FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 29, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-6905
RUDDICK CORPORATION
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-0905940
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) (Identification No.)
2000 Two First Union Center
Charlotte, North Carolina 28282
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (704) 372-5404
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding Shares
Class As of May 11, 1998
Common Stock 46,776,411 shares
RUDDICK CORPORATION
INDEX
PAGE NO.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS -
MARCH 29, 1998 AND SEPTEMBER 28, 1997 2
CONSOLIDATED CONDENSED STATEMENTS OF
INCOME - THREE MONTHS AND SIX MONTHS
ENDED MARCH 29, 1998 AND MARCH 30, 1997 3
CONSOLIDATED CONDENSED STATEMENTS OF
CASH FLOWS - SIX MONTHS ENDED
MARCH 29, 1998 AND MARCH 30, 1997 4
NOTES TO CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 6-10
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS. 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
SIGNATURES 12
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RUDDICK CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
March 29, September 28,
ASSETS 1998 1997
(Unaudited) (Unaudited)
----------- -------------
CURRENT ASSETS:
Cash and Temporary Cash
Investments 17,740 17,150
Accounts Receivable, Net 77,138 77,852
Inventories 204,852 196,049
Other 26,304 32,249
--------- ---------
Total Current Assets 326,034 323,300
PROPERTY, NET 491,715 466,559
INVESTMENTS AND OTHER ASSETS 91,044 95,384
-------- --------
Total $ 908,793 $ 885,243
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes Payable $ 8,176 $ 8,100
Current Portion of Long-Term Debt 653 575
Accounts Payable 138,824 142,812
Income Taxes Payable 5,364 5,758
Other Accrued Liabilities 63,834 77,162
--------- ---------
Total Current Liabilities 216,851 234,407
LONG-TERM DEBT 213,523 189,919
DEFERRED LIABILITIES 76,024 75,823
MINORITY INTEREST 4,590 4,587
SHAREHOLDERS' EQUITY:
Capital Stock - Common 58,613 56,779
Retained Earnings 342,385 326,488
Cumulative Translation Adjustments (3,193) (2,760)
----------- ---------
Shareholders' Equity 397,805 380,507
----------- ---------
Total $ 908,793 $ 885,243
========== =========
2
RUDDICK CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(in thousands, except share and per share data)
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------- --------------------
MARCH 29, MARCH 30, MARCH 29, MARCH 30,
1998 1997 1998 1997
---------- ---------- --------- ----------
(Unaudited) (Unaudited) (Unaudited)(Unaudited)
NET SALES
American & Efird $ 87,673 $ 90,642 $ 175,398 $ 178,051
Harris Teeter 528,589 473,285 1,058,466 959,989
---------- --------- ----------- --------
Total 616,262 563,927 1,233,864 1,138,040
---------- --------- ----------- ---------
OPERATING PROFIT
American & Efird 10,037 11,911 20,658 21,998
Harris Teeter 12,803 10,025 26,228 22,979
---------- -------- ----------- ----------
Total 22,840 21,936 46,886 44,977
---------- -------- ----------- ----------
OTHER COSTS AND DEDUCTIONS
Interest expense,
net 3,966 3,480 8,071 6,674
Other expense, net 1,758 1,822 3,582 4,256
Minority interest 65 - 215 -
--------- --------- ----------- ---------
Total 5,789 5,302 11,868 10,930
Income before income
taxes 17,051 16,634 35,018 34,047
Income taxes 5,672 5,441 11,647 11,275
--------- --------- ----------- ---------
Net income $ 11,379 $ 11,193 23,371 $ 22,772
========= ========== ============ ==========
WEIGHTED AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING:
Basic 46,723,286 46,537,225 46,684,883 46,515,117
Diluted 47,041,576 46,852,522 47,012,252 46,784,877
NET INCOME PER SHARE -
BASIC AND DILUTED $.24 $.24 $.50 $.49
DIVIDENDS DECLARED
PER SHARE - Common $.08 $.08 $.16 $.16
3
RUDDICK CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
SIX MONTHS ENDED
--------------------------
MARCH 29, MARCH 30,
1998 1997
(Unaudited) (Unaudited)
----------- -------------
CASH FLOW FROM OPERATING ACTIVITIES
Net Income $ 23,371 $ 22,772
Non-Cash Items Included
in Net Income Depreciation
and Amortization 32,075 29,056
Other, Net 1,785 3,920
Decrease (Increase) in Current
Assets (2,795) (21,963)
Increase (Decrease) in Current
Liabilities (17,634) (18,232)
----------- --------------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 36,802 15,553
----------- -------------
NET CASH PROVIDED BY
DISCONTINUED ACTIVITIES - 413
----------- -------------
INVESTING ACTIVITIES
Purchase of Assets (59,800) (64,213)
Cash Proceeds from Sale
of Assets 697 265
Company Owned Life
Insurance, Net 6,450 3,538
Other, Net (2,078) (5,735)
----------- -------------
NET CASH USED IN INVESTING
ACTIVITIES (54,731) (66,145)
----------- -------------
FINANCING ACTIVITIES
Proceeds of Long-Term
Borrowings 24,000 51,550
Payment of Principal
on Long-Term Debt (249) (2,543)
Dividends (7,474) (7,445)
Other, Net 2,242 1,050
---------- -------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 18,519 42,612
---------- -------------
INCREASE (DECREASE) IN BALANCE
SHEET CASH 590 (7,567)
BALANCE SHEET CASH AT BEGINNING
OF PERIOD 17,150 21,033
----------- ------------
BALANCE SHEET CASH AT END
OF PERIOD $ 17,740 $ 13,466
=========== =============
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash Paid During the
Period for:
Interest $ 8,077 $ 6,341
Income Taxes 11,042 5,997
4
RUDDICK CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
IN THE OPINION OF MANAGEMENT, THE INFORMATION FURNISHED REFLECTS ALL
ADJUSTMENTS (CONSISTING ONLY OF NORMAL RECURRING ACCRUALS) NECESSARY TO
PRESENT FAIRLY THE RESULTS FOR THE INTERIM PERIODS PRESENTED.
5
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
The following table shows net sales and operating profit for each of
Ruddick Corporation's operating subsidiaries for the quarters and six
months ended March 29, 1998 and March 30, 1997:
(In Thousands) Quarter Ended Six Months Ended
---------------------- ------------------------
March 29, March 30, March 29, March 30,
1998 1997 1998 1997
--------- --------- ---------- ----------
Net Sales
American &
Efird $ 87,673 $ 90,642 $ 175,398 $ 178,051
Harris Teeter 528,589 473,285 1,058,466 959,989
--------- -------- --------- ---------
Total $ 616,262 $ 563,927 $1,233,864 $1,138,040
Operating Profit
American &
Efird $ 10,037 $ 11,911 $ 20,658 $ 21,998
Harris Teeter 12,803 10,025 26,228 22,979
--------- -------- ---------- ---------
Total $ 22,840 $ 21,936 $ 46,886 $ 44,977
For the Three Months Ended March 29, 1998 and March 30, 1997
Consolidated sales of $616 million in the second quarter of fiscal 1998
increased 9% over the $564 million reported for the comparable period last
year. Total operating profit of $22.8 million increased 4.1% over last
year. Net income of $11.4 million was up slightly from the $11.2 million
reported last year. Basic and diluted earnings per share were $.24 in both
fiscal second quarters.
In the second quarter of fiscal 1998, American & Efird sales of $87.7
million decreased 3.3% from the $90.6 million reported for the comparable
period last year, and was essentially flat when compared to the first
fiscal quarter. In the U.S. market, the sluggish retail environment for
apparel, which adversely affected A&E's sales in the first quarter,
continued throughout most of the second fiscal quarter. Fueled by lower
than expected retail holiday sales and customer efforts to reduce inventory
levels, A&E experienced weak sales demand. Although the foreign operations
of A&E are not material to the consolidated Company, foreign sales
continued to display solid growth. Especially strong was the sales growth
in Mexico as U.S. apparel manufacturing continued to shift to Latin America
as a result of NAFTA. A&E's operating profit of $10 million in the second
quarter of fiscal 1998 declined 15.7% from the $11.9 million in the
comparable period last year. In response to the conditions in the U.S.
apparel market, A&E reduced manufacturing operating schedules to control
inventories, which adversely impacted operating profit. Late in the second
quarter, management observed some strengthening in business conditions
presumably as a result of customers' production for the back-to-school
retail season. In A&E's international operations, the economic turbulence
in Asia continued to dampen profit performance as additional bad debt
losses and inventory writedowns in Korea, Malaysia and Hong Kong
contributed to a reduction of nearly $1 million in operating profit for the
quarter.
6
Management expects continuing financial turbulence in the Asian
markets, especially Korea, but expects no material future losses to the
Company.
Harris Teeter sales in the second quarter of fiscal 1998 of $528.6
million increased by 11.7% over the $473.3 million reported for the
comparable period last year. Net sales for stores in operation during both
periods increased by 5.8%. These increases were achieved despite the
intensely competitive supermarket environment in the company's markets and
the lack of inflation in the grocery sector, both conditions which the
company expects to continue for the foreseeable future. The strong
comparative sales results are believed to reflect the continuing success of
the company's more aggressive promotional, advertising and customer service
activities, including the greater use of its customer loyalty card.
Operating profit of $12.8 million increased by 27.7% over the $10 million
reported for the comparable period last year. The operating profit
improvement was the result of the favorable combination of higher sales and
a number of productivity and efficiency initiatives that enhanced the
operating margin. Increased levels of expense for promotional and
advertising activities and the higher fixed expenses associated with new
stores recently opened only partially offset the improvements. At March
29, 1998, 141 stores were in operation, up from 136 at March 30, 1997. Two
new stores were opened during the second quarter of fiscal 1998 and one
older store was closed.
For the Six Months Ended March 29, 1998 and March 30, 1997
Consolidated sales in the six months ended March 29, 1998 of $1.23
billion increased 8.4% over the $1.14 billion reported for the first six
months of fiscal 1997, due to significant same store sales expansion at
Harris Teeter, coupled with sales from the ten new stores opened in the
last twelve months, while sales at A&E declined slightly. Operating profit
of $46.9 million was up 4.2% from the $45 million reported for the
comparable period last year, with A&E reporting a decrease and Harris
Teeter showing a substantial increase. Net income of $23.4 million was
2.6% higher than the $22.8 million reported last year. Basic and diluted
earnings per share for the first six months this year were $.50 versus $.49
a year ago. The adoption during the first quarter of fiscal 1998 of
Statement of Financial Accounting Standards No. 128, "Earnings per Share,"
had no effect on the net income per share for the respective periods.
A&E sales of $175.4 million for the first six months this year
decreased 1.5% from the comparable period last year. This sales decrease
was due to weak demand for industrial thread in the U.S. market by A&E's
apparel manufacturing customers who suffered from a sluggish retail
environment for apparel sales and resulting constraints on production to
control inventories. Led by strong sales in Mexico, A&E's foreign
operations achieved sales growth in every market except Korea. The
relative distribution of the company's business in Latin America continued
to grow as the result of NAFTA. For the six-month period of fiscal 1998,
operating profit declined 6.1% to $20.7 million from $22 million in the
prior year period. Profitability declined as the achievement of improved
manufacturing productivity from the completion of the integration of
Threads USA and the shifts of demand for higher value-added products were
more than offset by the unfavorable effects of reduced manufacturing
schedules and by operating losses in Asia. Although the financial
exposures in Asia are not material to the Company, operating profit was
negatively impacted by the performance of Korea, Malaysia and Hong Kong.
Their aggregate operating profit results declined $2.1
7
million from the same period last year, primarily as the result of bad
debt write-offs, inventory adjustments and currency translation for the
six-month period in fiscal 1998.
For the fiscal year to date, Harris Teeter sales of $1.06 billion
improved by 10.3% over the $960 million recorded in the comparative six
months ended March 30, 1997, primarily the result of increased promotional,
advertising and customer service activities, including customer acceptance
and increased use of its customer loyalty card. Net sales for stores in
operation during both periods increased 4.2%. Management expects the very
intense competitive environment in its Southeast U.S. markets and the low
inflation in the grocery sector to continue for the foreseeable future.
Operating profit increased by 14.1%, from $23 million for the six months in
fiscal 1997 to $26.2 million in fiscal 1998, due to the success of a number
of productivity and efficiency enhancements and the higher sales level, the
combination of which increased the operating margin. A total of six new
stores were opened during the six-month period in fiscal 1998 and three
older stores were closed, with 141 stores in operation at March 29, 1998.
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
manufacturing 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 seeks to limit long-term debt so that it constitutes no
more than 40% of capital employed, which includes long-term debt, minority
interest and shareholders' equity. As of March 29, 1998, this percentage
was 34.7%, as compared to 33.1% at September 28, 1997.
The Company's principal source of liquidity has been revenues from
operations. The Company also has the ability to borrow up to an aggregate
of $100 million under established revolving lines of credit with three
banks. The maximum amount outstanding under these credit facilities
during the quarter ended March 29, 1998 was $83.7 million, and $57.9
million was outstanding at quarter end compared to $33.9 million at
September 28, 1997. The additional 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. In
addition, the Company has available a non-committed $50 million Private
Shelf Facility with a major life insurance company. No borrowings under
this facility had been undertaken as of March 29, 1998.
Working capital of $109.2 million at March 29,1998 increased $20.3
million from September 28, 1997, primarily the result of increases in
inventories to support increased sales activity at Harris Teeter and
reductions in accounts payable and other accrued liabilities. The current
ratio was 1.5 at March 29, 1998 and 1.4 at September 28, 1997.
8
Covenants in certain of the Company's long-term debt agreements limit
the total indebtedness that the Company may incur. 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 the first six months, capital expenditures totaled $56.6 million.
A&E has spent $9.7 million of the $30 million it expects to spend in fiscal
year 1998, and Harris Teeter has spent $46.8 million of an expected $82
million. These expenditures are for modernization and expansion.
Management expects that internally generated funds, supplemented by
available borrowing capacity, will be adequate to finance such
expenditures.
Other Matters
The Company is in the process of the modification or conversion of
Company computer systems to provide for proper functioning beyond calendar
year 1999. During the fiscal year ended September 28, 1997, the Company
instituted plans and initiated its Year 2000 remediation programs by which
it would complete such remediation by the end of March 1999 in the U.S. and
June 1999 in its foreign operations. A current assessment of the total
amount of Year 2000 remediation expenditures over the fiscal years 1997
through completion in 1999 yielded an estimate of $2.8 - $3.3 million, the
vast majority of which expense is expected to be incurred generally pro
rata over the fiscal years 1998 and 1999. Maintenance and modification
costs will be expensed as incurred, while the costs of the new software
will be capitalized and amortized over the software's useful life. The
Company is also working with its suppliers and thread customers to
ascertain their Year 2000 remediation plans and efforts. All costs of
their remediation will be borne by the suppliers and customers. Management
expects that the costs of the Company's Year 2000 remediation will have no
material impact on its results of operations, liquidity and capital
resources and further, that resources are available to complete the
modification and conversion as planned. It must be recognized, however,
that failure to do so could have a material adverse effect on the Company's
future results of operations.
The Company expects that its effective income tax rates will increase
toward the statutory rates domestically as the favorable tax attributes of
Company owned life insurance ("COLI") were significantly diminished as of
January 1, l996, as a result of federal legislation which will phase out
interest deductions on policy loans by January 1, 1999. In addition, the
Internal Revenue Service, on a comprehensive national level, is evaluating
their position regarding the deductibility of COLI policy loan interest for
years prior to January 1, 1999. In March 1998, the IRS issued a Technical
Advice Memorandum regarding the COLI deductibility of a taxpayer unrelated
to the Company. Management understands that the adverse position taken by
the IRS will be subjected to extensive challenges in the courts. In the
event that the IRS prevails, this outcome could result in a material impact
upon the Company's future income taxes and results of operations.
Regarding Forward-Looking Statements
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
9
the forward-looking statements. Words such as "expects," "anticipates,"
"believes," "estimates," variations of such words and other similar
expressions are intended to identify such 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, or regulatory interpretations
or pronouncements, 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.
10
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of Ruddick Corporation was held on
February 5, 1998 (the "Annual Meeting"). Proxies for the Annual Meeting
were solicited pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended. The shareholders voted upon the following matters at the
Annual Meeting:
1. ELECTION OF DIRECTORS
The shareholders elected five directors at the Annual Meeting. One of
the five, Harold C. Stowe, was elected to fill Mr. E. C. Wall's vacant seat on
the Board with a two-year term expiring in 2000.* The four remaining
directors are serving for terms to expire in 2001. Anna S. Nelson was elected
to fill Mr. Beverly F. Dolan's seat, vacated by his retirement from the Board.
In addition, the following directors currently are serving for terms to expire
in 1999 or 2000, as indicated: Edwin B. Borden, Jr. (1999), R. Stuart Dickson
(1999), Hugh L. McColl, Jr. (1999), John R. Belk (2000), Thomas W. Dickson
(2000), and James E. S. Hynes (2000). There was no solicitation in opposition
to management's nominees as listed in the proxy statement, and all such
nominees were elected. The following information is furnished with respect to
each director elected at the meeting:
Shares
Director Elected Shares Voted Withholding Broker
at Annual Meeting for Election Authority Non-Votes
For two year term:
Harold C. Stowe 38,178,440 991,513 N/A
For three year term:
John W. Copeland 38,451,790 718,163 N/A
Alan T. Dickson 38,456,580 713,373 N/A
Roddey Dowd, Sr. 38,435,670 734,283 N/A
Anna Spangler Nelson 38,442,202 727,751 N/A
*Mr. Wall died unexpectedly on March 5, 1997, subsequent to his election on
February 6, 1997 to a three-year term as director.
11
2. APPROVAL OF THE 1997 COMPREHENSIVE STOCK OPTION AND
AWARD PLAN
The shareholders approved the adoption of the Ruddick Corporation 1997
Comprehensive Stock Option and Award Plan, and the following information
is provided with respect to the approval thereof:
Shares Voted Shares Voted Shares Broker
For Against Abstaining Non-Votes
-------------- -------------- ----------- -----------
32,808,112 5,950,525 411,316 None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
Exhibit No. Description of Exhibit
10.2 Ruddick Corporation Director Deferral Plan
10.3 Ruddick Corporation Senior Officers Insurance
Program
11 Statement Re: Computation of Per Share Earnings
27 Financial Data Schedule
(B) REPORTS ON FORM 8-K - None
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
RUDDICK CORPORATION
DATE: May 11, 1998 /s/ R. N. Brigden
R. N. BRIGDEN
VICE PRESIDENT - FINANCE
(PRINCIPAL FINANCIAL OFFICER)
12
EXHIBIT INDEX
Exhibit No.
(per Item 601 Description of Sequential
Of Reg. S-K) Exhibit Page No.
10.2 Ruddick Corporation Director Deferral Plan
10.3 Ruddick Corporation Senior Officers Insurance
Program
11 Statement Re: Computation of Per Share Earnings
27 Financial Data Schedule
RUDDICK CORPORATION DIRECTOR DEFERRAL PLAN
Effective January 1, 1998
1. Name:
This plan shall be known as the "Ruddick Corporation
Director Deferral Plan" (the "Plan").
2. Purpose and Intent:
Ruddick Corporation (the "Corporation") established this
Plan effective January 1, 1998 for the purpose of providing the
nonemployee members of its Board of Directors with the
opportunity to defer payment of all (but not any portion of) the
annual retainer fee and/or the regularly-scheduled or duly-called
Board of Directors meetings fees payable during a year. This Plan
(i) allows a participating director to defer all of the
director's annual retainer fee and meeting fees and (ii) sets
forth special provisions for crediting such deferrals in a manner
that parallels the performance of the Corporation's common stock.
It is the intent of the Corporation that amounts deferred under
the Plan by a director shall not be taxable to the director for
income tax purposes until the time actually received by the
director. The provisions of the Plan shall be construed and
interpreted to effectuate such intent.
3. Definitions:
For purposes of the Plan, the following terms shall have the
following meanings:
(a) "Accounts" means collectively the Participants' Stock
Accounts.
(b) "Board of Directors" means the Board of Directors of
the Corporation.
(c) "Claim" means a claim for benefits under the Plan.
(d) "Claimant" means a person making a Claim.
(e) "Code" means the Internal Revenue Code of 1986, as now
in affect or as hereafter amended, and the regulations
thereunder.
(f) "Common Stock" means the common stock of the
Corporation.
(g) "Compensation and Special Stock Option Committee" means
the committee of individuals who are serving from time to time as
the members of the Compensation and Special Stock Option
Committee of the Board of Directors.
(h) "Fair Market Value" of a share of Common Stock means,
as of a Valuation Date and for so long as shares of the Common
Stock are listed on a national securities exchange or reported on
2
The Nasdaq Stock Market as a Nasdaq National Market security, the
mean between the high and low sales prices for the Common Stock
on such Valuation Date, or, if no such shares were sold on such
date, the most recent date on which shares of such Common Stock
were sold, as reported in The Wall Street Journal. If the Common
Stock is not listed on a national securities exchange or reported
on The Nasdaq Stock Market as a Nasdaq National Market security,
Fair Market Value shall mean the average of the closing bid and
asked prices for such stock in the over-the-counter market as
reported by The Nasdaq Stock Market. If the Common Stock is not
listed on a national securities exchange, reported on The Nasdaq
Stock Market as a Nasdaq National Market security, or reported by
The Nasdaq Stock Market in the over-the-counter market, Fair
Market Value shall be the fair value thereof determined in good
faith by the Board of Directors.
(i) "Fees" means both (i) the annual retainer fee (the
"Annual Retainer Fee") and (ii) any regularly-scheduled or duly-called Board
of Directors meeting fees (the "Meetings Fees")
payable to a Nonemployee Director under the Corporation's
compensation policies for directors in effect from time to time.
(j) "Nonemployee Director" means an individual who is a
member of the Board of Directors but who is not an employee of
the Corporation or any of its Subsidiaries.
(k) "Participant" means a Nonemployee Director who has
elected to participate in the Plan as provided in paragraph 5(b)
below.
(l) "Payment Date" means the date ninety (90) days
following the effective date on which the director ceases to be a
member of the Board of Directors.
(m) "Plan Administrator" means the Compensation and Special
Stock Option Committee, or such other person or entity designated
as the "Plan Administrator" for purposes of the Plan by the
Compensation and Special Stock Option Committee.
(n) "Plan Year" means the twelve (12) month period
beginning January 1 and ending December 31.
(o) "Stock Account" means the account established and
maintained on the books of the Corporation to record a
Participant's interest under the Plan attributable to the Fees
credited to the Participant pursuant to paragraph 5(c) and (d)
below, as adjusted from time to time pursuant to the terms of the
Plan.
(p) "Stock Unit" means a unit having a value as of a given
date equal to the Fair Market Value of one (1) share of Common
Stock on the Valuation Date.
(q) "Subsidiary" means a subsidiary corporation of the
Corporation as that term is defined in Code section 424(f).
(r) "Valuation Date" means any date requiring the
determination of a Fair Market Value; in the case of association
with a Payment Date, Valuation Date shall mean the business day
next preceding
3
the Payment Date; and in the case of the deferral
of retainer, fees or distributions payable on the common stock,
Valuation Date shall mean the business day on which such payment
would have been made.
4. Administration:
The Plan Administrator shall be responsible for administering
the Plan. The Plan Administrator shall have all of the powers
necessary to enable it to properly carry out its duties under the
Plan. Not in limitation of the foregoing, the Plan Administrator
shall have the power to construe and interpret the Plan and to
determine all questions that shall arise thereunder. The Plan
Administrator shall have such other and further specified duties,
powers, authority and discretion as are elsewhere in the Plan
either expressly or by necessary implication conferred upon it.
The Plan Administrator may appoint such agents as it may deem
necessary for the effective performance of its duties, and may
delegate to such agents such powers and duties as the Plan
Administrator may deem expedient or appropriate that are not
inconsistent with the intent of the Plan. The decision of the
Plan Administrator upon all matters within its scope of authority
shall be final and conclusive on all persons, except to the
extent otherwise provided by law.
5. Operation:
(a) Eligibility. Each Nonemployee Director shall be
eligible to participate in the Plan.
(b) Elections to Defer. A Nonemployee Director may become
a Participant in the Plan by irrevocably electing, on a form
provided by the Plan Administrator, to defer all of the Annual
Retainer Fee payable to the Nonemployee Director during such Plan
Year and/or the Meetings Fees payable to the Nonemployee Director
for all meetings occurring during such Plan Year. In order to be
effective, a Nonemployee Director's election to defer must be
executed and returned to the Plan Administrator on or before the
date specified by the Plan Administrator for such purpose. Such
election must normally be made prior to the beginning of the Plan
Year to which the election relates. However, the Plan
Administrator, in its sole and exclusive discretion, may
determine that in certain circumstances an election may be made
during the Plan Year if such determination is not inconsistent
with the intent of the Plan expressed in Section 2 above.
(c) Establishment of Stock Accounts. The Corporation shall
establish and maintain on its books a Stock Account for each
Participant. Each Stock Account shall be designated by the name
of the Participant for whom established. The Fees deferred by a
Participant shall be credited to the Participant's Stock Account
as of the date such Fees would have otherwise been paid to the
Participant. The Stock Account of a Participant shall be credited
with a number of Stock Units equal to the number of whole and
fractional shares of Common Stock which the Participant would
have received with respect to such Fees if the Fees had been paid
in Common Stock, determined by dividing such Fees by the Fair
Market Value of a share of Common Stock on the Valuation Date and
such Stock Units shall be credited to the Participant's Stock
Account as of the date the Fees would have been paid to the
Participant.
4
(d) Adjustments to the Accounts. Each Stock Account shall
be credited additional whole or fractional Stock Units for
distributions and stock dividends paid on the Common Stock based
on the number of Stock Units in the Stock Account on the
applicable record date, which additional whole or fractional
Stock Units shall be calculated based on the Fair Market Value of
the Common Stock on the applicable Valuation Date. Each Stock
Account shall also be equitably adjusted as determined by the
Plan Administrator in the event of any stock dividend, stock
split or similar change in the capitalization of the Corporation.
(e) Method of Payment. When a Participant ceases to serve
as a member of the Board of Directors, such Participant's
Accounts shall continue to be credited with adjustments under
paragraph 5(d) above through the Payment Date following the date
on which the Participant's membership on the Board of Directors
ceases. The number of Stock Units in the Stock Account as of such
Payment Date shall be, in the sole discretion of the Compensation
and Special Stock Option Committee, either (i) converted to cash
based on the Fair Market Value of the Common Stock for the
Valuation Date, with such cash amount paid in a single cash
payment or (ii) delivered, in the form of a certificate for the
equivalent number of whole shares of Common Stock, plus cash
equivalent for any fractional shares. In either case, payment
shall be made on the Payment Date as defined in Section 3(l) to
the Participant or to the Participant's designated beneficiary,
if the Participant's termination as a member of the Board of
Directors was the result of the Participant's death.
(f) Other Payment Provisions. A Participant shall not be
paid any portion of the Participant's Stock Account prior to the
Participant's termination of services as a member of the Board of
Directors. Any payment hereunder shall be subject to applicable
payroll and withholding taxes. In the event any amount becomes
payable under the provisions of the Plan to a Participant,
beneficiary or other person who is a minor or an incompetent,
whether or not declared incompetent by a court, such amount may
be paid directly to the minor or incompetent person or to such
person's fiduciary (or attorney-in-fact in the case of an
incompetent) as the Plan Administrator, in its sole discretion,
may decide, and the Plan Administrator shall not be liable to any
person for any such decision or any payment pursuant thereto.
(g) Statements of Account. Each Participant shall receive
an annual statement of the balance in the Participant's Account
upon the request of a Participant or in the discretion of the
Plan Administrator.
6. Amendment, Modification and Termination of the Plan:
(a) Corporation's Right to Amend, Modify or Terminate. The
Board of Directors shall have the right and power at any time and
from time to time to amend the Plan in whole or in part and at
any time to terminate the Plan; provided, however, that no such
amendment or termination shall reduce the amount actually
credited to a Participant's Accounts under the Plan on the date
of such amendment or termination, or further defer the due dates
for the payment of such amounts, without the consent of the
affected Participant.
5
(b) Disposition of the Plan Following Certain Transactions.
The Plan shall be continued following a transfer or sale of
assets of the Corporation, or following the merger or
consolidation of the Corporation into or with any other
corporation or entity, by the purchaser or successor entity,
unless the Plan has been terminated by the Corporation pursuant
to the provisions of Section 6(a) prior to the effective date of
such transaction.
7. Claims Procedures:
(a) General. In the event that a Claimant has a Claim
under the Plan, such Claim shall be made by the Claimant's filing
a notice thereof with the Plan Administrator within ninety (90)
days after such Claimant first has knowledge of such Claim. Each
Claimant who has submitted a Claim to the Plan Administrator
shall be afforded a reasonable opportunity to state such
Claimant's position and to present evidence and other material
relevant to the Claim to the Plan Administrator for its
consideration in rendering its decision with respect thereto. The
Plan Administrator shall render its decision in writing within
ninety (90) days after the Claim is referred to it, unless
special circumstances, determined in the sole discretion of the
Plan Administrator, require an extension of such time within
which to render such decision, in which event such decision shall
be rendered no later than one hundred eighty (180) days after the
Claim is referred to it. A copy of such written decision shall be
furnished to the Claimant.
(b) Notice of Decision of Plan Administrator. Each
Claimant whose Claim has been denied by the Plan Administrator
shall be provided written notice thereof, which notice shall set
forth:
(i) the specific reason(s) for the denial;
(ii) specific reference to pertinent provision(s) of
the Plan upon which such denial is based;
(iii) a description of any additional material or
information necessary for the Claimant to perfect such
Claim and an explanation of why such material or
information is necessary; and
(iv) an explanation of the procedure hereunder for
review of such Claim;
all in a manner calculated to be understood by such Claimant.
(c) Review of Decision of Plan Administrator. Each such
Claimant shall be afforded a reasonable opportunity for a full
and fair review of the decision of the Plan Administrator denying
the Claim. Such review shall be by the Board of Directors. Such
appeal shall be made within ninety (90) days after the Claimant
received the written decision of the Plan Administrator and shall
be made by the written request of the Claimant, or such
Claimant's duly authorized representative, to the Board of
Directors. In the event of appeal, the Claimant or such
Claimant's duly authorized representative may (i) review
pertinent documents and (ii) submit issues and comments in
writing to the Board of Directors. The Board of Directors shall
review the following:
6
(i) the initial proceedings of the Plan Administrator
with respect to such Claim;
(ii) such issues and comments as were submitted in
writing by the Claimant or the Claimant's duly authorized
representative ; and
(iii) such other material and information as the
Board of Directors, in its sole discretion, deems
advisable for a full and fair review of the decision of
the Plan Administrator.
The Board of Directors may approve, disapprove or modify the
decision of the Plan Administrator, in whole or in part, or may
take such other action with respect to such appeal as it deems
appropriate. The decision of the Board of Directors with respect
to such appeal shall be made in no event later than sixty (60)
days after receipt of such appeal, unless special circumstances,
determined in the sole discretion of the Board of Directors,
require an extension of such time within which to render such
decision, in which event such decision shall be rendered as soon
as possible and in no event later than one hundred twenty (120)
days following receipt of such appeal. The decision of the Board
of Directors shall be in writing and in a manner calculated to be
understandable by the Claimant and shall include specific reasons
for such decision and set forth specific references to the
pertinent provisions of the Plan upon which such decision is
based. The Claimant shall be furnished a copy of the written
decision of the Board of Directors. Such decision shall be final
and conclusive upon all persons interested therein, except to the
extent otherwise provided by applicable law.
8. Applicable Law:
The Plan shall be construed, administered, regulated and
governed in all respects under and by the laws of the United
States to the extent applicable, and to the extent such laws are
not applicable, by the laws of the state of North Carolina.
9. Miscellaneous:
A Participant's rights and interests under the Plan may not be
assigned or transferred by the Participant. The Plan shall be an
unsecured, unfunded arrangement. To the extent the Participant
acquires a right to receive payments from the Corporation under
the Plan, such right shall be no greater than the right of any
unsecured general creditor of the Corporation. Nothing contained
herein shall be deemed to create a trust of any kind or any
fiduciary relationship between the Corporation and any
Participant. The Plan shall be binding on the Corporation and any
successor in interest of the Corporation.
7
IN WITNESS WHEREOF, this instrument has been executed by an
authorized officer of the Corporation as of the 30th day of
April, 1998.
RUDDICK CORPORATION
By: /s/ R. N. BRIGDEN
R.N. BRIGDEN
Vice President-Finance
8
Attachment 1
RUDDICK CORPORATION DIRECTOR DEFERRAL PLAN
1998 DEFERRAL ELECTION
Name of Nonemployee Director:
Social Security Number:
I am a nonemployee director of Ruddick Corporation and
therefore eligible to participate in the Ruddick Corporation
Director Deferral Plan (the "Plan") for the 1998 Plan Year (the
calendar year). I hereby irrevocably elect to have the "Annual
Retainer Fee" and/or "Board Meeting Fees" (as those terms are
defined in the Plan) for the 1998 Plan Year deferred as elected
below:
Check one or both:
[ ] All of my Annual Retainer Fee
[ ] All of my Board Meetings Fees
Signature:
Date: December __, 1997
9
Attachment 2
RUDDICK CORPORATION DIRECTOR DEFERRAL PLAN
Beneficiary Designation
Please review the beneficiary rules below before completing this
form. Please type or print.
Nonemployee Director Name Social Security No. Address
Name of Primary Beneficiary Address Relationship
Secondary Beneficiary Address Relationship
Beneficiary Designation Rules
1. Death benefits will be paid to surviving secondary
beneficiary only if no designated primary beneficiary
survives you.
2. If more than one primary beneficiary or secondary
beneficiary is designated and entitled to receive benefits
under this designation, percentages are shown, and if:
(a) all survive me, payment will be made accordingly to
these percentages; or
(b) one or more (but not all) do not survive me, payment
will be made to the surviving beneficiaries, with each
surviving beneficiary receiving that percentage of the
benefits payable determined by dividing the percentage
designated for that beneficiary by the total of the
percentages designated for all the surviving
beneficiaries entitled to receive benefits.
3. If more than one primary beneficiary or secondary
beneficiary is designated and entitled to receive benefits
under this designation and percentages are not shown,
payment will be made to the survivor(s) in equal shares.
4. Additional primary and secondary beneficiaries may be
designated on an attached continuation sheet.
5. If any beneficiary entitled to receive benefits under this
designation is a minor, the Plan Administrator, in its
discretion, may direct that the benefits be paid directly
to the minor or to the minor's parent or guardian. Retain
a copy for your records.
Return to: ______________________________________
__________________________________________________
Nonemployee Director Signature Date
Witnessed:
________________________________________
Witness Signature Date
This designation cancels all prior designations made by me.
10
Attachment 3
PAYMENT METHOD ACKNOWLEDGMENT FOR AMOUNTS DEFERRED
UNDER THE
RUDDICK CORPORATION DIRECTOR DEFERRAL PLAN
Name of Nonemployee Director:
Social Security Number:
I am electing to participate in the Ruddick Corporation
Director Deferral Plan (the "Plan"), and will therefore have an
account under the Plan (the "Stock Account") representing amounts
that I have deferred in accordance with the provisions of the
Plan. When my Stock Account becomes payable in accordance with
the provisions of the Plan, I understand that my Stock Account
shall be paid in a single payment.
I understand that this method of payment applies to amounts
deferred under the Plan for both the first Plan Year of my
participation in the Plan and for all subsequent Plan Years.
Signature:
Date: December __, 1997
11
RUDDICK CORPORATION
SENIOR OFFICERS INSURANCE PROGRAM
PLAN DOCUMENT
AND
SUMMARY PLAN DESCRIPTION
Ruddick Corporation (the "Company") desires to help certain
key employees selected by it, and who desire to participate,
("Employees" or, each, an "Employee") provide life insurance
protection for their families. The terms and conditions upon
which such insurance protection will be provided shall be set
forth in this Plan Document and Summary Plan Description (the
"Plan Document") and in a "Senior Officers Insurance Program
Agreement" (the "Agreement") between the Company and the owner of
the life insurance policy who may be the Employee or a third-party
(the "Owner"). Each Employee shall enter into an agreement
with the Company (the "Agreement") which, among other things,
will designate the Owner, and unless inconsistent with the Plan
Document, the terms and conditions of each Employee's Agreement
shall control the operation and administration of the Senior
Officers Insurance Program (the "Program") with respect to such
Employee.
1. Application for Insurance: Ownership of the Policy.
(a) The Owner shall apply to an insurance company (the
"Insurer") for issuance of a life insurance policy (the
"Policy") insuring the Employee's life (or the lives of the
Employee and his or her spouse) in such amount as determined
by the Company. The Owner shall be the sole owner of the
Policy and, subject to the Agreement and the collateral
assignment to be executed in favor of the Company (the
"Collateral Assignment"), may exercise all ownership rights
which the Policy grants to the policy owner. Notwithstanding
anything herein to the contrary, the Company's obligations
under the Agreement are conditioned on issuance of the
Policy upon such underwriting classification and premium
amount as are acceptable to the Company in the exercise of
its sole and absolute discretion.
(b) The Owner recognizes that if the Employee made any
material misrepresentation on the policy application that
would have resulted in a different classification or rating
or in insurance not being accepted, a claim for benefits
under the Policy may be denied. The Owner also recognizes
that if, during the first two years the Policy is in force,
the Employee dies as a result of suicide, death benefits
will not be paid under the Program. The Owner further
recognizes that any other events and conditions which affect
the benefit under the Policy will have a similar effect
under the Program.
2. Payment of Premiums.
(a) Subject to subsection 2(c) below, the Company and
the Owner shall each pay a portion of each premium due on
the Policy as hereinafter set forth. Except as otherwise
specifically arranged, each premium on the Policy shall be
paid by the Company as it becomes due. Following each
premium payment by the Company, the Owner shall reimburse
the Company for a portion of the premium paid by the
Company. The amount of the reimbursement shall be
calculated as provided in the Agreement.
(b) Notwithstanding the foregoing, during the term of
the Agreement the Company shall pay a portion of the annual
premium for the number of years stated in a schedule to the
respective Agreement. If the Policy insures the lives of
the Employee and his or her spouse and if the Employee dies
while premiums are still due under the Policy, the Company
shall continue to pay the premiums when due until the later
to occur of the date the Employee would have attained age
sixty-five (65) or the beginning of the 16th Policy year
following the initial date of the Policy. The Company's
responsibilities to pay premiums under this subsection 2(b)
shall be subject to the further provisions of Section 5 of
this Plan Document.
(c) In the event the Company is not obligated to pay a
portion of the premium on the policy for any policy year
during the term of the Agreement, the Owner shall pay such
premium in cash, and such cash payments will reduce the
Company's Policy Interest (as defined in subsection 4(a)).
3. Collateral Assignment. To secure the Owner's
reimbursement of the amount of premiums the Company pays on the
Policy pursuant to the Agreement, the Owner shall, promptly upon
issuance of the Policy, assign and deliver the Policy to the
Company as collateral (the "Collateral Assignment"). Such
Collateral Assignment shall be in such form as the Company
requires and shall grant to the Company the limited rights in and
to the Policy specified therein. All rights in and to the Policy
not granted to the Company by the Collateral Assignment or the
respective Agreement, including but not limited to the right to
designate and change the beneficiary of that portion of the
Policy proceeds to which the Owner is entitled hereunder, shall
be retained by the Owner. The Collateral Assignment is intended
only to grant to the Company a security interest in the Policy
and this security interest shall not be interpreted in any way to
include any incidents of ownership, except as provided in the
Agreement and/or the Collateral Assignment. Such Collateral
Assignment shall not be canceled, altered or amended except as
provided in the Agreement by both parties. The Company and the
Owner agree to take all action necessary to cause such Collateral
Assignment to conform to the provisions of the Agreement and this
Plan Document.
4. Policy Interests.
(a) Company's Policy Interest. In the event of the
surrender or cancellation of the Policy, the Company's
interest in the Policy is limited to its right to recover a
portion
2
of the cash value equal to the cumulative amount of
premiums on the Policy paid by the Company other than funds
reimbursed to it by the Owner. Upon the death of the
Employee (or the last insured under a second to die policy),
the Company's interest in the Policy's death benefit is an
amount equal to the cumulative amount of premiums on the
Policy paid by the Company other than funds reimbursed to it
by the Owner. The Policy interests described in this
subsection 4(a) shall be referred to as the "Company's
Policy Interest."
(b) The Owner's Policy Interest. In the event of the
surrender or cancellation of the Policy, the Owner's
interest in the Policy shall be the total Policy cash value,
reduced by the Company's interest under the Collateral
Assignment as described in subsection 4(a) hereof. When
death proceeds become payable under the Policy, the
beneficiary's interest in the Policy's death benefit is the
Policy's total death benefit reduced by the cumulative
amount of premiums on the Policy paid by the Company other
than funds reimbursed to it by the Owner as described in
subsection 4(a) hereof. Because the Policy is a variable
life insurance contract, the Owner has the responsibility
and right under the terms of the Policy to direct the
investment of the cash value among various investment
sub-accounts as provided in the Policy. It is agreed,
however, that the Owner shall exercise such rights only as
shall be agreed between the Owner and the Company. The
Policy interests described in this subsection 4(b) shall be
referred to as the "Owner's Policy Interest."
5. Termination of Agreement. The Agreement shall
terminate (and the Company's obligation to pay a portion of the
premiums pursuant to Section 2 hereof) shall cease upon any of
the events described in subsections 5 (a) through (g) below:
(a) Failure to Pay Premiums. The Agreement will
terminate if the Owner fails to either timely pay its share
of a premium or to reimburse the Company for its share of a
premium pursuant to Section 2 hereof.
If the Agreement is not sooner terminated by the
Owner's failure to pay premiums pursuant to subsection 5(a),
the Agreement shall terminate upon events as further
described in subsection 5(b) through 5(g), as follows:
(b) Attained Age for Normal Retirement In the case
of an Employee who terminates employment with the Company in
a Normal Retirement, or who attains the age for Normal
Retirement but elects to continue in the employment of the
Company, the Agreement will terminate upon the later of the
date the Employee attains age sixty-five (65) or at the
beginning of the sixteenth (16th) Policy year following the
initial date of the Policy, provided that the termination
was not a Termination of Employment For Cause.
(c) Early Retirement. In the case of an Employee who
terminates employment with the Company in an Early
Retirement, the Agreement will terminate upon the later of
the date the Employee attains age sixty (60) or at the
beginning of the sixteenth (16th)
3
Policy year following the initial date of the Policy, provided
the termination was not a Termination of Employment For Cause.
(d) Termination of Employment For Cause after
Qualifying for Normal Retirement or Early Retirement. In
the case of an Employee whose employment with the Company
terminates because of a Termination of Employment For Cause
after qualifying for Normal Retirement or Early Retirement,
the Agreement will terminate upon such termination of
employment.
(e) Termination of Employment Before Qualifying for
Early Retirement. In the case of an Employee whose
employment with the Company terminates before the Employee
qualifies for Early Retirement for any reason other than the
Employee's Disability or following a Change of Control, the
Agreement will terminate upon such termination; provided,
however, that in its sole and absolute discretion, the
Administrative Committee may elect to continue the
Agreement.
(f) Termination Due to Disability. In the case of an
Employee whose employment with the Company is terminated due
to Disability, the Agreement will terminate upon the later
of the date the Employee attains age sixty-five (65) or at
the beginning of the sixteenth (16th) Policy year following
the initial date of the Policy.
(g) Termination as a Result of a Change of Control.
In the case of an Employee whose employment with the Company
is terminated as a result of a Change of Control, the
Agreement will terminate upon the later of the date the
Employee attains age sixty-five (65) or at the beginning of
the sixteenth (16th) Policy Year following the initial date
of the Policy.
For purposes of the Plan Document and Agreements, the
following definitions shall apply:
(i) Normal Retirement. "Normal Retirement" means
termination of employment with the Company on or
following the date the Employee attains age sixty (60).
(ii) Early Retirement. "Early Retirement" means
termination of employment with the Company on or
following the date the Employee attains age fifty-five
(55) with ten (10) years of service with the Company.
(iii) Disability. "Disability" means "total
disability" as defined in the Company Group Long-Term
Disability Plan; provided, however, that if at the time
of determination of Disability the Company does not
sponsor such Plan, Disability shall mean the complete
inability to perform the normal duties of the
Employee's job during the first twenty-four (24) months
after commencement of Disability; thereafter,
Disability means the inability to engage in any gainful
occupation for which the Employee is reasonably fitted
by virtue of education, training or experience.
4
(iv) Termination of Employment For Cause.
"Termination Of Employment For Cause" shall mean the
termination of the Employee's employment with the
Company for any one or more of the following reasons:
(a) embezzlement or theft from the Company or an
affiliate, or other acts of dishonesty or disloyalty
injurious to the Company or an affiliate; (b) use by
the Employee of alcohol, drugs, narcotics, or other
controlled substances to such an extent that the
Employee's ability to perform his duties as an employee
of the Company or an affiliate is materially impaired;
(c) disclosing without authorization proprietary or
confidential information of the Company or an
affiliate; (d) committing any act of gross negligence
or gross malfeasance; or (e) conviction of a crime
amounting to a felony under the laws of the United
States of America or any of the several states. The
determination of whether there has been a termination
for cause shall be made by the Company's Administrative
Committee; provided that, if the terminated Employee is
a member of the Administrative Committee, he shall not
participate in the determination.
(v) Change of Control. A "Change of Control"
means (i) the adoption of a plan of merger or
consolidation of the Company with any other company or
association as a result of which the holders of the
voting capital stock of the Company as a group would
receive less than 50% of the voting capital stock of
the surviving or resulting corporation; (ii) the
approval by the Board of Directors of an agreement
providing for the sale or transfer (other than as
security for obligations of the Company) of
substantially all the assets of the Company; (iii) in
the absence of a prior expression of approval by the
Board of Directors, the acquisition of more than 20% of
the Company's voting capital stock by any person within
the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, other than a person, or group
including a person, who beneficially owned, as of
January 1, 1998, more than 6.5% of the Company's voting
capital stock; or (iv) the failure of the majority of
the Board of Directors to consist of directors who are
"continuing directors", where "continuing director"
means (a) a director who at two years before the
determination date was a director, and (b) any new
director whose nomination was approved by two-thirds
(2/3) of the directors who qualify under category (a).
(vi) Administrative Committee. "Administrative
Committee" means the Compensation and Special Stock
Option Committee of the Board of Directors.
6. Recovery of the Company's Interest. If the Agreement
terminates as provided in Section 5, the Owner shall have the
right to pay to the Company within sixty (60) days following the
date of such termination an amount equal to the total of all the
premiums paid by the Company pursuant to Section 2 other than
premiums previously reimbursed to it by the Owner. Upon receipt
of such amount, the Company shall promptly execute and deliver to
the Owner an appropriate instrument releasing any and all rights
of the Company under the Collateral Assignment so that all rights
under the Policy thereafter inure to the Owner. If the Owner
fails to
5
timely repay the Company such amount, the Company shall
refund to the Owner any payment made by the Owner to the Company
or the Insurer for the unexpired portion of the premium payment
period in which the termination of the Agreement occurred, and
thereafter the Owner promptly shall execute any and all
instruments required to vest sole ownership of the Policy in the
Company. The Owner shall thereafter have no further interest in
the Policy and will be deemed to have satisfied all of its
obligations for the repayment of any and all of the Company's
Policy Interest.
7. Assignment.
(a) The Owner may at any time transfer or assign its
interest in the Policy as described in subsection 4(b) and
its rights and obligations under the Agreement to a third
party or parties (the "Transferee"). Any such transfer
shall be valid and effective as of the date the Owner
provides written notice of the transfer or assignment signed
by the Owner and the Transferee and stating that such
Transferee agrees to be bound by the terms of the Agreement,
and, to the extent applicable, to the Plan Document. Upon
any such transfer, all of the Owner's interest in the Policy
and rights and obligations under the Agreement and the
Collateral Assignment shall be vested in the Transferee, who
shall be substituted for the Owner as a party or parties
hereto, and the Owner shall have no further interest in the
Policy or rights under the Agreement or this Plan Document.
(b) The Company may assign its rights, interest and
obligations under the Agreement by providing written notice
of such assignment to the Owner; provided, however, any such
assignment shall be subject to the terms of the Agreement;
and provided further, however, the Company shall remain
liable to discharge its obligations under the Agreement.
8. Liability of Insurer. The Insurer shall be bound only
by the provisions of and endorsements on the Policy, and any
payments made or action taken by it in accordance therewith shall
fully discharge it from all claims, suits and demands of all
persons whatsoever. The Insurer shall be entitled to rely
exclusively on a statement by the Company as to the determination
of the parties' respective interests in the Policy. The Insurer
shall in no way be bound by or be deemed to have notice of the
provisions of the Agreement.
9. Entire Agreement; Amendment and Termination. The
Agreement and the Collateral Assignment, any written amendments
thereto and this Plan Document contain all the terms and
provisions of the parties' rights and obligations relating to the
subject hereof and shall constitute the entire agreement of the
parties, any other alleged terms or provisions being of no
effect. In the event that any provision in an Agreement or
Collateral Assignment is inconsistent with this Plan Document,
the provisions of this Plan Document shall control. Prior to a
Change of Control (as defined in subsection 5(v)), the Company
retains the right to amend or terminate the Plan Document and
Agreement at any time for any reason. After a Change of Control,
neither the Agreement nor the Collateral Assignment may be
amended, modified or terminated except by a written instrument
signed by all parties to the Agreement and if not a party to the
Agreement, by the Employee.
6
10. Binding Effect. The Agreement is binding upon and
inures to the benefit of the Company, its affiliates and any
successors or transferees, the Employee, if a party to the
Agreement, and the Owner (and their respective heirs, executors,
administrators, transferees, successors and assigns), and any
Policy beneficiary.
11. Merger or Consolidation. In the event of a merger or a
consolidation by Company with another corporation as described in
subsection 5(v)(i), or the acquisition of substantially all of
the assets or outstanding stock of Company by another corporation
as described in subsection 5(v)(ii), then and in such event the
obligations and responsibilities of the Company under the
Agreement and Plan Document shall be assumed by any such
successor or acquiring corporation, and all of the rights,
privileges and benefits of the Owner under the Agreement and Plan
Document shall continue.
12. No Employment Agreement. The Agreement is not an
employment agreement nor does it in any way guarantee continued
employment with the Company. Nothing in the Agreement changes or
in any way affects the right of the Employee's employer to alter
or terminate the Employee's employment.
13. No Guarantee of Any Particular Tax Results. Neither
the Company nor any of its agents, consultants or advisors
guarantee any particular income tax or transfer tax treatment of
the Agreement and the Policy. While the Agreement is in effect
the Employee is subject to income taxation each year based on the
value of the economic benefit attributable to the life insurance
protection provided under the Agreement, less any amounts
reimbursed to the Company by the Owner. The Employee has been
advised of the tax risks associated with the Employee's accession
to the cash value of such policy and accepts such risks.
Although the Policy is designed not to be or become a Modified
Endowment Contract ("MEC"), as defined in Section 7702A of the
Internal Revenue Code of 1986, as amended, it may nevertheless be
or become a MEC. Under a MEC, cash withdrawals and Policy loans
are taxed to the extent there are earnings in the policy, and may
be subject to an additional excise tax. The preceding content of
this Section 13 is a brief summary of some but not all of the tax
statutes and regulations regarding possible tax attributes of the
Agreement and the Policy, and may be subject to change and
interpretation. The Employee and the Owner have been advised to
seek competent, independent financial and tax counsel.
14. The Employee's Interest Is Exempt from Creditors (to
the Extent Permitted by Law). To the extent enforceable under
applicable law, neither the Employee's nor the Owner's interest
in the Policy and the Agreement nor any part thereof is subject
in any manner to (i) any claims of any creditor of the Employee,
the Owner or the Company, (ii) the debts, contracts, liabilities
or torts of the Employee, the Owner or the Company, or (iii)
voluntary or involuntary transfer to, on behalf of, or on account
of any creditor of the Employee, the Owner or the Company. If
any person or entity attempts to take any action contrary to this
Section and if this Section is enforceable under applicable law,
such action will have no effect, and the Company, the Employee
and the Owner will disregard the action, will not in any manner
be bound by it, and will not incur any liability on account of it
or the disregard of it.
7
15. Miscellaneous. Where appropriate in the Agreement,
words used in the singular shall include the plural, and words
used in masculine shall include the feminine or neuter. The
Agreement and all rights hereunder are governed by ERISA and, to
the extent that state law is applicable, the laws of the State of
North Carolina shall govern the Agreement.
ERISA MATTERS
General Information
The following provisions of the Program are intended to meet
the requirements of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"). This Program is a "welfare plan"
under ERISA. This document and the Agreements (including the
Schedules) constitutes a plan document and a summary plan
description under ERISA.
(a) The Plan Name: Ruddick Corporation Senior
Officers Insurance Program.
(b) Plan Number: 510
(c) Plan Year-End: December 31st
(d) Plan Sponsor: Ruddick Corporation
2000 Two First Union Center
Charlotte, North Carolina 28282
Phone 704-372-5404
IRS Employer Identification Number:
56-0905940
(e) Plan Administrator: Ruddick Corporation
(f) Agent for Service of Legal Process: The Secretary
of Ruddick Corporation. Service of process may also be made
on the Plan Administrator.
(g) The Named Fiduciary: Company
(h) Eligibility Requirements: Any Senior Vice
President or more senior officer of the Company or a
designated affiliate, as designated by the Board of
Directors of the Company.
(i) Funding Policy: The Company and the Owner remit
all premiums on the Policy when due.
(j) Benefit Payments: The Insurer pays all benefits
under the Agreement, with those benefits in turn being based
on the payment of premiums by the Company and the Owner.
8
(k) Claims Procedures: For claims procedure purposes,
the "Claims Manager" shall be the Secretary of the Company.
(i) If for any reason a claim for benefits under
the Agreement is denied by the Company, the Claims
manager shall deliver to the claimant a written
explanation setting forth the specific reasons for the
denial, pertinent references to the section of the
Agreement on which the denial is based, such other data
as may be pertinent and information on the procedures
to be followed by the claimant in obtaining a review of
his claim, all written in a manner calculated to be
understood by the claimant. For this purpose:
(A) The claimant's claim shall be deemed
filed when presented orally or in writing to the
Claims Manager.
(B) The Claims Manager's explanation shall
be in writing delivered to the claimant within
ninety (90) days of the date the claim is filed.
(ii) The claimant shall have sixty (60) days
following his receipt of the denial of the claim to
file with the Claims Manager a written request for
review of the denial. For such review, the claimant or
his representative may submit pertinent documents and
written issues and comments.
(iii) The Claims Manager shall decide the issue on
review and furnish the claimant with a copy within
sixty (60) days of receipt of the claimant's request
for review of his claim. The decision on review shall
be in writing and shall include specific reasons for
the decision written in a manner calculated to be
understood by the claimant, as well as specific
references to the pertinent provisions of the Plan
Document and Agreement on which the decision is based.
If a copy of the decision is not so furnished to the
claimant within such sixty (60) days, the claim shall
be deemed denied on review.
9
Statement of ERISA Rights
As a participant in The Ruddick Corporation Senior Officers
Insurance Program you are entitled to certain rights and
protections under the Employee Retirement Income Security Act of
1974 (ERISA). ERISA provides that all plan participants shall be
entitled to:
--Examine, without charge, at the plan administrator's
office, all plan documents, including insurance contracts
and copies of all documents filed by the plan with the U.S.
Department of Labor, such as detailed annual reports and
plan descriptions, if any.
--Obtain copies of all plan documents and other plan
information upon written request to the plan administrator.
The administrator may make a reasonable charge for the
copies.
In addition to creating rights for plan participants, ERISA
imposes duties upon the people who are responsible for the
operation of the employee benefit plan. The people who operate
your plan, called "fiduciaries" of the plan, have a duty to do so
prudently and in the interest of you and other plan participants
and beneficiaries. No one, including your employer or any other
person, may fire you or otherwise discriminate against you in any
way to prevent you from obtaining a welfare benefit or exercising
your rights under ERISA. If your claim for a welfare benefit is
denied in whole or in part you must receive a written explanation
of the reason for the denial. You have the right to have the
plan review and reconsider your claim. Under ERISA, there are
steps you can take to enforce the above rights. For instance, if
you request materials from the plan and do not receive them
within 30 days, you may file suit in a federal court. In such a
case, the court may require the plan administrator to provide the
materials and pay you up to $100 a day until you receive the
materials, unless the materials were not sent because of reasons
beyond the control of the administrator. If you have a claim for
benefits which is denied or ignored, in whole or in part, you may
file suit in a state or federal court. If it should happen that
plan fiduciaries misuse the plan's money, or if you are
discriminated against for asserting your rights, you may seek
assistance from the U.S. Department of Labor, or you may file
suit in a federal court. The court will decide who should pay
court costs and legal fees. If you are successful the court may
order the person you have sued to pay these costs and fees. If
you lose, the court may order you to pay these costs and fees,
for example, if it finds your claim is frivolous. If you have
any questions about your plan, you should contact the plan
administrator. If you have any questions about this statement or
about your rights under ERISA, you should contact the nearest
Area Office of the U.S. Labor-Management Services Administration,
Department of Labor.
EXHIBIT 11
RUDDICK CORPORATION
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
SIX MONTHS ENDED
------------------------------
March 29, March 30,
1998 1997
-------------- -------------
NET INCOME PER SHARE COMPUTED AS
FOLLOWS:
BASIC:
1. Net income available to common
shareholders $23,371,000 $22,772,000
============= =============
2. Weighted average common shares
outstanding - Basic 46,684,883 46,517,117
============= =============
3. Basic net income per share
(Item 1 divided by Item 2) $ .50 .49
============= =============
DILUTED:
1. Net income available to common
shareholders $23,371,000 $22,772,000
============= =============
2. Weighted average common shares
outstanding - Basic 46,684,883 46,517,117
3. Weighted potential shares under
stock options computed for the
periods using the Treasury Stock
Method. 327,369 267,760
------------ -------------
4. Weighted average common shares
outstanding - Diluted 47,012,252 46,784,877
============ =============
5. Net Income Per Share (Item 1
divided by Item 4) $ .50 $ .49
============= =============
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
RUDDICK CORPORATION
FINANCIAL DATA SCHEDULE FOR THE THREE MONTHS ENDED 3/29/98
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-28-1997
<PERIOD-END> MAR-28-1998
<CASH> 17,740,000
<SECURITIES> 0
<RECEIVABLES> 79,366,000
<ALLOWANCES> 2,228,000
<INVENTORY> 204,852,000
<CURRENT-ASSETS> 326,034,000
<PP&E> 831,381,000
<DEPRECIATION> 339,666,000
<TOTAL-ASSETS> 908,793,000
<CURRENT-LIABILITIES> 216,851,000
<BONDS> 213,523,000
0
0
<COMMON> 58,613,000
<OTHER-SE> 339,192,000
<TOTAL-LIABILITY-AND-EQUITY> 908,793,000
<SALES> 616,262,000
<TOTAL-REVENUES> 616,262,000
<CGS> 448,387,000
<TOTAL-COSTS> 593,422,000
<OTHER-EXPENSES> 1,823,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,966,000
<INCOME-PRETAX> 17,051,000
<INCOME-TAX> 5,672,000
<INCOME-CONTINUING> 11,379,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,379,000
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
