscal 1997, primarily as a result of expenses related to the
opening of a record number of new stores, as well as several major store
remodels during the year and higher fixed costs associated with those stores.
These costs were partially offset by greater sales volume and a favorable
product mix of higher margin items.
At the end of fiscal 1997, 138 stores were in operation, compared to 134
a year ago. During the year, thirteen new stores were opened, five of which
were replacements, and four additional, less profitable stores were sold or
closed. During fiscal 1997, charges to a $5.3 million reserve established in
1993 for the closing of specified stores to be replaced, which stores have been
closed, totaled $1.3 million, for a cumulative total of $4.4 million for all
periods to date.
AMERICAN & EFIRD, INC. Sales increased 19% over fiscal 1996.
This sales growth was primarily due to the inclusion of a full year's sales
from the June 1996 acquisition of certain assets of Threads USA, moderate
additions to business with existing U.S. customers and an increase in foreign
sales. Further, sales growth was driven by good market conditions in most major
industries served by A&E, while during the prior year relative weakness in
thread sales was primarily related to weak apparel sales at retail. Sales
increases were primarily in industrial sewing thread, and consumer thread and
notions sales declined modestly. A&E believes that its ability to meet the
increasing demands of its customers for top-quality, high-performance
industrial thread in both the apparel and home furnishings markets provides an
opportunity for future growth. Operating profit advanced by 42% to $49.1
million in fiscal 1997 compared to $34.7 million in the prior year. Operating
profit was positively impacted by additional sales volume and the successful
integration of the Threads USA business into existing facilities, which
resulted in improved operating efficiency, by the renovation and upgrading of a
Threads USA manufacturing facility and by the improved performance in a number
of foreign operations.
The integration of Threads USA is near completion, including the
consolidation of manufacturing and administrative operations, customer
conversion and sales force reorganization. A new customer support center is
also planned, and construction is expected to begin by early 1998.
Sales by foreign operations made up 20% of A&E's total sales and 14% of
its operating profit. While foreign sales and profits were not material to the
Company's consolidated results of operations, they continued to build
significantly. NAFTA and the Caribbean Basin Initiative continued to drive
strong performances in Mexico and the Caribbean, due to the growth of apparel
manufacturing in Central and South America. The A&E majority-owned joint
venture in China also evidenced strong growth, and export sales continued to
expand. Slightly offsetting such improvements were weak financial results in
the Korean and Malaysian operations, due to poor economic conditions and
currency devaluation. Lastly, A&E has begun the process of establishing
operations in India.
RESULTS OF OPERATIONS - FISCAL 1996 COMPARED
TO FISCAL 1995
For fiscal year 1996, consolidated sales of $2.14 billion increased 6.6% over
the $2.01 billion reported in fiscal 1995.
13
<PAGE> 2
Consolidated net income of $42.8 million was up 9% from the $39.3 million
reported in fiscal 1995. On a per share basis, earnings from continuing
operations were $.92 for fiscal 1996, an increase of 9.5% when compared to $.84
reported in fiscal 1995. The discontinued operations of the printing business
segment, the assets of which were sold in January 1996, generated no
significant earnings or loss during either fiscal year. Fiscal 1996
consolidated operating profit increased 8.4%, led by gains at Harris Teeter.
On June 3, 1996, American & Efird completed the acquisition of certain
assets of Threads USA. The assets included the plants and equipment at four
manufacturing facilities in Gastonia, N.C. and the equipment at one
manufacturing facility in Puerto Rico.
HARRIS TEETER, INC. Sales in fiscal 1996 increased 7% over fiscal 1995. Sales
for stores in operation in both periods were ahead 3.9% compared to 6.5% in
1995. Sales increases were attributable to customer acceptance of larger,
new-format stores, strong feature plans, merchandising and advertising, strong
holiday sales and a 4% increase in store square footage during fiscal 1996.
Grocery sales were up 6%, which accounted for 43% of the sales increase. Dairy,
meat, produce and frozen products had sales increases ranging from 4% to 10%
and accounted for 38% of the sales increase. Operating profit showed an
improvement of 15% over 1995, derived mainly from higher sales volume, a
favorable product mix of higher gross margin items and continued control of
ongoing operating expenses. Pre-opening expenses associated with aggressive new
store openings and major remodels served to increase operating expenses in the
year. Several store prototypes of varying sizes were developed in 1996 in an
effort to enable efficient store sizing to specific markets, amenities to
customers and standardized, reduced construction costs.
At the end of fiscal 1996, 134 stores were in operation, compared to 139
in 1995. During fiscal 1996, seven smaller stores in less urban markets were
sold at no significant gain or loss. Nine new larger stores were opened during
the year, four of which were replacement stores, and three additional smaller
stores were closed. Four of the stores closed in fiscal 1996 were closed under
a previously announced marketing strategy and related plan to replace a finite
number of smaller, less competitive stores in specified markets with larger
stores. A reserve of $5.3 million was established in fiscal 1993 for the direct
costs of these future store closings. Charges incurred in fiscal 1996 were $1.5
million and cumulatively, $3.1 million. The closings were substantially
completed by 1996 year end, except for the payment of future rents. Management
anticipates that the remaining charges to be incurred, primarily closed store
rents, will not materially effect the Company's operating results or its
financial position.
AMERICAN & EFIRD, INC. Sales increased 4% over fiscal 1995. This increase was
achieved during a period of poor demand for thread due to weak retail sales of
apparel and home furnishings. Gradual improvement in U.S. market conditions was
evidenced toward the 1996 fiscal year end. The purchase of the assets of
Threads USA in the June quarter, by which A&E became the largest U.S.
industrial sewing thread company, contributed $24.8 million to the sales
increase although only four months of sales from this acquisition were
reflected in fiscal 1996. The sales increase was primarily due to industrial
sewing thread sales as consumer thread and notions sales recorded a modest
decline for the year. Operating profit of $34.7 million was slightly ahead of
1995. Utilizing sales from the Threads USA acquisition resulted in improved
operating schedules, which had a positive impact on operating profit for the
year. A&E responded to the weak domestic demand for thread by exercising tight
control of inventories and operating costs while improving quality and customer
service.
Significant progress was achieved towards integrating Threads USA into
A&E and reducing costs in the Threads USA facilities. As of the 1996 fiscal
year end, A&E was continuing the process of integrating the Threads USA
operations into its own. The nature and location of product lines and
facilities of the two companies were enabling A&E to combine and streamline
manufacturing, reduce duplicative general and administrative expenses and
integrate the qualified, skilled workforce of Threads USA.
Sales by foreign operations comprised 18% of A&E's total sales and 7% of
its operating profit. While not material to the Company's consolidated
financial results, foreign sales and operating profits increased over the 1995
fiscal year, with all foreign subsidiaries except Canada and Costa Rica
reporting improved earnings. NAFTA had stimulated growth of apparel
manufacturing in Central and South America. As a result, A&E subsidiaries in
Mexico, Costa Rica and the Dominican Republic displayed growth, and A&E's U.S.
production benefited from export growth. Additionally, A&E announced
commitments to establish future operations in China and India to enhance its
position in Asia.
14
<PAGE> 3
OTHER EFFECTS ON RESULTS OF OPERATIONS
During the second fiscal 1996 quarter, the Company elected to begin paying
directly to its ESOP employee-shareholders the cash dividends on ESOP shares.
Favorable tax treatment of the ESOP dividend pass-through under the applicable
income tax statutes along with favorable tax attributes of COLI reduced the
effective income tax rate of the Company. The favorable tax attributes of COLI,
however, were significantly diminished as of January 1, 1996 as a result of
federal legislation which will phase out interest deductions on policy loans by
January 1, 1999.
On January 23, 1996, certain assets of Jordan Graphics, Inc., a
subsidiary of the Company, were sold to The Reynolds and Reynolds Company. The
revenues of the discontinued operations for the fiscal year prior to the sale
were $17.3 million. The operating results for fiscal years 1996 and 1995 were
not significant. Substantially all the value of assets of Jordan was realized
during fiscal year 1996 by collection or sale. The disposition had no
significant impact on the consolidated earnings or the financial condition of
the Company. The business forms segment was reported as discontinued
operations.
In fiscal 1996, Ruddick Investment Company, a subsidiary of the Company,
redefined its business, with major emphasis on the development of selected
sites for Harris Teeter stores. Venture capital investment holdings continue to
be managed but future equity investment will be limited. Due to continued
growth of the American & Efird and Harris Teeter businesses, Ruddick
Investment's relative size to the consolidated Company had declined. As a
result, Ruddick Investment is no longer considered an operating company.
Effective with the beginning of fiscal year 1996, and for all comparable
periods, the Harris Teeter retail site activities of Ruddick Investment are
assigned to the retail business segment for financial reporting; and other
activities, to the Parent Company as "other administrative expense."
CAPITAL RESOURCES AND LIQUIDITY
Ruddick Corporation is a holding company which, through its wholly-owned
subsidiaries, American & Efird, Inc. and Harris Teeter, Inc., is engaged in the
primary businesses of industrial sewing thread manufacture and distribution,
and regional supermarket operations, respectively. Ruddick has no material
independent operations, nor material assets, other than the investments in its
operating subsidiaries. Ruddick provides a variety of services to its
subsidiaries and is dependent upon income and upstream dividends from its
subsidiaries. There exist no material restrictions on such dividends, which are
determined as a percentage of net income of each subsidiary.
The Company strives to achieve a goal of earning a 15% return on
beginning shareholders' equity. In fiscal 1997, the return on beginning equity
was 13.8%, compared to 13.5% in the prior year. At the same time, the Company
seeks to limit long-term debt such that it constitutes no more than 40% of
capital employed, which includes long-term debt and shareholders' equity. As of
the end of fiscal 1997, this percentage was 33.1%, a slight increase from last
year's 32.2%.
The Company's principal source of liquidity has been revenue from
operations. The Company also has the ability to borrow up to an aggregate of
$100 million under established revolving lines of credit with three banks. The
maximum amount outstanding under these credit facilities during fiscal 1997 was
$100 million, and $33.9 million was outstanding at year end. The majority of
the borrowings under Ruddick's revolving credit facilities were used for
capital expenditures. Borrowings and repayments under these revolving credit
facilities are of the same nature as short-term credit lines; however, due to
the nature and terms of the agreements allowing up to five years for repayment,
all borrowings under these facilities are classified as long-term debt.
On April 15, 1997, the Company executed unsecured 7.72% Senior Notes in
the amount of $50 million, due April 15, 2017, and an additional uncommitted
$50 million Private Shelf Facility with a major insurance company.
Subsequently, on July 15, 1997, the Company executed unsecured 7.55% Senior
Notes in the amount of $50 million due July 15, 2017, under the Private Shelf
Facility. Proceeds from these notes were used to repay an 8.57% Term Note and
reduce the amount borrowed under the revolving lines of credit, which
borrowings and term debt had been primarily undertaken for capital
expenditures. Under a separate Private Shelf Facility with the same major
insurance company dated March 1, 1996, the Company has uncommitted capacity to
borrow an additional $50 million.
Working capital as of the fiscal years ended 1997, 1996 and 1995 was
$88.9 million, $65.1 million and $73.7 million, respectively. The increase of
$23.8 million in fiscal 1997 was primarily due to higher inventories and
accounts
15
<PAGE> 4
receivable related to the expansion of A&E's domestic and
international sales and due to higher pre-paid assets at Harris Teeter. The
current ratio was 1.4 at September 28, 1997 and 1.3 at September 29, 1996.
Covenants in certain of the Company's long-term debt agreements limit the
total indebtedness that the Company may incur. The Company remains well within
such covenants. Management believes that the limit on indebtedness does not
significantly restrict the Company's liquidity and that such liquidity is
adequate to meet foreseeable requirements.
In fiscal 1997, capital expenditures were $115.3 million. In fiscal 1998,
capital expenditures are expected to be not more than $132 million. In order to
complete the integration of Threads USA and for further modernization and
expansion, American & Efird expects to spend $39 million. In the very
competitive southeastern U.S. grocery market, Harris Teeter has capital
expenditure plans totaling $93 million. The Harris Teeter estimates include the
fiscal 1998 opening of 12 new stores, one of which is a replacement, and three
additional stores are expected to be closed. New store locations include three
in Virginia, two in Atlanta, Georgia, one in Nashville, Tennessee, five in
North Carolina and one in Jacksonville, Florida, a new market for Harris Teeter
and its sixth state. The expansion that began in 1997 of Harris Teeter's two
distribution centers is expected to be completed in 1998. The total cost of the
project is still estimated at $40 to $45 million and Harris Teeter anticipates
spending approximately $25 million in fiscal 1998. Management expects that
internally generated funds, supplemented by available borrowing capacity, will
be adequate to finance such expenditures.
OTHER MATTERS
The Company has several initiatives underway for the improvement of information
systems, including the modification or conversion of Company computer systems
to provide for proper functioning beyond calendar year 1999. It is anticipated
that substantially all of these Year 2000 costs will be incurred during fiscal
1998 and 1999. The Company expects to complete its Year 2000 cost estimates by
mid-1998. Maintenance or modification costs will be expensed as incurred, while
the costs of new software will be capitalized and amortized over the software's
useful life. Management believes that resources are available to complete the
modification and conversion and that its costs will not materially effect the
Company's operating results or financial condition. Management believes that
the Year 2000 compliance will be completed well before the end of fiscal year
1999. It must be recognized, however, that failure to do so could have a
material adverse effect on the Company's future results of operations.
During fiscal year 1996, the Company announced to its shareholders the
adoption of a Dividend Reinvestment and Stock Purchase Plan available to all
shareholders of record.
The foregoing discussion contains some forward-looking statements about
the Company's financial condition and results of operations, which are subject
to certain risks and uncertainties that could cause actual results to differ
materially from those reflected in the forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking statements,
which reflect management's judgment only as of the date hereof. The Company
undertakes no obligation to publicly revise these forward-looking statements to
reflect events and circumstances that arise after the date hereof.
Factors that might cause the Company's actual results to differ
materially from those anticipated in forward-looking statements include the
following:
- - generally adverse economic and industry conditions, including a decline in
consumer demand for apparel products or significant changes in consumer food
preferences or eating habits,
- - changes in the competitive environment, including increased competition in
the Company's primary geographic markets, the entry of new competitors and
consolidation in the supermarket industry,
- - economic or political changes in the countries in which the Company operates
or adverse trade regulations,
- - the passage of future tax legislation, if any, that could have an adverse
impact on the tax benefits of the ESOP dividends and COLI,
- - management's ability to accurately predict the adequacy of the Company's
present liquidity to meet future requirements,
- - changes in the Company's capital expenditures, new store openings and store
closings, and
- - non-availability of resources for the Company, or its suppliers
and customers, to complete their respective Year 2000 compliance effectively.
16
<PAGE> 5
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 28 September 29
(Dollars in thousands 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 17,150 $ 21,033
Accounts Receivable, Less Allowance For Doubtful
Accounts: 1997 - $2,005; 1996 - $1,398 77,852 70,809
Inventories 196,049 183,649
Other Current Assets 32,249 22,569
Net Assets of Discontinued Operations -- 413
- ---------------------------------------------------------------------------------------------------------------------------
Total Current Assets 323,300 298,473
- ---------------------------------------------------------------------------------------------------------------------------
PROPERTY
Land and Buildings 127,600 109,999
Machinery and Equipment 522,627 462,102
Leasehold Improvements 130,078 113,850
Assets Under Capital Leases 1,920 1,920
- ---------------------------------------------------------------------------------------------------------------------------
Total, at Cost 782,225 687,871
Accumulated Depreciation and Amortization 315,666 277,304
- ---------------------------------------------------------------------------------------------------------------------------
Property, Net 466,559 410,567
- ---------------------------------------------------------------------------------------------------------------------------
INVESTMENTS AND OTHER ASSETS
Investments 27,529 29,841
Other Assets 67,855 62,821
- ---------------------------------------------------------------------------------------------------------------------------
Total Assets $ 885,243 $ 801,702
===========================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes Payable $ 8,100 $ 7,118
Current Portion of Long-term Debt 575 5,247
Dividends Payable 3,727 3,252
Accounts Payable 139,085 134,780
Federal and State Income Taxes 5,758 1,945
Accrued Compensation 28,349 34,677
Accrued Interest 21,217 20,530
Other Accrued Liabilities 27,596 25,790
- ---------------------------------------------------------------------------------------------------------------------------
Total Current Liabilities 234,407 233,339
- ---------------------------------------------------------------------------------------------------------------------------
NON-CURRENT LIABILITIES
Long-term Debt 189,919 159,188
Deferred Income Taxes 52,447 43,598
Other Liabilities 23,376 18,721
Minority Interest 4,587 --
- ---------------------------------------------------------------------------------------------------------------------------
Commitments and Contingencies
- ---------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity
Common Stock - Shares Outstanding:
1997 - 46,599,301; 1996 - 46,461,290 56,779 55,599
Retained Earnings 326,488 293,654
Cumulative Translation Adjustments (2,760) (2,397)
- ---------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity 380,507 346,856
- ---------------------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $ 885,243 $ 801,702
===========================================================================================================================
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these balance sheets.
17
<PAGE> 6
Statements of Consolidated Income and Retained Earnings
<TABLE>
<CAPTION>
For the Fiscal Years Ended,
----------------------------------------------------------------
September 28 September 29 October 1
(Dollars in thousands, except per share data) 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $ 2,300,089 $ 2,142,501 $ 2,009,776
- ---------------------------------------------------------------------------------------------------------------------------
Cost of Sales 1,667,858 1,561,098 1,483,859
Selling, General and Administrative Expenses 537,395 498,260 449,189
- ---------------------------------------------------------------------------------------------------------------------------
Operating Profit 94,836 83,143 76,728
- ---------------------------------------------------------------------------------------------------------------------------
Net Interest Expense 14,558 12,155 10,480
Other Administrative Expense, Net 8,976 8,979 6,991
- ---------------------------------------------------------------------------------------------------------------------------
Income Before Taxes 71,302 62,009 59,257
Taxes 23,571 19,207 19,990
- ---------------------------------------------------------------------------------------------------------------------------
Net Income 47,731 42,802 39,267
Retained Earnings at Beginning of Fiscal Year 293,654 262,921 235,219
Common Dividend: 1997 - $.32 a share;
1996 - $.26 a share; 1995 - $.25 a share 14,897 12,069 11,565
- ---------------------------------------------------------------------------------------------------------------------------
Retained Earnings at End of Fiscal Year $ 326,488 $ 293,654 $ 262,921
===========================================================================================================================
Net Income Per Share $ 1.02 $ .92 $ .84
===========================================================================================================================
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
18
<PAGE> 7
STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
For the Fiscal Years Ended,
--------------------------------------------------------
(Dollars in thousands) September 28 September 29 October 1
1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net Income $ 47,731 $ 42,802 $ 39,267
Non-cash Items Included in Net Income
Depreciation and Amortization 58,723 51,226 44,648
Deferred Taxes 6,133 6,863 (215)
Restructuring Charge (1,298) (1,512) (1,480)
Other, Net 4,459 (49) 2,526
Decrease (Increase) in Accounts Receivable (7,043) (12,903) (2,634)
Decrease (Increase) in Inventories (12,400) (6,254) (2,881)
Decrease (Increase) in Other Current Assets (6,965) 11,466 (13,903)
Increase (Decrease) in Current Liabilities 5,742 11,874 37,860
- -------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 95,082 103,513 103,188
- -------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Discontinued Activities 413 12,650 2,538
- -------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Capital Expenditures (115,299) (123,280) (98,205)
Cash Proceeds from Sale of Property 1,038 4,127 126
COLI, Net (2,883) (9,098) (9,345)
Other, Net 5,492 (10,668) 1,985
- -------------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (111,652) (138,919) (105,439)
- -------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from Long-term Borrowings 87,650 44,950 25,777
Payments of Principal on Long-term Debt (61,493) (8,285) (5,408)
Dividends Paid (14,897) (12,069) (11,565)
Other, Net 1,014 234 (4,663)
- -------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 12,274 24,830 4,141
- -------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Cash and Cash Equivalents (3,883) 2,074 4,428
Cash and Cash Equivalents at Beginning of Year 21,033 18,959 14,531
- -------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 17,150 $ 21,033 $ 18,959
===================================================================================================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID DURING THE YEAR FOR:
Interest $ 13,937 $ 11,201 $ 11,357
Income Taxes $ 13,725 $ 11,056 $ 23,959
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
19
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
Ruddick Corporation and its wholly owned operating companies, American & Efird,
Inc. and Harris Teeter, Inc., and in fiscal 1996 and 1995, Jordan Graphics,
Inc. (disposed in 1996), collectively referred to herein as the Company. All
material intercompany amounts have been eliminated. To the extent that
non-affiliated parties held minority equity investments in joint ventures of
the Company, such investments are classified as minority interest.
CASH EQUIVALENTS
For purposes of the statements of consolidated cash flows, the Company
considers all highly liquid cash investments purchased with a maturity of three
months or less to be cash equivalents.
INVENTORIES
Inventories are valued at the lower of cost or market with the cost of
substantially all inventories being determined using the last-in, first-out
(LIFO) method. The LIFO cost of such inventories was $20,949,000 and
$19,047,000 less than the first-in, first-out (FIFO) cost method at September
28, 1997 and September 29, 1996, respectively.
PROPERTY AND DEPRECIATION
Property is at cost and is depreciated, using principally the straight-line
method, over the following useful lives:
- -------------------------------------------------------------------------------
Land improvements 10-40 years
Buildings 10-50 years
Machinery and equipment 3-15 years
- -------------------------------------------------------------------------------
Leasehold improvements are depreciated over the lesser of the estimated useful
life or the remaining term of the lease. Assets under capital leases are
amortized on a straight-line basis over the lesser of 20 years or the lease
term. Maintenance and repairs are charged against income when incurred.
Expenditures for major renewals, replacements and betterments are added to
property. The cost and the related accumulated depreciation of assets retired
are eliminated from the accounts; gains or losses on disposal are added to or
deducted from income. Property categories include $35,635,000 and $17,963,000
undepreciated construction in progress at September 28, 1997 and September 29,
1996, respectively.
INVESTMENTS
The Company holds a financial position in certain shopping centers in which
Harris Teeter, Inc., is an anchor tenant. Additionally it makes loans to and
equity investments in a number of emerging growth companies, as well as
selected publicly traded companies. Real estate and financial investments are
carried at the lower of cost or market. In management's opinion, the net
aggregate carrying value of financial instruments of $8,435,000 and $7,335,000
held for investment approximated their aggregate fair values at September 28,
1997 and September 29, 1996, respectively.
OTHER ASSETS
Other assets include cash surrender value of Company owned life insurance
(COLI), investment in unconsolidated foreign subsidiaries and various
acquisition costs. The cash surrender value of life insurance is recorded net
of policy loans. The net life insurance expense, including interest expense of
$18,490,000 in 1997, $18,564,000 in 1996, and $12,845,000 in 1995, is included
in other administrative expense in the statements of consolidated income and
retained earnings. Acquisition costs allocated to other assets, including
favorable lease rights and goodwill, are being amortized over 10-15 years.
20
<PAGE> 9
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts for certain of the Company's financial instruments,
including cash and cash equivalents, accounts and notes receivable, accounts
payable and other accrued liabilities approximate fair value because of their
short maturities. The recorded amount of fixed rate obligations approximates
their fair value based on borrowing rates currently available to the Company
for loans with similar terms and maturities.
ADVERTISING
Costs incurred to produce media advertising are expensed in the period in which
the advertising first takes place. All other advertising costs are also
expensed when incurred. Cooperative advertising income from vendors is recorded
in the period in which the related expense is incurred. Net advertising
expenses of $15,555,000, $12,839,000, and $13,224,000 were included in the
Company's results of operations for fiscal 1997, 1996 and 1995, respectively.
INCOME TAXES
Ruddick and its subsidiaries file a consolidated federal income tax return. Tax
credits are recorded as a reduction of federal income taxes in the years in
which they are utilized. Deferred tax liabilities or assets at the end of each
period are determined using the tax rate expected to be in effect when taxes
are actually paid or recovered. Accordingly, income tax expense will increase
or decrease in the same period in which a change in tax rates is enacted.
PER SHARE AMOUNTS
Primary and fully diluted net income per share amounts were determined based on
the weighted average number of shares of common stock and common stock
equivalents (non-cumulative, voting $.56 convertible preference stock and stock
options) outstanding. The weighted average primary shares outstanding were
46,832,409 in 1997, 46,618,950 in 1996, and 46,536,346 in 1995. Common stock
equivalents had no material effect on the per share amounts in 1997, 1996 and
1995.
DISCONTINUED OPERATIONS
In fiscal 1996, the assets of Jordan Graphics, Inc., the business forms
segment, were sold. The revenues of the discontinued operation were $17,293,000
(16 weeks), and $60,991,000, in fiscal 1996 and 1995, respectively. Operating
profits were $123,000 and $336,000 for the same respective periods and
applicable taxes were $47,000 and $151,000, respectively.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual amounts could differ from those estimates.
RECLASSIFICATIONS
To conform with classifications adopted in the current year, the financial
statements and related notes for prior years reflect certain reclassifications,
which have no effect on net income.
NEW ACCOUNTING STANDARDS
LONG-LIVED ASSETS: Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of," requires accounting adjustments and disclosures relative to
impairments of tangible and intangible long-lived assets. At September 28,
1997, the carrying values of the Company's long-lived assets and intangibles
were recoverable in all material respects and no adjustments or disclosures are
required.
21
<PAGE> 10
STOCK OPTIONS: Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation," encourages, but does not require,
companies to record compensation cost for stock option plans at fair value of
the options. The Company has chosen to continue to account for stock-based
compensation using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25. Accordingly, compensation cost of stock
options is measured as the excess, if any, of the market price of the Company's
stock at the date of the grant over the option exercise price and is charged to
operations over the vesting period. Income tax benefits attributable to stock
options exercised are credited to capital stock.
EARNINGS PER SHARE: Statement of Financial Accounting Standards No. 128,
"Earnings per Share" will be effective for the Company's 1998 fiscal year. This
new standard requires dual presentation of basic and diluted net income per
share on the face of the statement of consolidated income and requires a
reconciliation of the numerators and denominators of the respective
calculations. Management believes that basic and diluted net income per share
will not differ materially from the current calculations of primary and fully
diluted net income per share for the Company.
LEASES
The Company leases certain equipment under agreements expiring during the next
five years. Harris Teeter leases most of its stores under leases that expire
during the next 21 years. It is expected that such leases will be renewed by
exercising options or replaced by leases of other properties. Most store leases
provide for additional rentals based on sales, and certain store facilities are
sublet under leases expiring during the next eight years. Rent expenses were as
follows:
<TABLE>
<CAPTION>
(In thousands) 1997 1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING LEASES:
Minimum $52,327 $43,282 $36,111
Contingent 941 1,175 1,277
- -------------------------------------------------------------------------------
Total $53,268 $44,457 $37,388
- -------------------------------------------------------------------------------
</TABLE>
Future minimum lease commitments at September 28, 1997 (excluding leases
assigned or expected to be assigned - see below) were as follows:
<TABLE>
<CAPTION>
(In thousands) Capital Leases Operating Leases
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
1998 $ 268 $ 57,398
1999 268 55,752
2000 268 53,709
2001 268 51,151
2002 268 49,602
Later years 209 517,184
- --------------------------------------------------------------------------------------------------------
Total minimum lease payments $ 1,549 $ 784,796
- --------------------------------------------------------------------------------------------------------
Less amount representing interest
(Store premises, 6.75%-10.25%, store equipment, 8%-15%) 756
- --------------------------------------------------------------------------------------------------------
Present value of minimum lease obligations 793
Less current portion 113
- --------------------------------------------------------------------------------------------------------
Long-term capital lease obligations $ 680
- --------------------------------------------------------------------------------------------------------
Total minimum sublease rentals to be received
under noncancelable subleases $ 2,753
- --------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE> 11
In connection with the closing of certain store locations, Harris Teeter has
assigned leases to other merchants with recourse. These leases expire over the
next 12 years and the future minimum lease payments of $11,532,000 over this
period have been assumed by these merchants. In addition, Harris Teeter leases
certain store locations which are not currently in use but are expected to be
assigned to other merchants. These leases expire over the next 20 years and the
future minimum lease payments related to these locations total $35,665,000
(approximating $3,222,000 per year for each of the next five years).
LONG-TERM DEBT
Long-term debt at September 28, 1997 and September 29, 1996 was as follows:
<TABLE>
<CAPTION>
(In thousands) 1997 1996
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
6.48% Senior Note due $7,143 annually March, 2005 through 2011 $ 50,000 $ 50,000
7.72% Senior Note due April, 2017 50,000 --
7.55% Senior Note due July, 2017 50,000 --
Revolving line of credit, variable rate, due February 2002 33,900 48,600
8.57% Term Note - Repaid in 1997 -- 50,167
Industrial revenue bond, variable rate, due November 2000 2,500 2,500
Obligations under capital leases and other 4,094 13,168
- --------------------------------------------------------------------------------------------------------------------
Total 190,494 164,435
- --------------------------------------------------------------------------------------------------------------------
Less current portion 575 5,247
- --------------------------------------------------------------------------------------------------------------------
Total long-term debt $ 189,919 $ 159,188
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Long-term debt maturities, excluding obligations under capital leases, in each
of the next five fiscal years are as follows: 1998 - $462,000; 1999 - $484,000;
2000 - $367,000; 2001 - $2,746,000; 2002 - $126,000. Additionally in fiscal
2002, the revolving line of credit with three banks ($33,900,000 as of
September 28, 1997) would mature; however, management expects to obtain the one
year extension of term upon receipt of the mutual consent of lenders under the
"evergreen" provisions of the loan agreement.
In fiscal 1996, the Company executed an unsecured $50,000,000 6.48% Senior
Promissory Note due March 1, 2011, and a non-committed $50,000,000 Private
Shelf Facility with a major insurance company. As of September 28, 1997, no
commitments had been initiated under the Private Shelf Facility.
In fiscal 1997, the Company executed an unsecured $50,000,000 7.72% Senior
Promissory Note due April 15, 2017 and an unsecured $50,000,000 7.55% Senior
Promissory Note due July 15, 2017, with the same major insurance company.
Proceeds from the Notes were used to repay the 8.57% Term Note and reduce the
amount borrowed under the revolving line of credit. During 1997 and 1996, the
maximum outstanding borrowing under the revolving line of credit for both years
was $100,000,000 and the average for the 364 days outstanding was $70,942,000
and $70,562,000, respectively. The daily weighted average interest rate (a
variable rate related to the current published CD rate) was 6.1% (5.9%) and a
commitment fee of .15% (.125%) of the unused line was charged during 1997
(1996).
Various loan agreements provide, among other things, for maintenance of minimum
levels of consolidated shareholders' equity. At September 28, 1997,
consolidated tangible net worth exceeded by $73,312,000 the balance which,
under the most restrictive provisions, must be maintained through September 27,
1998. The requirement shall increase annually by 40% of consolidated net income
for such year.
Total interest expense on long-term debt was $14,615,000, $12,748,000, and
$10,649,000 in 1997, 1996 and 1995, respectively.
23
<PAGE> 12
CAPITAL STOCK
The capital stock of the Company authorized at September 28, 1997 was 1,000,000
shares of Additional Preferred, 4,000,000 shares of Preference-noncumulative
$.56 convertible, voting ($10 liquidation value), and 75,000,000 shares of
Common.
Changes in shares issued and outstanding and in shareholders' equity accounts
other than retained earnings are summarized as follows:
<TABLE>
<CAPTION>
Common
(In thousands except share amounts) Shares Amount
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
BALANCE AT OCTOBER 2, 1994 46,352,214 $ 57,620
- -------------------------------------------------------------------------------------------------------------------
Shares issued under exercised stock options 704,052 3,639
Shares purchased and retired (682,600) (6,952)
Tax effect of disqualifying option stocks -- 471
Other -- 38
- -------------------------------------------------------------------------------------------------------------------
BALANCE AT OCTOBER 1, 1995 46,373,666 $ 54,816
- -------------------------------------------------------------------------------------------------------------------
Shares issued under exercised stock options 94,424 661
Tax effect of disqualifying option stocks -- 117
Other (6,800) 5
- -------------------------------------------------------------------------------------------------------------------
BALANCE AT SEPTEMBER 29, 1996 46,461,290 $ 55,599
- -------------------------------------------------------------------------------------------------------------------
Shares issued under exercised stock options 138,011 1,008
Tax effect of disqualifying option stocks -- 106
Other -- 66
- -------------------------------------------------------------------------------------------------------------------
BALANCE AT SEPTEMBER 28, 1997 46,599,301 $ 56,779
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
During fiscal 1995, the Company declared a two-for-one split of the common stock
effected in the form of a 100% stock dividend. All common stock and per share
data included in the consolidated financial statements and footnotes have been
restated to reflect the stock split.
One preferred share purchase right is attached to each outstanding share of
common stock, which rights expire on November 15, 2000. Each right entitles the
holder to purchase one four-hundredth of a share of a new Series A Junior
Participating Additional Preferred Stock at $26.25. The rights will become
exercisable only under certain circumstances related to a person or group
acquiring or offering to acquire a substantial portion of the Company's common
stock. If certain additional events then occur, each right would entitle the
rightholder to acquire common stock of the Company, or in some cases of an
acquiring entity, having a value equal to twice the exercise price. Under
certain circumstances the Board of Directors may exchange all or part of the
outstanding rights at an exchange ratio per right of one share of common stock,
or one four-hundredth of a share of Series A Junior Participating Additional
Preferred Stock, or may redeem each right at a price of $.0025. There are
200,000 shares of Series A Junior Participating Additional Preferred Stock
reserved for issuance upon exercise of the rights.
STOCK OPTIONS
At September 28, 1997, the Company has 1982, 1988, 1993 and 1995 incentive
stock option plans which authorized options for 4,000,000 shares of common
stock. Under the plans, the Company has granted to officers and management
personnel stock options which become exercisable in installments of 20% per
year at each of the first through fifth anniversaries from
24
<PAGE> 13
grant date and which expire seven years from grant date. Additionally under the
1995 plan, the Company grants a single, one-time option of 10,000 shares,
generally vested immediately, to each of its outside directors. Under each of
the plans the exercise price of each option shall be no less than the market
price of the Company's stock on the date of grant and an option's maximum term
is ten years. At the discretion of the Company, under certain plans a stock
appreciation right may be granted and exercised in lieu of the exercise of the
related option (which is then forfeited). Under the plans, as of September 28,
1997, the Company may grant additional options for the purchase of 859,600
shares.
A summary of the status of the Company's stock option plans as of September 28,
1997, September 29, 1996 and October 1, 1995, changes during the years ending
on those dates and related weighted average exercise price is presented below:
<TABLE>
<CAPTION>
(Shares in thousands) 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
Shares Price Shares Price Shares Price
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 1,116 $ 10.40 696 $ 9.07 1,364 $ 7.11
Granted 120 13.45 573 11.50 124 9.72
Exercised (181) 9.05 (97) 7.21 (757) 5.59
Forfeited (44) 10.64 (56) 10.81 (35) 10.03
- ---------------------------------------------------------------------------------------------------------------------------
Outstanding at end of year 1,011 10.99 1,116 10.40 696 9.07
- ---------------------------------------------------------------------------------------------------------------------------
Options exercisable at year-end 422 $ 10.29 368 $ 9.14 404 $ 8.20
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The following table summarizes options outstanding and options
exercisable as of September 28, 1997, and the related weighted average
remaining contractual life (years) and weighted average exercise price (shares
in thousands):
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
-------------------------------------------------------------------------------------------
Shares Remaining Shares
Option Price per Share Outstanding Life Price Exercisable Price
- ----------------------- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 5.23 to $ 8.13 84 0.7 $ 6.99 84 $ 6.99
9.16 to 11.44 743 4.4 10.98 249 10.68
11.94 to 14.38 184 7.0 12.88 89 12.34
- ----------------------- ------------------------------------------------------------------------------------------
$ 5.23 to $ 14.38 1,011 4.6 $ 10.99 422 $ 10.29
- ----------------------- ------------------------------------------------------------------------------------------
</TABLE>
The weighted average fair value at date of grant for options granted during
fiscal 1997 and 1996 was $3.82 and $2.95 per option, respectively. The fair
value of options at date of grant was estimated using the Black-Scholes model
with the following weighted average assumptions:
<TABLE>
<CAPTION>
1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Expected life (years) 4.9 5.0
Risk-free interest rate 5.91% 5.74%
Volatility 28.65% 26.01%
Dividend yield 2.10% 2.40%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." Accordingly, no compensation cost has been recognized for the
stock options granted in 1997 or 1996. Had compensation cost been determined
based on the fair value at the grant date consistent with the provisions of
this statement, the Company's pro forma net income and net income per share
would have been as follows:
<TABLE>
<CAPTION>
(In thousands, except per share data) 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net income - as reported $ 47,731 $42,802
- pro forma 47,381 42,375
Net income per share - as reported $ 1.02 $ .92
- pro forma 1.01 .91
</TABLE>
25
<PAGE> 14
The pro forma effect on net income for 1997 and 1996 is not representative of
the pro forma effect on net income in future years because it does not take
into consideration pro forma compensation expense related to grants made prior
to fiscal year 1996.
INCOME TAXES
The provision for income taxes consisted of the following:
<TABLE>
<CAPTION>
(In thousands) 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CURRENT
Federal $ 12,803 $10,556 $ 15,995
State and other 4,687 2,486 3,983
- ---------------------------------------------------------------------------------------------------------------------------
17,490 13,042 19,978
- ---------------------------------------------------------------------------------------------------------------------------
DEFERRED
Federal 5,034 5,196 (151)
State and other 1,047 969 163
- ---------------------------------------------------------------------------------------------------------------------------
6,081 6,165 12
- ---------------------------------------------------------------------------------------------------------------------------
Provision for income taxes $ 23,571 $19,207 $ 19,990
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Income from foreign operations before income taxes in fiscal 1997, 1996, and
1995 was $4,520,000, $1,390,000, and $560,000, respectively.
Income tax expense differed from an amount computed by applying the statutory
tax rates to pre-tax income as follows:
<TABLE>
<CAPTION>
(In thousands) 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income tax on pre-tax income at the statutory
federal rate of 35% $ 24,956 $ 21,703 $ 20,740
Increase (decrease) attributable to:
State and other income taxes, net of federal
income tax benefit 3,265 1,806 2,841
COLI (3,528) (4,261) (3,646)
Other items, net (1,122) (41) 55
- ---------------------------------------------------------------------------------------------------------------------------
Income tax expense $ 23,571 $ 19,207 $ 19,990
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The tax effects of temporary differences giving rise to the Company's
consolidated deferred tax liability at September 28, 1997 and September 29,
1996 are as follows:
<TABLE>
<CAPTION>
(In thousands) 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DEFERRED TAX ASSETS
Employee benefits $ 6,485 $ 6,215
Reserves not currently deductible 6,888 6,426
Other 3,256 1,836
- ---------------------------------------------------------------------------------------------------------------------------
Total deferred tax assets $ 16,629 $ 14,477
- ---------------------------------------------------------------------------------------------------------------------------
DEFERRED TAX LIABILITIES
Property, plant and equipment $ (52,300) $ (46,996)
Other capitalized costs (3,747) (3,094)
Other (8,410) (6,134)
- ---------------------------------------------------------------------------------------------------------------------------
Total deferred tax liabilities $ (64,457) $ (56,224)
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE> 15
INDUSTRY SEGMENT INFORMATION
The Company operates primarily in two businesses: industrial thread (textile
primarily) - American & Efird, and retail grocery (including the real estate
and store development activities of the Company) - Harris Teeter. American &
Efird manufactures sewing thread for the apparel and other markets. Harris
Teeter operates a regional chain of supermarkets.
Summarized information for fiscal 1997, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
Industrial Retail
(In millions) Thread Grocery (1) Corporate (2) Consolidated
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1997
Net Sales $368.9 $1,931.2 $2,300.1
- ---------------------------------------------------------------------------------------------------------------------------
Gross Profit 106.8 525.4 632.2
- ---------------------------------------------------------------------------------------------------------------------------
Operating Profit 49.1 45.7 94.8
- ---------------------------------------------------------------------------------------------------------------------------
Assets Employed at Year End $299.7 $ 521.7 $ 63.8 $ 885.2
Depreciation and Amortization 15.4 42.5 0.8 58.7
Capital Expenditures 28.9 86.2 0.2 115.3
1996
Net Sales $309.5 $1,833.0 $2,142.5
- ---------------------------------------------------------------------------------------------------------------------------
Gross Profit 89.0 492.4 581.4
- ---------------------------------------------------------------------------------------------------------------------------
Operating Profit 34.7 48.4 83.1
- ---------------------------------------------------------------------------------------------------------------------------
Assets Employed at Year End $263.5 $ 476.9 $ 61.3 $ 801.7
Depreciation and Amortization 12.3 37.6 1.3 51.2
Capital Expenditures 35.6(3) 83.2 4.5 123.3
1995
Net Sales $298.0 $1,711.8 $2,009.8
- ---------------------------------------------------------------------------------------------------------------------------
Gross Profit 82.9 443.0 525.9
- ---------------------------------------------------------------------------------------------------------------------------
Operating Profit 34.6 42.1 76.7
- ---------------------------------------------------------------------------------------------------------------------------
Assets Employed at Year End $214.1 $ 437.2 $ 64.0 $ 715.3
Depreciation and Amortization 11.3 31.7 1.6 44.6
Capital Expenditures 16.4 81.4 0.4 98.2
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Retail Grocery Assets Employed include $18,714,000, $22,131,000 and
$19,080,000 in 1997, 1996 and 1995, respectively, related to store
investment activities of the Company for the development of retail sites.
(2) Corporate Assets Employed include the net cash surrender value of Company
owned life insurance and the net assets of discontinued operations.
(3) Includes the purchase of certain assets of Threads USA.
COMMITMENTS AND CONTINGENCIES
Substantially all domestic full-time employees of the Company and its
subsidiaries participate in non-contributory defined benefit pension plans.
Employees in foreign subsidiaries participate to varying degrees in local
pension plans, which, in the aggregate, are not significant. Employee
retirement benefits are a function of both the years of service and
compensation for a specified period of time before retirement. The Company's
current funding policy is to contribute annually the minimum amount required by
regulatory authorities.
27
<PAGE> 16
The following table sets forth the defined benefit plans' funded status and
amounts recognized in the Company's consolidated balance sheets at September
28, 1997 and September 29, 1996:
<TABLE>
<CAPTION>
(In thousands) 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits $ 82,676 $ 71,585
Nonvested benefits 3,677 2,934
- ---------------------------------------------------------------------------------------------------------------------------
Accumulated benefit obligations 86,353 74,519
Effect of projected future compensation levels 23,838 19,612
- ---------------------------------------------------------------------------------------------------------------------------
Projected benefit obligations 110,191 94,131
Plans' assets at fair market value 92,611 72,642
- ---------------------------------------------------------------------------------------------------------------------------
Projected benefit obligations in excess of plans' assets (17,580) (21,489)
Unrecognized net asset at September 30, 1985, net of
amortization, being amortized over 15-20 years 1,541 1,935
Unrecognized net loss due to past experience
different from assumptions made (14,215) (12,412)
- ---------------------------------------------------------------------------------------------------------------------------
Unfunded accrued pension cost $ (4,906) $ (11,012)
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The plans' assets consist primarily of U. S. government securities, corporate
bonds, cash equivalents and domestic equities, all managed by two banks. The
contribution payable at September 28, 1997 and September 29, 1996, required to
be paid by due date of the federal income tax return, was $1,462,000 and
$6,986,000, respectively.
In 1997 (1996), a 7.5% (8%) weighted average discount rate and 5% (5%) rate of
increase in future payroll costs were used in determining the actuarial present
value of the projected benefit obligations. The expected long-term rate of
return on assets was 8% for both years.
Pension expense for defined benefit plans for fiscal 1997, 1996, and 1995
included the following components:
<TABLE>
<CAPTION>
(In thousands) 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Benefits earned by employees $ 4,464 $ 4,033 $ 3,835
Interest on projected benefit obligations 7,789 7,135 6,608
Actual return on plan assets (11,560) (4,635) (7,134)
Net amortization and deferral 5,356 (1,143) 1,873
- ---------------------------------------------------------------------------------------------------------------------------
Net pension expense $ 6,049 $ 5,390 $ 5,182
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Company also has an Employee Stock Ownership Plan (ESOP), a profit-sharing
plan and certain other plans. Expenses under these plans were as follows:
<TABLE>
<CAPTION>
(In thousands) 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ESOP $ 8,733 $ 7,866 $ 7,651
- ---------------------------------------------------------------------------------------------------------------------------
Profit-sharing 3,098 1,699 1,652
- ---------------------------------------------------------------------------------------------------------------------------
Other 2,517 2,266 2,061
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Company is involved in various lawsuits and environmental and patent
matters arising in the normal course of business. Management believes that such
matters will not have a material effect on the financial condition or results
of operations of the Company.
See "Leases" for additional commitments and contingencies.
28
<PAGE> 17
QUARTERLY INFORMATION (UNAUDITED)
The following table sets forth certain financial information, the high and low
sales prices and dividends declared for the common stock for the periods
indicated. The Company's common stock is listed and traded on the New York
Stock Exchange. As of September 28, 1997, there were 1,599 holders of record of
common stock.
<TABLE>
<CAPTION>
First Second Third Fourth
(In millions, except per share data) Quarter Quarter Quarter Quarter
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1997 OPERATING RESULTS
Net Sales $ 574.1 $ 563.9 $ 579.8 $ 582.3
Net Income 11.6 11.2 13.0 11.9
Net Income Per Share .25 .24 .28 .25
Dividend Per Share .08 .08 .08 .08
Market Price Per Share
High 13 7/8 17 3/4 16 3/4 16 5/8
Low 12 3/8 13 1/4 14 14
- ---------------------------------------------------------------------------------------------------------------------------
1996 OPERATING RESULTS
Net Sales $ 529.7 $522.3 $532.6 $ 557.9
Net Income 8.1 9.5 13.6 11.6
Net Income Per Share .17 .21 .29 .25
Dividend Per Share .06 .06 .07 .07
Market Price Per Share
High 14 1/8 13 1/4 15 1/4 14
Low 9 5/8 10 5/8 12 1/4 11 1/4
</TABLE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF RUDDICK CORPORATION:
We have audited the accompanying consolidated balance sheets of Ruddick
Corporation (a North Carolina corporation) and subsidiaries as of September 28,
1997, and September 29, 1996, and the related statements of consolidated income
and retained earnings and consolidated cash flows for each of the three years
in the period ended September 28, 1997. 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 Ruddick
Corporation and subsidiaries as of September 28, 1997 and September 29, 1996,
and the results of their operations and their cash flows for each of three
years in the period ended September 28, 1997 in conformity with generally
accepted accounting principles.
Charlotte, North Carolina /s/ARTHUR ANDERSEN LLP
October 22, 1997
29
<PAGE> 18
ELEVEN-YEAR FINANCIAL AND OPERATING SUMMARY
<TABLE>
<CAPTION>
1997 1996 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales
American & Efird $ 368,877 $ 309,459 $ 297,963 $ 277,016
Harris Teeter 1,931,212 1,833,042 1,711,813 1,578,880
- ----------------------------------------------------------------------------------------------------------------------
Total Net Sales $ 2,300,089 $2,142,501 $2,009,776 $1,855,896
- ----------------------------------------------------------------------------------------------------------------------
Operating Profit
American & Efird $ 49,165 $ 34,684 $ 34,614 $ 26,916
Harris Teeter 45,671 48,459 42,114 37,032
- ----------------------------------------------------------------------------------------------------------------------
Total Operating Profit $ 94,836 $ 83,143 $ 76,728 $ 63,948
- ----------------------------------------------------------------------------------------------------------------------
Net Income $ 47,731 $ 42,802 $ 39,267 $ 31,811
Net Income Per Share 1.02 .92 .84 .67
Common Dividend .32 .26 .25 .22
- ----------------------------------------------------------------------------------------------------------------------
Earnings Before Interest, Taxes,
Depreciation and Amortization $ 144,583 $ 125,390 $ 114,385 $ 99,166
- ----------------------------------------------------------------------------------------------------------------------
Shareholders' Equity $ 380,507 $ 346,856 $ 316,236 $ 291,209
Percent Return on Beginning Equity 13.8% 13.5% 13.5% 11.6%
Book Value Per Share $ 8.17 $ 7.47 $ 6.82 $ 6.28
- ----------------------------------------------------------------------------------------------------------------------
Capital Expenditures
American & Efird $ 28,878 $ 35,605(2) $ 16,359 $ 20,416
Harris Teeter 86,237 83,204 81,447 46,349
Corporate 184 4,471 399 35
- ----------------------------------------------------------------------------------------------------------------------
Total Capital Expenditures $ 115,299 $ 123,280 $ 98,205 $ 66,800
- ----------------------------------------------------------------------------------------------------------------------
Working Capital $ 88,893 $ 65,134 $ 73,741 $ 93,387
Total Assets $ 885,243 $ 801,702 $ 715,318 $ 634,599
Long-Term Debt - Including Current Portion $ 190,494 $ 164,435 $ 128,952 $ 109,567
Long-Term Debt as a Percent of Capital Employed 33.4% 32.2% 29.0% 27.3%
Number of Employees 19,700 20,100 19,850 18,610
Number of Beneficial Shareholders
Including Employee/Owners 19,100 16,700 14,500 14,100
Common Shares Outstanding 46,599,301 46,461,290 46,373,666 46,352,214
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) 53-week year
(2) Includes purchase of assets of Threads USA
30
<PAGE> 19
<TABLE>
<CAPTION>
1993(1)
- ---------------------
<S> <C>
$ 264,814
1,412,315
- ---------------------
$ 1,677,129
- ---------------------
$ 30,551
29,845
- ---------------------
$ 60,396
- ---------------------
$ 33,873
.71
.21
- ---------------------
$ 97,490
- ---------------------
$ 274,740
13.3%
$ 5.87
- ---------------------
$ 19,433
33,683
27
- ---------------------
$ 53,143
- ---------------------
$ 103,191
$ 580,807
$ 104,173
27.5%
17,120
14,600
46,036,146
- ---------------------
</TABLE>
31
<PAGE> 1
EXHIBIT 21
RUDDICK CORPORATION
Affiliated Companies
as of December 18, 1997
Listed below are the domestic subsidiaries of the Corporation,
all of which are wholly owned and are owned directly by the Corporation, unless
otherwise indicated.
American & Efird, Inc.
The Kaim Company(1)
American & Efird Services, Inc.(1)
A&E Export, Inc.(1)
Harris Teeter, Inc.
Harris-Teeter Services, Inc.(2)
Ruddick of Delaware, Inc.
R. S. Dickson & Company
Ruddco Management, Inc.(3)
----------
(1) Owned by American & Efird, Inc.
(2) Owned by Harris Teeter, Inc.
(3) Owned by R. S. Dickson & Company
Listed below are the foreign subsidiaries of the Corporation,
all of which are wholly owned through American & Efird, Inc., unless otherwise
indicated.
American & Efird (HK) Limited - 100%
A&E Korea Ltd. - 100%
American & Efird (GB) Limited - 100%
American & Efird Canada, Inc. - 100%
Hilos A&E de Costa Rica, S.A. - 100%
American & Efird International (FE) Limited - 100%
American & Efird de Mexico, S.A. de C.V. - 100%(1)
American & Efird Mills (S) Pte. Ltd. - 100%
American & Efird (Malaysia) SDN BHD - 100%
Hengmei Spinning Company, Ltd. - Joint venture, 60% owned
Hilos A&E Dominicana, Ltd. - Joint venture, 49% owned
Hilos A&E de Honduras, S.A. de C.V. - Joint venture, 45% owned
In addition, in the normal course of business, R. S. Dickson &
Company from time to time makes investments in corporations and partnerships
that may result in ownership of capital stock or other interests as an
investment.
(1) In order to comply with Mexican law, one share of
such entity is owned of record by a person designated
by American & Efird, Inc.
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports included in this Form 10-K, into Ruddick Corporation's previously filed
Registration Statements on Form S-8, Registration No. 33-26302, No. 33-56567,
No. 333-19085 and No. 333-22659. It should be noted that we have not audited any
financial statements of the Company subsequent to September 28, 1997 or
performed any audit procedures subsequent to the date of our report.
/s/ ARTHUR ANDERSEN LLP
Charlotte, North Carolina,
December 18, 1997.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-28-1997
<PERIOD-END> SEP-28-1997
<CASH> 17,150,000
<SECURITIES> 0
<RECEIVABLES> 79,857,000
<ALLOWANCES> 2,005,000
<INVENTORY> 196,049,000
<CURRENT-ASSETS> 323,300,000
<PP&E> 782,225,000
<DEPRECIATION> 315,666,000
<TOTAL-ASSETS> 885,243,000
<CURRENT-LIABILITIES> 234,407,000
<BONDS> 189,919,000
0
0
<COMMON> 56,779,000
<OTHER-SE> 323,728,000
<TOTAL-LIABILITY-AND-EQUITY> 885,243,000
<SALES> 2,300,089,000
<TOTAL-REVENUES> 2,300,089,000
<CGS> 1,667,858,000
<TOTAL-COSTS> 2,205,253,000
<OTHER-EXPENSES> 8,976,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,558,000
<INCOME-PRETAX> 71,302,000
<INCOME-TAX> 23,571,000
<INCOME-CONTINUING> 47,731,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47,731,000
<EPS-PRIMARY> 1.02
<EPS-DILUTED> 1.02
</TABLE>
