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 June 28, 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 August 10, 1998
---------------------- ------------------------------
Common Stock 46,664,291 shares
RUDDICK CORPORATION
INDEX
PAGE NO.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS -
June 28, 1998 AND SEPTEMBER 28, 1997 2
CONSOLIDATED CONDENSED STATEMENTS OF
INCOME - THREE MONTHS AND NINE MONTHS
ENDED June 28, 1998 AND June 29, 1997 3
CONSOLIDATED CONDENSED STATEMENTS OF
CASH FLOWS - NINE MONTHS ENDED
June 28, 1998 AND June 29, 1997 4
NOTES TO CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 6-12
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 13
SIGNATURES 13
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RUDDICK CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
June 28, September 28,
ASSETS 1998 1997
(Unaudited) (Unaudited)
-------------------------
CURRENT ASSETS:
Cash and Temporary Cash Investments 15,044 17,150
Accounts Receivable, Net 76,658 77,852
Inventories 212,812 196,049
Other 27,300 32,249
-------- -------
Total Current Assets 331,814 323,300
PROPERTY, NET 495,487 466,559
INVESTMENTS AND OTHER ASSETS 100,114 95,384
------- -------
Total 927,415 885,243
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes Payable 8,251 8,100
Current Portion of Long-Term Debt 1,328 575
Accounts Payable 138,053 142,812
Income Taxes Payable 2,589 5,758
Other Accrued Liabilities 72,595 77,162
------- -------
Total Current Liabilities 222,816 234,407
LONG-TERM DEBT 218,497 189,919
DEFERRED LIABILITIES 78,382 75,823
MINORITY INTEREST 4,447 4,587
SHAREHOLDERS' EQUITY:
Capital Stock - Common 56,531 56,779
Retained Earnings 348,947 326,488
Cumulative Translation Adjustments (2,205) (2,760)
-------- --------
Shareholders' Equity 403,273 380,507
-------- --------
Total 927,415 885,243
======== ========
-2-
RUDDICK CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(in thousands, except share and per share data)
THREE MONTHS ENDED
-----------------------
JUNE 28, JUNE 29,
1998 1997
(Unaudited) (Unaudited)
------------------------
NET SALES
American & Efird 89,805 95,311
Harris Teeter 530,666 484,436
-------------------------
Total 620,471 579,747
-------------------------
OPERATING PROFIT
American & Efird 8,920 14,066
Harris Teeter 12,719 11,382
------------------------
Total 21,639 25,448
------------------------
OTHER COSTS AND DEDUCTIONS
Interest expense, net 4,079 3,928
Other expense, net 2,014 1,830
Minority interest 67 329
------------------------
Total 6,160 6,087
------------------------
Income before income taxes 15,479 19,361
Income taxes 5,185 6,297
------------------------
Net income 10,294 13,064
========================
WEIGHTED AVERAGE NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING:
Basic 46,700,661 46,552,817
Diluted 46,994,722 46,858,100
NET INCOME PER SHARE -
BASIC AND DILUTED $.22 $.28
DIVIDENDS DECLARED PER SHARE - Common $.08 $.08
RUDDICK CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(in thousands, except share and per share data)
NINE MONTHS ENDED
-------------------------
JUNE 28, JUNE 29,
1998 1997
(Unaudited) (Unaudited)
--------------------------
NET SALES
American & Efird 265,203 273,362
Harris Teeter 1,589,132 1,444,425
--------------------------
Total 1,854,335 1,717,787
--------------------------
OPERATING PROFIT
American & Efird 29,578 36,064
Harris Teeter 38,947 34,361
--------------------------
Total 68,525 70,425
--------------------------
OTHER COSTS AND DEDUCTIONS
Interest expense, net 12,150 10,602
Other expense, net 5,596 6,086
Minority interest 282 329
-------------------------
Total 18,028 17,017
-------------------------
Income before income taxes 50,497 53,408
Income taxes 16,832 17,572
-------------------------
Net income 33,665 35,836
=========================
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING:
Basic 46,690,143 46,529,017
Diluted 47,006,865 46,810,674
NET INCOME PER SHARE -
BASIC AND DILUTED $.72 $.77
DIVIDENDS DECLARED PER SHARE - Common $.24 $.24
-3-
RUDDICK CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
NINE MONTHS ENDED
-----------------------
JUNE 28, JUNE 29,
1998 1997
------------------------
(Unaudited) (Unaudited)
-------------------------
CASH FLOW FROM OPERATING ACTIVITIES
Net Income 33,665 35,836
Non-Cash Items Included in Net Income
Depreciation and Amortization 48,496 44,522
Other, Net 6,978 8,247
Decrease (Increase) in Current Assets (11,252) (25,522)
Increase (Decrease) in Current
Liabilities (12,344) (12,372)
-----------------------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 65,543 50,711
-----------------------
NET CASH PROVIDED BY DISCONTINUED
ACTIVITIES - 413
-----------------------
INVESTING ACTIVITIES
Purchase of Assets (82,319) (96,717)
Cash Proceeds from Sale of Assets 1,507 9,489
Company Owned Life Insurance, Net 3,326 831
Other, Net (8,808) (2,356)
-----------------------
NET CASH USED IN INVESTING ACTIVITIES (86,294) (88,753)
-----------------------
FINANCING ACTIVITIES
Proceeds of Long-Term Borrowings 29,100 56,150
Payment of Principal on Long-Term Debt (375) (14,705)
Dividends (11,206) (11,170)
Other, Net 1,126 657
----------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 18,645 30,932
----------------------
INCREASE (DECREASE) IN BALANCE SHEET CASH (2,106) (6,697)
BALANCE SHEET CASH AT BEGINNING OF PERIOD 17,150 21,033
---------------------
BALANCE SHEET CASH AT END OF PERIOD 15,044 14,336
=====================
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash Paid During the Period for:
Interest 12,361 9,860
Income Taxes 16,122 9,751
-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, gross profit and
operating profit for each of Ruddick Corporation's operating
subsidiaries for the quarters and nine months ended June 28, 1998
and June 29, 1997:
(In Thousands) Quarter Ended Nine Months Ended
--------------------- ----------------------------
June 28, June 29, June 28, June 29,
1998 1997 1998 1997
Net Sales
American & Efird $ 89,805 $ 95,311 $ 265,203 $ 273,362
Harris Teeter 530,666 484,436 1,589,132 1,444,425
--------- --------- ----------- ------------
Total $ 620,471 $ 579,747 $ 1,854,335 $ 1,717,787
Gross Profit
American & Efird $ 26,662 $ 29,037 $ 77,004 $ 79,852
Harris Teeter 144,779 134,372 430,698 390,596
--------- --------- ----------- -----------
Total $ 171,441 $ 163,409 $ 507,702 $ 470,448
Operating Profit
American & Efird $ 8,920 $ 14,066 $ 29,578 $ 36,064
Harris Teeter 12,719 11,382 38,947 34,361
--------- --------- ----------- -----------
Total $ 21,639 $ 25,448 $ 68,525 $ 70,425
For the Three Months Ended June 28, 1998 and June 29, 1997
Consolidated sales of $620 million in the third quarter of
fiscal 1998 increased 7% over the $580 million reported for the
comparable period last year. Total gross profit grew by 5% from
$163 million in fiscal 1997 to $171 million in the third quarter
of fiscal 1998. Total operating profit of $21.6 million decreased
15% from $25.4 million last year. Net income of $10.3 million
decreased 21% from the $13.1 million reported last year. Basic
and diluted earnings per share fell from $.28 in the third
quarter of fiscal 1997 to $.22 in fiscal 1998, due primarily to
write-offs for cessation of Korean operations.
On June 23, 1998, the Company announced that due to the
deterioration of business conditions in Korea, its industrial
thread subsidiary, American & Efird ("A&E"), would withdraw from
that country. At that time, the plan of withdrawal resulted in
the announced write-offs of substantially all remaining assets in
the Korean operation. The financial exposures in Korea are not
material to the financial condition of the Company as a whole.
For example, in the entire prior fiscal year, Korea accounted for
$5.8 million, or .25%, of the Company's consolidated sales of
$2.3 billion. During its third fiscal quarter ending June 28,
1998, operating losses attributable to Korea totaled
approximately $800,000. In addition, under the adopted plan of
withdrawal, A&E expensed the total anticipated pre-tax cost of
approximately $3.1 million for withdrawing from Korea, including
closure of the plant and liquidation of assets, as well as
severance expenses. Therefore, Korean operations reduced
-6-
operating profit by $3.9 million in the quarter which adversely
impacted after-tax earnings per share by $.06 for the
consolidated Company. Business conditions continue to be
monitored in the economically troubled Asian markets, in which
A&E has operations in China, Hong Kong and Malaysia. Management
believes at the present time that these operations hold
attractive future potential.
In the third quarter of fiscal 1998, A&E sales of $89.8
million decreased 5.8% from the $95.3 million reported for the
comparable period last year. In the U.S. markets, A&E reported
that demand for thread improved slightly over the second fiscal
quarter but remained much weaker than the same period last year.
The relative softness in demand for thread in its U.S. markets,
which adversely affected A&E's sales in the first half of fiscal
1998, continued throughout the third fiscal quarter. With the
exception of Mexico, the sales growth in A&E's foreign operations
slowed in comparison to the first two quarters of the fiscal year
and sales were flat for the third quarter versus the same prior
year quarter. Sales in Mexico remained particularly strong as
U.S. apparel manufacturing continued to shift to Latin America as
a result of NAFTA, and market conditions in Canada showed signs
of improvement. A&E's gross profit of $26.7 million declined
8.2% from $29.0 million in the third quarter of fiscal 1997, and
operating profit of $8.9 million in the third quarter of fiscal
1998 fell 36.6% from the $14.1 million in the comparable period
last year. Excluding the $3.1 million cost of withdrawing from
Korea, A&E's operating profit was 14.9% below the prior year
quarter. Overall, A&E reported declines in operating profits of
its foreign operations, excluding Korea, as the result of soft
demand in the Far East and European markets. A&E's results in
the U.S. market in comparison to the prior year quarter also
reflected its reduction in manufacturing operating schedules,
which decreased overall profitability, due to the continuation of
relatively sluggish demand.
The following table shows selected quarterly financial
information for fiscal 1997 and 1998 for the industrial thread
(textile) segment, American & Efird (in millions):
Quarter Ended 12/29/96 3/30/97 6/29/97 9/28/97 12/28/97 3/29/98 6/28/98
- ------------------------------------------------------------------------------
Net sales $87.4 $90.6 $95.4 $95.5 $87.7 $87.7 $89.8
Gross profit 24.8 26.0 29.0 27.0 25.6 24.7 26.7
Operating
profit 10.1 11.9 14.1 13.0 10.6 10.0 8.9
Depr. &
amortization 4.1 4.2 4.3 2.8 4.0 4.1 3.8
Capital
expenditures 10.8 6.4 9.2 2.5 4.8 4.9 3.7
Harris Teeter sales in the third quarter of fiscal 1998 of
$530.7 million increased by 9.5% over the $484.4 million
reported for the comparable period last year. Net sales for
stores in operation during both periods increased by 4.8%. 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 merchandising efforts,
including more aggressive promotional, advertising and customer
service activities, and the greater use of its customer loyalty
card. Gross profit of $144.8 million increased by 7.7% from
$134.4 million in the third fiscal quarter of 1997. Operating
profit of $12.7 million increased by 11.7% over the $11.4 million
reported for the comparable period last year. The gross profit
and operating profit improvements were the result of the
favorable combination of higher sales and improved cost
management through a number of productivity and efficiency
initiatives
-7-
that enhanced the margins. At June 28, 1998, 142 stores were in operation,
up from 138 at June 29, 1997. One new store in Virginia Beach, Virginia
was opened during the third quarter of fiscal 1998.
The following table shows selected quarterly financial
information for fiscal 1997 and 1998 for the retail grocery
segment, Harris Teeter (in millions):
Quarter Ended 12/29/96 3/30/97 6/29/97 9/28/97 12/28/97 3/29/98 6/28/98
- ------------------------------------------------------------------------------
Net sales $486.7 $473.3 $484.4 $486.8 $529.9 $528.6 $530.7
Gross profit 128.2 128.0 134.4 134.8 142.8 143.1 144.8
Operating
profit 13.0 10.0 11.4 11.3 13.4 12.8 12.7
Depr. &
amortization 10.1 10.4 10.8 11.2 11.5 12.0 12.4
Capital
expenditures 19.3 22.4 22.4 22.1 29.6 17.2 15.6
For the Nine Months Ended June 28, 1998 and June 29, 1997
Consolidated sales in the nine months ended June 28, 1998 of
$1.85 billion increased 7.9% over the $1.72 billion reported for
the nine months of fiscal 1997, due to significant sales
expansion at Harris Teeter, both in new and comparable stores,
partially offset by reduced sales at A&E. Gross profit of $508
million in the first nine months of fiscal 1998 increased 8% from
$470 million in the same period in fiscal 1997. Operating profit
of $68.5 million fell 3% from the $70.4 million reported for the
comparable period last year, with A&E reporting a decrease and
Harris Teeter showing an increase. Net income of $33.7 million
was 6% lower than the $35.8 million reported last year. Basic
and diluted earnings per share for the nine months this year were
$.72 versus $.77 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.
As previously reported by the Company on June 23, 1998 and
as described above, A&E adopted a plan of withdrawal from its
business operations in Korea due to the substantial deterioration
of business conditions in that country. As a result of Korean
year-to-date operating losses of $2.3 million and an additional
$3.1 million pre-tax charge for the costs of closing and
liquidating the operation, the consolidated after-tax earnings of
the Company was adversely impacted by $3.8 million or $.08 per
share for the nine months of fiscal 1998.
A&E sales of $265.2 million for the nine months this year
decreased 3% from $273.4 million in the comparable period last
year. This sales decrease was primarily due to weak demand for
industrial thread in the U.S. market by A&E's apparel
manufacturing customers who as a result of a sluggish retail
apparel market constrained their production to control
inventories in the first six months. In addition, sales were
impacted by increased imports from Asia and a decrease in apparel
units sold at retail in some categories. Led by strong sales in
Mexico, A&E's foreign operations achieved sales growth for the
nine months of fiscal 1998 in every market except Korea.
However, except for strong growth in Mexico, the current third
fiscal quarter displayed relatively flat sales by foreign
operations compared to the prior year quarter. The relative
distribution of the company's business in Latin America continued
to grow as the result of NAFTA. Gross profit of $77 million for
the nine months in fiscal 1998 declined 3.6% from $79.9 million
in fiscal 1997. For the nine-month period of fiscal 1998,
operating profit declined 18% to $29.6 million from $36.1 million
in the prior year
-8-
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 foreign operating losses primarily in Korea as well as the
charges related to the company's decision to withdraw from Korea.
The operating profit results in Korea, excluding the one-time
charge for withdrawal, declined $2.6 million from the same period
last year, primarily as the result of bad debt write-offs,
inventory adjustments and currency translation for the nine-month
period in fiscal 1998. The company anticipates no further losses
related to Korea and is comfortable with the operational
opportunities at its twelve other overseas facilities, including
Malaysia and Hong Kong. While A&E's other foreign operations
have collectively generated positive operating profit for the
nine months of 1998, such profitability was $2 million below the
prior year period. U.S. sales and exports have generated 76% of
revenues for the nine months in 1998 and 92% of A&E's operating
profit, excluding the results of the Korean operations. Market
conditions for the balance of the fiscal year may continue to
display soft demand for industrial thread in the U.S., Far East
and European markets.
For the fiscal year to date, Harris Teeter sales of $1.59
billion improved by 10% over the $1.44 billion recorded in the
comparative nine months ended June 29, 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 4.5%. 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. Gross profit increased by 10.3% to $430.7
million from $390.6 million in the comparable nine months of
fiscal 1997. Operating profit increased by 13.3%, from $34.4
million for the nine months in fiscal 1997 to $38.9 million in
fiscal 1998. These results were due to the successes of a number
of productivity and efficiency enhancements, and merchandising
efforts. The higher sales level and cost management improvements
combined to positively impact the operating margin. A total of
seven stores were opened during the nine-month period in fiscal
1998 and three older stores were closed, with 142 stores in
operation at June 28, 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 June 28, 1998, this percentage was 35%, as compared to 33.1%
at September 28, 1997.
-9-
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 June 28, 1998 was $68.1 million, and $63 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 primarily 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 June 28, 1998.
Working capital of $109.0 million at June 28, 1998 increased
$20.1 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 June 28, 1998
and 1.4 at September 28, 1997.
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 nine months, capital expenditures totaled $75.8
million. A&E has spent $13.4 million of the $24 million it
expects to spend in fiscal year 1998, and Harris Teeter has spent
$62.4 million of an expected $86 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. Routine periodic
reports have displayed that the project activities are on
schedule with the requirements of the Year 2000 remediation plan.
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
-10-
failure to do so could have a material adverse effect on the Company's
future results of operations.
As a result of federal legislation which will phase out
interest deductions on certain policy loans and thereby
significantly diminish the favorable tax attributes of Company
owned life insurance ("COLI") as of January 1, 1999, the Company
expects that its effective income tax rates will be only slightly
below statutory rates domestically beyond that date. The Company
will have recorded income tax reductions of approximately $24
million cumulatively as the result of COLI interest deductions
from October 1993 through fiscal year ending September 1998. 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.
In June 1998, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging Activities.
The Statement establishes accounting and reporting standards
requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded
in the balance sheet as either an asset or liability measured at
its fair value. Statement 133 is effective for fiscal years
beginning after June 15, 1999. Management believes the impact of
adopting Statement 133 will be immaterial.
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 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,
-11-
-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.
-12-
PART II. OTHER INFORMATION
ITEM 5. Other Information.
On May 21, 1998, the Securities and Exchange Commission adopted an
amendment to Rule 14a-4 promulgated under the Securities Exchange Act of
1934, as amended, which governs a company's use of its discretionary proxy
voting authority with respect to certain shareholder proposals raised at a
shareholder meeting. For the Company's 1999 Annual Meeting of Shareholders,
if the Company receives notice of a shareholder proposal after November 3,
1998, such notice will be considered untimely and may not be brought before
the meeting. Therefore, the persons named in proxies solicited by the Board
of Directors may exercise discretionary voting power with respect to such
proposal.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
Exhibit No. Description of Exhibit
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: August 10, 1998 /s/ R. N. Brigden
--------------------------
R. N. BRIGDEN
VICE PRESIDENT - FINANCE
(PRINCIPAL FINANCIAL OFFICER)
-13-
EXHIBIT INDEX
Exhibit No.
(per Item 601 Description of Sequential
Of Reg. S-K) Exhibit Page No.
11 Statement Re: Computation of Per Share Earnings
27 Financial Data Schedule
EXHIBIT 11
RUDDICK CORPORATION
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
NINE MONTHS ENDED
----------------------
JUNE 28, JUNE 29,
1998 1997
----------------------
NET INCOME PER SHARE COMPUTED AS FOLLOWS:
BASIC:
1. Net income available to common
shareholders 33,665,000 35,836,000
=======================
2. Weighted average common
shares outstanding -
Basic 46,690,143 46,529,017
=======================
3. Basic net income per share
(Item 1 divided by Item 2) .72 .77
=======================
DILUTED:
1. Net income available to common
shareholders 33,665,000 35,836,000
=======================
2. Weighted average common
shares outstanding -
Basic 46,690,143 46,529,017
3. Weighted potential shares
under stock options computed
for the periods using the
Treasury Stock Method 316,722 281,657
-----------------------
4. Weighted average common
shares outstanding -
Diluted 47,006,865 46,810,674
=======================
5. Net Income Per Share (Item
1 divided by Item 2) .72 .77
======================
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
FINANCIAL DATA SCHEDULE FOR THE THREE MONTHS ENDED 6/28/98
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-28-1998
<PERIOD-END> JUN-28-1998
<CASH> 15,044,000
<SECURITIES> 0
<RECEIVABLES> 78,367,000
<ALLOWANCES> 1,709,000
<INVENTORY> 212,812,000
<CURRENT-ASSETS> 331,814,000
<PP&E> 850,315,000
<DEPRECIATION> 354,828,000
<TOTAL-ASSETS> 927,415,000
<CURRENT-LIABILITIES> 222,816,000
<BONDS> 218,497,000
0
0
<COMMON> 56,531,000
<OTHER-SE> 346,742,000
<TOTAL-LIABILITY-AND-EQUITY> 927,415,000
<SALES> 620,471,000
<TOTAL-REVENUES> 620,471,000
<CGS> 449,030,000
<TOTAL-COSTS> 598,832,000
<OTHER-EXPENSES> 2,081,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,079,000
<INCOME-PRETAX> 15,479,000
<INCOME-TAX> 5,185,000
<INCOME-CONTINUING> 10,294,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,294,000
<EPS-PRIMARY> .22
<EPS-DILUTED> .22
</TABLE>
