SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended: September 27, 1998
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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COMMISSION FILE NUMBER: 1-6905
RUDDICK CORPORATION
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NORTH CAROLINA 56-0905940
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1800 TWO FIRST UNION CENTER, CHARLOTTE, NORTH CAROLINA 28282
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (704) 372-5404
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS: NAME OF EXCHANGE ON WHICH REGISTERED:
- ---------------------------- -------------------------------------
COMMON STOCK NEW YORK STOCK EXCHANGE, INC.
RIGHTS TO PURCHASE SERIES A JUNIOR
PARTICIPATING ADDITIONAL PREFERRED STOCK NEW YORK STOCK EXCHANGE, INC.
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ x ]
The aggregate market value of the voting stock held by nonaffiliates of the
Registrant as of December 11, 1998, was $587,770,504.
As of December 11, 1998, the Registrant had outstanding 46,613,607 shares of
Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I and II: Certain portions of the Annual Report to Shareholders for the
fiscal year ended September 27, 1998 (with the exception of those portions which
are specifically incorporated by reference in this Form 10-K and included as
Exhibit 13 hereto, the Annual Report to Shareholders for the fiscal year ended
September 27, 1998, is not deemed to be filed or incorporated by reference as
part of this report).
Part III: Definitive Proxy Statement dated January 4, 1999, as filed pursuant to
Section 14 of the Securities Exchange Act of 1934 in connection with the 1999
Annual Meeting of Shareholders. (With the exception of those portions which are
specifically incorporated by reference in this Form 10-K, the Proxy Statement is
not deemed to be filed or incorporated by reference as part of this report.)
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RUDDICK CORPORATION
AND CONSOLIDATED SUBSIDIARIES
Form 10-K for the Fiscal Year ended September 27, 1998
TABLE OF CONTENTS
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PART I
Page
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Item 1. Business ................................................................................ 1
Item 2. Properties .............................................................................. 3
Item 3. Legal Proceedings ....................................................................... 5
Item 4. Submission of Matters to a Vote of Security Holders ..................................... 5
Item 4A.Executive Officers of the Registrant .................................................... 5
PART II
Item 5. Market for Registrant's Common Equity and Related Shareholder Matters.................... 6
Item 6. Selected Financial Data ................................................................. 6
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations ... 6
Item 7A. Quantitative and Qualitative Discussion about Market Risk .............................. 7
Item 8. Financial Statements and Supplementary Data ............................................. 7
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .... 7
PART III
Item 10. Directors and Executive Officers of the Registrant ..................................... 7
Item 11. Executive Compensation ................................................................. 7
Item 12. Security Ownership of Certain Beneficial Owners and Management ......................... 7
Item 13. Certain Relationships and Related Transactions ......................................... 8
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K ............................................................................ 8
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PART I
ITEM 1. BUSINESS
Ruddick Corporation (the "Registrant") is a holding company which, through
its wholly owned subsidiaries, is engaged in two primary businesses: Harris
Teeter, Inc. ("Harris Teeter") operates a regional chain of supermarkets in five
southeastern states and American & Efird, Inc. ("A&E") manufactures and
distributes industrial and consumer sewing thread.
At September 27, 1998, the Registrant and its subsidiaries had total
consolidated assets of $931,618,000 and had approximately 20,700 employees. The
principal executive offices of the Registrant are located at 1800 Two First
Union Center, Charlotte, North Carolina 28282.
Ruddick Corporation, which is incorporated under North Carolina law, was
created in 1968 through the consolidation of the predecessor companies of A&E
and Ruddick Investment Company. In 1969, the Registrant acquired Harris Teeter.
Also in 1969, the Registrant acquired the predecessor of Jordan Graphics, Inc.
("Jordan Graphics"). On January 23, 1996, substantially all of the assets of
Jordan Graphics were sold to The Reynolds and Reynolds Company. In addition, as
of the beginning of fiscal year 1996, Ruddick Investment Company redefined its
business to emphasize the development of selected sites for Harris Teeter
stores. Further, in fiscal year 1998, these real estate development activities
were fully made the direct and integral responsibility of Harris Teeter. Ruddick
Investment Company will continue to manage its venture capital investment
holdings but future equity investment will be limited and made primarily through
investments in certain venture capital funds. Due to continued growth of the
Harris Teeter and A&E businesses, Ruddick Investment's relative size to the
consolidated Company has declined and is no longer considered an operating
company. For certain other information regarding the Company's venture capital
and real estate holdings, see the Note entitled "Investments" of the Notes to
Consolidated Financial Statements of Ruddick Corporation and Subsidiaries in the
Registrant's 1998 Annual Report to Shareholders (the "1998 Annual Report"),
which information is incorporated herein by reference.
The two businesses in which the Registrant engages through its principal
operating subsidiaries, together with certain financial information and
competitive aspects of such businesses, are discussed separately below. For
certain other information regarding industry segments, see the Note entitled
"Industry Segment Information" of the Notes to Consolidated Financial Statements
of Ruddick Corporation and Subsidiaries in the 1998 Annual Report, which
information is incorporated herein by reference.
The only foreign operations conducted by the Registrant are through A&E.
Neither of the two businesses engaged in by the Registrant would be
characterized as seasonal.
The Registrant employs eighteen people, including four executives who
formulate and implement overall corporate objectives and policies. The
Registrant's employees perform functions in a number of areas including finance,
accounting, audit, insurance, reporting, employee benefits and public and
shareholder relations. The Registrant assists its subsidiaries in developing
long-range goals, in strengthening management personnel and skills and in
financing
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operations. Management of each subsidiary is responsible for implementing
operating policies and reports to management of the Registrant.
HARRIS TEETER
Harris Teeter operates supermarkets in North Carolina (93), South Carolina
(22), Virginia (17), Georgia (9) and Tennessee (3) for sales of groceries,
produce, meat and seafood, delicatessen items, bakery items, beer and wines and
non-food items such as health and beauty care, floral and other products
normally offered for sale in supermarkets. Harris Teeter has a program in place
whereby each retail store will undergo a major remodel every eight years. Harris
Teeter remodeled 27 stores during fiscal 1998 and expects to remodel 32 stores
in fiscal 1999. In addition, ten new stores were opened and four older, less
profitable, stores were sold or closed in fiscal 1998. As of fiscal year end,
Harris Teeter had 144 stores in operation. Its principal offices and
distribution facility containing cold storage perishable products and dry
groceries are located near Charlotte, North Carolina. Another dry grocery, cold
storage perishable and frozen storage facility is located in Greensboro, North
Carolina. Both distribution facilities underwent major expansion during fiscal
1997 and 1998, which expansions were completed in May 1998. Harris Teeter
produces dairy products, but buys most of the products it sells, including its
private label brands. Harris Teeter's sales constituted 86% of the Registrant's
consolidated sales in fiscal 1998 (84% in fiscal 1997 and 86% in fiscal 1996).
The supermarket industry is highly competitive. Harris Teeter competes
with local, regional and national food chains, some of which are larger in terms
of assets and sales, as well as with independent merchants. In the past several
years, considerable consolidation of competitors has taken place in the
supermarket industry and is expected to continue. As a result, Harris Teeter is
likely to compete with more, larger food chains in its markets. Principal
competitive factors include store location, price, service, convenience,
cleanliness, product quality and product variety. No one customer or group of
customers has a material effect upon the business of Harris Teeter.
At fiscal year end, Harris Teeter employed approximately 9,500 persons
full-time and 7,800 part-time. Warehouse employees and drivers at Harris
Teeter's warehouse near Charlotte, North Carolina are represented by a union,
but Harris Teeter is not party to a collective bargaining agreement covering
such employees. Harris Teeter considers its employee relations to be good.
A & E
A&E is a leading manufacturer and distributor of sewing thread,
produced from natural and synthetic fibers, for worldwide industrial and
consumer markets. Manufacturers of apparel, automotive materials, home
furnishings, medical supplies and footwear rely on A&E industrial sewing thread
to manufacture their products. The company's sales are primarily for industrial
sewing thread products, which are sold to manufacturers through A&E's employed
sales representatives, commissioned agents and distributors. In addition, A&E
produces the Signature line of consumer sewing thread, which is sold through
independent retail outlets. A&E also distributes sewing supplies manufactured by
other companies. A&E's sales constituted 14% of the Registrant's consolidated
sales in fiscal 1998 (16% in fiscal 1997 and 14% in fiscal 1996).
Over 70% of A&E's sales are industrial thread for use in apparel products.
The apparel market is made up of many categories, servicing both genders and
diverse age groups, including
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jeanswear, underwear, menswear, womenswear, outerwear, intimate apparel,
workwear and childrenswear. A&E also manufacturers industrial thread for use in
a wide variety of non-apparel products including home furnishings, automotive,
footwear, upholstered furniture, sporting goods, caps and hats, gloves, leather
products, medical products and tea bag strings.
Headquartered in Mt. Holly, North Carolina, the company operates 13 modern
manufacturing facilities in North Carolina. These facilities have been designed
for flexibility and efficiency to accommodate changing customer product demands.
In addition to manufacturing, A&E operates 16 distribution centers in the U. S.
and one in Puerto Rico.
A&E also has wholly owned operations in Belgium, Canada, Costa Rica,
England, Guatemala, Honduras, Hong Kong, Ireland, Mexico and Malaysia, a
majority-owned joint venture in China and minority interest in ventures in the
Dominican Republic and Italy. The company's value of assets in these operations
totals approximately $74 million. Management expects to continue to expand
foreign production and distribution operations, through joint ventures,
acquisitions or wholly owned start-up companies.
The domestic order backlog, believed to be firm, as of the end of the 1998
fiscal year was approximately $14,329,000 versus $13,941,000 at the end of the
preceding fiscal year. The majority of the order backlog is expected to be
filled within three weeks of fiscal year end. The international order backlog is
not material. A&E has approximately 9,300 domestic and 4,700 international
customer accounts which are active. In fiscal 1998, no single customer accounted
for more than 8% of total net sales, and the ten largest accounted for 22% of
total net sales.
A&E purchases cotton from farmers and domestic cotton merchants. There is
presently a sufficient supply of cotton worldwide and in the domestic market.
Synthetic fibers are bought from the principal American synthetic fiber
producers and are currently available in an adequate supply.
A&E has been issued two patents and has a patent application pending in
several jurisdictions. There are no material licenses, franchises or concessions
held by A&E. Research and Development expenditures were $405,000 and $328,000 in
fiscal 1998 and fiscal 1997, respectively, none of which were sponsored by
customers. Three employees are engaged in this activity on a full-time basis.
The industrial sewing thread industry is highly competitive. A&E is
believed to be one of the largest producers in the domestic industrial thread
market. Principal competitors include Coats American, Inc., Barbour Threads,
Inc. and imported products sold primarily through distributors. Principal
competitive factors include quality, service, and price. In the consumer thread
market, A&E competes with a number of large, well-established companies,
including Coats American, Inc.
A&E employed approximately 3,400 persons worldwide as of the end of fiscal
1998. A&E considers its employee relations to be good.
ITEM 2. PROPERTIES
The executive offices of the Registrant are located in approximately 8,000
square feet of leased space in a downtown office tower at 1800 Two First Union
Center, Charlotte, North Carolina, 28282.
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Harris Teeter owns its principal offices, which consist of 116,000 square
feet of space located on a 10-acre tract of land near Charlotte, North Carolina.
Harris Teeter also owns a 104-acre tract east of Charlotte where a cold storage
and dry grocery distribution facility is located. This facility was expanded
during fiscal 1997 and 1998 to include approximately 338,000 square feet of dry
grocery warehouse and approximately 252,000 square feet of storage for
refrigerated or perishable goods. Harris Teeter also owns a 49-acre tract in
Greensboro, North Carolina, which was also expanded during fiscal 1997 and 1998
to contain approximately 550,000 square feet of dry grocery warehousing,
approximately 138,000 square feet of perishable warehouse and approximately
139,000 square feet of frozen goods storage. Harris Teeter owns an 18,050 square
foot milk processing plant located on 8.3 acres of land in Charlotte, North
Carolina and an 81,900 square foot milk processing and ice cream manufacturing
facility located on 4.7 acres of land in High Point, North Carolina. Harris
Teeter operates its retail stores primarily from leased properties. The base
annual rentals on leased store and warehouse properties as of September 27, 1998
aggregated approximately $54,473,000 net of sublease rentals of approximately
$1,095,000. In addition to the base rentals, the majority of the lease
agreements provide for additional annual rentals based on 1% of the amount by
which annual store sales exceed a predetermined amount. During the fiscal year
ended September 27, 1998, the additional rental amounted to approximately
$1,157,000. Harris Teeter's supermarkets range in size from approximately 12,000
square feet to 66,000 square feet, with an average size of approximately 39,000
square feet. The following table sets forth selected statistics with respect to
Harris Teeter stores for each of the last three fiscal years.
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HARRIS TEETER STORE DATA 1996 1997 1998
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Stores Open at End of Period 134 138 144
Average Weekly Net Sales Per Store* $ 259,160 $ 272,924 $ 292,124
Average Square Footage Per Store 36,273 38,076 39,155
Average Square Footage Per New
Store Opened During Period 57,610 50,191 45,966
Total Square Footage at End
of Period 4,860,546 5,254,457 5,638,261
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*Computed on the basis of aggregate sales of stores open for a full year.
A&E's principal offices and thirteen domestic manufacturing plants are all
owned by A&E and are all located in North Carolina. Manufacturing and related
warehouse facilities have an aggregate of 2,225,093 square feet of floor space
and an insured value of $569,874,000. A&E has the capacity to produce annually
approximately 42,750,000 pounds of industrial sewing thread and has a dyeing
capacity of approximately 48,500,000 pounds per year. Capacities are based on
168 hours of operations per week.
A&E leases sixteen distribution centers scattered throughout its domestic
markets with an aggregate of 391,441 square feet of floor space and an
approximate annual rent of $1,485,000.
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Through subsidiaries, A&E also owns 4 international manufacturing and/or
distribution facilities with an aggregate of 289,608 square feet of floor space
and an approximate insured value of $20,200,000. A&E leases another 19
international facilities with an aggregate of 345,336 square feet of floor space
and an approximate annual rent of $1,300,000. The subsidiaries which are engaged
in manufacturing have a sewing thread dyeing capacity of approximately
14,400,000 pounds per year. Capacities are based on 168 hours of operations per
week. In addition to its subsidiaries, A&E also has a minority interest in
certain joint ventures.
ITEM 3. LEGAL PROCEEDINGS
The Registrant has entered into an Administrative Order on Consent with
Region IV of the United States Environmental Protection Agency, together with 14
other parties who have been designated potentially responsible parties, to
perform a remedial investigation/feasibility study at the Leonard Chemical
Company Superfund site in Rock Hill, South Carolina. The Registrant's potential
liability is based on the alleged disposal of waste material at this Superfund
site by Pargo, Inc. Pargo, Inc. was a wholly owned subsidiary of the Registrant
from 1969 to 1972. The Registrant has agreed to participate in the remedial
investigation/feasibility study on the condition that its share of the costs
does not exceed 1.8% of the total plus an additional payment of $4,680 for costs
previously incurred by other parties. The Registrant estimates that, based on
current information, the total cost of the remedial investigation/feasibility
study should be approximately $1,500,000. Under the interim allocation of costs
agreed to by the parties to the Administrative Order on Consent, the
Registrant's share is 1.155% of the total cost. The Registrant does not believe
that this proceeding will have a material effect on its business or financial
condition.
The Registrant and its subsidiaries are involved in various lawsuits and
environmental and patent matters arising from time to time in the normal course
of business. These matters considered in the aggregate have not had, nor does
the Registrant expect them to have, a material effect on the Registrant's
business or financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The following list contains the name, age, positions and offices held, and
period served in such positions or offices for each of the executive officers of
the Registrant.
R. Stuart Dickson, age 69, has been Chairman of the Executive Committee
since February 1994. Prior to that time he had been Chairman of the Board
of the Registrant since its formation in October 1968.
Alan T. Dickson, age 67, has been Chairman of the Board since February
1994. Prior to that time he had been President of the Registrant since its
formation in October 1968.
Thomas W. Dickson, age 43, has been President of the Registrant since
February 1997. Prior to that time, and beginning in February 1996, he
served as Executive Vice President of the Registrant. He also served as
A&E's President from February 1994 to August 1996 and Executive Vice
President from 1991 to 1994.
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Richard N. Brigden, age 59, has been Vice President-Finance of the
Registrant since December 1983.
Fred J. Morganthall, II, age 47, was elected President of Harris Teeter on
October 30, 1997. Prior to that time, and beginning in October 1996, he
served as Executive Vice President of Harris Teeter. He was also Harris
Teeter's Senior Vice President of Operations from October 1995 to October
1996, Vice President of Operations from April 1994 to October 1995 and
Vice President of Sales and Distribution from October 1992 to April 1994.
Fred A. Jackson, age 48, has been President of A&E since August 1996.
Prior to that time, for more than five years, he served as its Senior Vice
President-Industrial Thread Sales.
The executive officers of the Registrant and its subsidiaries are elected
annually by their respective Boards of Directors. R. Stuart Dickson and Alan T.
Dickson are brothers. Thomas W. Dickson is the son of R. Stuart Dickson and the
nephew of Alan T. Dickson. No other executive officer has a family relationship
with any other executive officer or director or nominee for director as close as
first cousin.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The information required for this item is incorporated herein by reference
to the following sections of the Registrant's 1998 Annual Report: information
regarding the principal market for Common Stock, number of shareholders of
record, market price information per share of Common Stock and dividends
declared per share of Common Stock for each quarterly period in the 1998 and
1997 fiscal years is incorporated by reference to the Note headed "Quarterly
Information (Unaudited)" to the Notes to Consolidated Financial Statements; and
information regarding restrictions on the ability of the Registrant to pay cash
dividends is incorporated by reference to "Management's Discussion and Analysis
of Financial Condition and Results of Operations-Capital Resources and
Liquidity" and the Note headed "Long-Term Debt" to the Notes to Consolidated
Financial Statements.
ITEM 6. SELECTED FINANCIAL DATA
The information required for this item, for each of the last five fiscal
years, is incorporated herein by reference to the section headed "Eleven-Year
Financial and Operating Summary" in the Registrant's 1998 Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required for this item is incorporated herein by reference
to the section headed "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the Registrant's 1998 Annual Report.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Registrant's market risk sensitive instruments do not subject the
Registrant to material market risk exposures.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements of the Registrant, including the
Report of Independent Public Accountants thereon, are incorporated herein by
reference from the Registrant's 1998 Annual Report.
The required supplementary financial information is incorporated herein by
reference from the Note headed "Quarterly Information (Unaudited)" of the Notes
to Consolidated Financial Statements in the Registrant's 1998 Annual Report.
The financial statement schedules required to be filed herewith, and the
Report of Independent Public Accountants thereon, are listed under Item 14(a) of
this Report and filed herewith pursuant to Item 14(d) of this Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item with respect to executive officers
is set forth above in Part I, Item 4A. The other information required by this
item is incorporated herein by reference to the sections entitled "Election of
Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance" in the
Registrant's Proxy Statement dated January 4, 1999, filed with the Securities
and Exchange Commission with respect to the Registrant's 1999 Annual Meeting of
Shareholders (the "1999 Proxy Statement").
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated herein by reference
to the sections entitled "Election of Directors -Directors' Fees and Attendance"
and "Executive Compensation" in the Registrant's 1999 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated herein by reference
to the sections entitled "Principal Shareholders" and "Election of
Directors-Beneficial Ownership of Company Stock" in the Registrant's 1999 Proxy
Statement.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report:
(1) Financial Statements: The following report and financial statements
are incorporated herein by reference to the Registrant's 1998 Annual
Report:
Consolidated Balance Sheets, September 27, 1998 and September 28,
1997
Statements of Consolidated Income and Retained Earnings for the
fiscal years ended September 27, 1998, September 28, 1997 and
September 29, 1996
Statements of Consolidated Cash Flows for the fiscal years ended
September 27, 1998, September 28, 1997 and September 29, 1996
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
(2) Financial Statement Schedules: The following report and financial
statement schedules are filed herewith:
Report of Independent Public Accountants for each of the fiscal
years in the three year period ended September 27, 1998 Page S-1
Schedule II - Valuation and Qualifying Accounts and
Reserves Page S-2
All other schedules are omitted as the required information is
inapplicable or the information is presented in the consolidated
financial statements or related notes thereto.
(3) Index to Exhibits: The following exhibits are filed with this report
or, as noted, incorporated by reference herein.
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3.1 Restated Articles of Incorporation of the Registrant, incorporated *
herein by reference to Exhibit 3.1 of the Registrant's Quarterly
Report on Form 10-Q for the quarterly period ended March 29, 1992
(Commission File No. 1-6905).
3.2 Amended and Restated Bylaws of the Registrant. +
4.1 Revolving Credit Agreements for an aggregate of $100,000,000, *
entered into as of February 15, 1995, by and between the Registrant
and each of First Union National Bank of North Carolina,
NationsBank, National Association (formerly NationsBank, National
Association (Carolinas)) and Wachovia Bank of North Carolina, N.A.,
incorporated herein by reference to Exhibits 4.1, 4.2 and 4.3 of the
Registrant's Quarterly Report on Form 10-Q for the quarterly period
ended April 2, 1995 (Commission File No. 1-6905).
4.2 $50,000,000 6.48% Series A Senior Notes due March 1, 2011 and *
$50,000,000 Private Shelf Facility dated March 1, 1996 between
Ruddick Corporation and The Prudential Insurance Company of America,
incorporated herein by reference to Exhibit 4.1 of the Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended March
31, 1996 (Commission File No. 1-6905).
4.3 $50,000,000 7.55% Senior Series B Notes due July 15, 2017 and *
$50,000,000 7.72% Series B Senior Notes due April 15, 2017 under the
Note Purchase and Private Shelf Agreement dated April 15, 1997
between Ruddick Corporation and The Prudential Insurance Company of
America, incorporated herein by reference to Exhibit 4.3 of the
Registrant's Annual Report on Form 10-K for the fiscal year period
ended September 28, 1997 (Commission File No. 1-6905).
The Registrant has certain other long-term debt, but has not filed
the instruments evidencing such debt as part of Exhibit 4 as none of
such instruments authorize the issuance of debt exceeding 10 percent
of the total consolidated assets of the Registrant. The Registrant
agrees to furnish a copy of each such agreement to the Commission
upon request.
10.1 Description of Incentive Compensation Plans, incorporated herein by *
reference to Exhibit 10.1 of the Registrant's Annual Report on Form
10-K for the fiscal year ended September 29, 1996 (Commission No.
1-6905).**
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10.2 Supplemental Executive Retirement Plan of Ruddick Corporation, as *
amended and restated, incorporated herein by reference to Exhibit
10.3 of the Registrant's Annual Report on Form 10-K for the fiscal
year ended September 30, 1990 (Commission File No. 1-6905).**
10.3 Resolutions adopted by the Board of Directors of the Registrant and *
the Plan's Administrative Committee with respect to benefits payable
under the Registrant's Supplemental Executive Retirement Plan to
Alan T. Dickson and R. Stuart Dickson, incorporated herein by
reference to Exhibit 10.3 of the Registrant's Annual Report on Form
10-K for the fiscal year ended September 29, 1991 (Commission File
No. 1-6905).**
10.4 Deferred Compensation Plan for Key Employees of Ruddick Corporation *
and subsidiaries, as amended and restated, incorporated herein by
reference to Exhibit 10.5 of the Registrant's Annual Report on Form
10-K for the fiscal year ended September 30, 1990 (Commission File
No. 1-6905).**
10.5 1982 Incentive Stock Option Plan, as amended and restated, *
incorporated herein by reference to Exhibit 10.5 of the Registrant's
Annual Report on Form 10-K for the fiscal year ended October 2, 1994
(Commission File No. 1-6905).**
10.6 1988 Incentive Stock Option Plan, incorporated herein by reference *
to Exhibit 10.6 of the Registrant's Annual Report on Form 10-K for
the fiscal year ended October 2, 1994 (Commission File No.
1-6905).**
10.7 1993 Incentive Stock Option and Stock Appreciation Rights Plan, *
incorporated herein by reference to Exhibit 10.7 of the Registrant's
Annual Report on Form 10-K for the fiscal year ended October 3, 1993
(Commission File No. 1-6905).**
10.8 Description of the Registrant's Long Term Key Management Incentive *
Program, incorporated herein by reference to Exhibit 10.7 of the
Registrant's Annual Report on Form 10-K for the fiscal year ended
September 29, 1991 (Commission File No. 1-6905).**
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10.9 Ruddick Corporation Irrevocable Trust for the Benefit of *
Participants in the Long Term Key Management Incentive Program,
incorporated herein by reference to Exhibit 10.9 of the Registrant's
Annual Report on Form 10-K for the fiscal year ended September 30,
1990 (Commission File No. 1-6905).**
10.10 Rights Agreement dated November 15, 1990 by and between the *
Registrant and Wachovia Bank of North Carolina, N.A., incorporated
herein by reference to Exhibit 4.1 to the Registrant's Current
Report on Form 8-K dated November 21, 1990 (Commission File No.
1-6905).
10.11 Ruddick Corporation Senior Officers Insurance Program Plan *
Document and Summary Plan Description, incorporated herein by
reference to Exhibit 10.10 of the Registrant's Annual Report on Form
10-K for the fiscal year ended September 27, 1992 (Commission File
No. 1-6905).**
10.12 Ruddick Corporation Nonstatutory Stock Option Agreement *
Between the Registrant and Edwin B. Borden, Jr., incorporated herein
by reference to Exhibit 10.2 of the Registrant's Quarterly Report on
Form 10-Q for the quarterly period ended December 29, 1996
(Commission File No. 1-6905).**
10.13 Ruddick Corporation Nonstatutory Stock Option Agreement *
Between the Registrant and Beverly F. Dolan, incorporated herein by
reference to Exhibit 10.3 of the Registrant's Quarterly Report on
Form 10-Q for the quarterly period ended December 29, 1996
(Commission File No. 1-6905).**
10.14 Ruddick Corporation Nonstatutory Stock Option Agreement *
Between the Registrant and Roddey Dowd, Sr., incorporated herein by
reference to Exhibit 10.4 of the Registrant's Quarterly Report on
Form 10-Q for the quarterly period ended December 29, 1996
(Commission File No. 1-6905).**
10.15 Ruddick Corporation Nonstatutory Stock Option Agreement *
Between the Registrant and James E.S. Hynes, incorporated herein by
reference to Exhibit 10.5 of the Registrant's Quarterly Report on
Form 10-Q for the quarterly period ended December 29, 1996
(Commission File No. 1-6905).**
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description of Exhibit Page
- ------ ---------------------- ----
<S> <C> <C>
10.16 Ruddick Corporation Nonstatutory Stock Option Agreement Between the *
Registrant and Hugh L. McColl, Jr., incorporated herein by reference
to Exhibit 10.6 of the Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended December 29, 1996 (Commission File
No. 1-6905).**
10.17 Ruddick Corporation 1995 Comprehensive Stock Option Plan, *
incorporated herein by reference to Exhibit 10.1 of the Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended June
30, 1996 (Commission File No. 1-6905).**
10.18 Ruddick Corporation 1997 Comprehensive Stock Option and Award Plan, *
incorporated herein by reference to Exhibit 10.1 of the Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended
December 28, 1997 (Commission File No. 1-6905).**
10.19 Ruddick Corporation Director Deferred Plan, incorporated herein by *
reference to Exhibit 10.2 of the Registrant's Quarterly Report on
Form 10-Q for the quarterly period ended March 29, 1998 (Commission
File No. 1-6905).**
10.20 Ruddick Corporation Senior Officers Insurance Program, incorporated *
herein by reference to Exhibit 10.3 of the Registrant's Quarterly
Report on Form 10-Q for the quarterly period ended March 29, 1998
(Commission File No. 1-6905).**
11 Statement Regarding the Computation of Per Share Earnings. +
13 Ruddick Corporation 1998 Annual Report to Shareholders: Consolidated +
Financial Statements on pages 24 to 37 and sections headed
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" (pages 20 to 23) and "Eleven-Year Financial
and Operating Summary" (pages 38 and 39) only.
21 List of Subsidiaries of the Registrant. +
23 Consent of Independent Public Accountants. +
27 Financial Data Schedule. +
</TABLE>
12
<PAGE>
- ------------------------
* Incorporated by reference.
** Indicates management contract or compensatory plan required to be filed
as an Exhibit.
+ Indicates exhibits filed herewith and follow the signature pages.
(b) Reports on Form 8-K.
The Registrant did not file any reports on Form 8-K during the three months
ended September 27, 1998.
(c) Exhibits
See (a ) (3) above.
(d) Financial Statement Schedules See (a) (2) above.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
RUDDICK CORPORATION
(Registrant)
By: /s/ Thomas W. Dickson
-----------------------
Thomas W. Dickson, President
Dated: December 28, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated:
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ Thomas W. Dickson President and Director December 28, 1998
- ------------------------- (Principal Executive Officer)
Thomas W. Dickson
/s/ Richard N. Brigden Vice President-Finance December 28, 1998
- ------------------------- (Principal Financial Officer)
Richard N. Brigden
/s/ Douglas A. Stephenson Vice President and Treasurer December 28, 1998
- -------------------------- (Principal Accounting Officer)
Douglas A. Stephenson
/s/ John R. Belk Director December 28, 1998
- --------------------------
John R. Belk
/s/ Edwin B. Borden, Jr. Director December 28, 1998
- --------------------------
Edwin B. Borden, Jr.
/s/ John W. Copeland Director December 28, 1998
- --------------------------
John W. Copeland
/s/ Alan T. Dickson Chairman of the Board December 28, 1998
- -------------------------- and Director
Alan T. Dickson
/s/ R. Stuart Dickson Chairman of the Executive December 28, 1998
- -------------------------- Committee and Director
R. Stuart Dickson
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ Roddey Dowd, Sr. Director December 28, 1998
- --------------------
Roddey Dowd, Sr.
- -------------------- Director
James E. S. Hynes
- -------------------- Director
Hugh L. McColl, Jr.
/s/ Anna S. Nelson Director December 28, 1998
- ------------------
Anna S. Nelson
/s/ Harold C. Stowe Director December 28, 1998
- -------------------
Harold C. Stowe
</TABLE>
15
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Ruddick Corporation:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in Ruddick Corporation's annual
report to shareholders incorporated by reference in this Form 10-K, and have
issued our report thereon dated October 23, 1998. Our audit was made for the
purpose of forming an opinion on those statements taken as a whole. The schedule
listed in Item 14(a)(2) is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
Charlotte, North Carolina
October 23, 1998
S-1
<PAGE>
RUDDICK CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
AND RESERVES
FOR THE FISCAL YEARS ENDED
SEPTEMBER 29, 1996, SEPTEMBER 28, 1997 SCHEDULE II
AND SEPTEMBER 27, 1998
(in thousands)
<TABLE>
---------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
---------------------------------------------------------------------------------------
BALANCE ADDITIONS
AT BEGINNING CHARGED TO BALANCE
OF FISCAL COSTS AND AT END
DESCRIPTION YEAR EXPENSES DEDUCTIONS OF PERIOD
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fiscal Year Ended September
29, 1996:
Reserves deducted from
assets to which they apply -
Allowance For Doubtful
Accounts.......... $1,727 $428 $757* $1,398
========================================================
Fiscal Year Ended September
28, 1997:
Reserves deducted from
assets to which they apply -
Allowance For Doubtful
Accounts.......... $1,398 $1,704 $1,097* $2,005
========================================================
Fiscal Year Ended September
27, 1998:
Reserves deducted from
assets to which they apply -
Allowance For Doubtful
Accounts.......... $2,005 $2,145 $2,104* $2,046
========================================================
</TABLE>
*Represents accounts receivable balances written off as uncollectible, less
recoveries.
S-2
AMENDED AND RESTATED BYLAWS
OF
RUDDICK CORPORATION
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions............................................................1
Section 1. Definitions................................................1
Section 2. Cross-Reference to the Act.................................1
ARTICLE II
Offices................................................................2
Section 1. Principal Office...........................................2
Section 2. Other Offices..............................................2
Section 3. Registered Office..........................................2
ARTICLE III
Shareholders...........................................................2
Section 1. Annual Meeting............................................2
Section 2. Substitute Annual Meeting.................................2
Section 3. Special Meetings..........................................2
Section 4. Place of Meeting..........................................2
Section 5. Notice of Meeting.........................................3
Section 6. Fixing of Record Date.....................................3
Section 7. Shareholders List.........................................4
Section 8. Quorum....................................................4
Section 9. Proxies...................................................4
Section 10. Voting of Shares..........................................5
Section 11. Voting for Directors......................................5
Section 12. Notice of Shareholder Business and Nominees for Election
as Directors .............................................5
Section 13. Conduct of Meetings.......................................6
Section 14. Inapplicability of the North Carolina Control Share
Acquisition Act...........................................7
ARTICLE IV
Board of Directors.....................................................7
Section 1. General Powers.............................................7
Section 2. Number, Term, Qualification, and Removal...................7
Section 3. Vacancies..................................................8
Section 4. Compensation...............................................8
Section 5. Executive Committee........................................8
i
<PAGE>
Section 6. Other Committees...........................................8
ARTICLE V
Meetings of Directors..................................................9
Section 1. Regular Meetings..........................................9
Section 2. Special Meetings..........................................9
Section 3. Notice....................................................9
Section 4. Waiver of Notice.........................................10
Section 5. Quorum...................................................10
Section 6. Manner of Acting.........................................10
Section 7. Presumption of Assent....................................10
Section 8. Conduct of Meetings......................................10
Section 9. Action Without a Meeting.................................11
Section 10. Participation Other Than in Person.......................11
ARTICLE VI
Officers..............................................................11
Section 1. Officers of the Corporation..............................11
Section 2. Appointment and Term.....................................12
Section 3. Compensation.............................................12
Section 4. Resignation and Removal of Officers......................12
Section 5. Contract Rights of Officers..............................12
Section 6. Bonds....................................................12
Section 7. Chairman of the Board....................................12
Section 8. President................................................12
Section 9. Vice Presidents..........................................13
Section 10. Secretary................................................13
Section 11. Treasurer................................................13
Section 12. Assistant Vice Presidents, Secretaries and Treasurers....13
ARTICLE VII
Contracts, Loans, Checks and Deposits.................................14
Section 1. Contracts.................................................14
Section 2. Loans.....................................................14
Section 3. Checks and Drafts.........................................14
Section 4. Deposits..................................................14
ARTICLE VIII
Shares and Their Transfer.............................................14
Section 1. Shares....................................................14
ii
<PAGE>
Section 2. Stock Transfer Books and Transfer of Shares...............15
Section 3. Lost Certificates.........................................15
Section 4. Holder of Record..........................................15
Section 5. Transfer Agent and Registrar; Regulations.................15
ARTICLE IX
Indemnification.......................................................16
Section 1. General...................................................16
Section 2. Determination Requirement.................................16
Section 3. Expenses..................................................16
Section 4. Constituent Corporations..................................16
ARTICLE X
General Provisions....................................................17
Section 1. Fiscal Year...............................................17
Section 2. Distributions.............................................17
Section 3. Seal......................................................17
Section 4. Amendments................................................17
iii
<PAGE>
ARTICLE I
Definitions
Section 1. Definitions. In these Bylaws, unless otherwise specifically
provided:
(a) "Act" shall mean the North Carolina Business Corporation Act, as contained
in Chapter 55 of the North Carolina General Statutes, as the same now
exists or may hereafter be amended.
(b) "Articles of Incorporation" means the Articles of Incorporation of the
Corporation, as amended and restated from time to time, including any
Articles of Merger and any amendments or statements of classification
adopted in connection with the Corporation's authorized preferred stock.
(c) "Common Stock" means the common stock of the Corporation.
(d) "Corporation" shall mean Ruddick Corporation, a North Carolina
corporation, and any successor thereto.
(e) "Preference Stock" means the Non-cumulative, Voting $.56 Convertible
Preference Stock of the Corporation.
(f) "Principal office" means the office (in or out of the State of North
Carolina) so designated in the Corporation's annual report filed pursuant
to the Act where the principal executive offices of the Corporation are
located.
(g) "Shares" means the Common Stock, the Preference Stock and other units into
which the proprietary interests in the Corporation are divided.
(h) "Shareholder" means the person in whose name shares are registered in the
records of the Corporation or the beneficial owner of shares to the extent
of the rights granted by a nominee certificate on file with the
Corporation.
(i) "Voting group" means all shares of one or more classes or series that
under the Articles of Incorporation or the Act are entitled to vote and be
counted together collectively on a matter at a meeting of shareholders.
All shares entitled by the Articles of Incorporation or the Act to vote
generally on a matter are for that purpose a single voting group.
Section 2. Cross-Reference to the Act. If any term used in these Bylaws
and not otherwise defined herein is defined for purposes of the Act, such
definition shall apply for purposes of these Bylaws, unless the context shall
otherwise clearly require.
<PAGE>
ARTICLE II
OFFICES
Section 1. Principal Office. The principal office of the Corporation shall
be located in the City of Charlotte, County of Mecklenburg, State of North
Carolina, or such other place as the Board of Directors may determine from time
to time.
Section 2. Other Offices. The Corporation may have offices at such other
places, either within or without the State of North Carolina, as the Board of
Directors may from time to time determine or as the affairs of the Corporation
may require from time to time.
Section 3. Registered Office. The registered office of the Corporation
required by the Act to be maintained in the State of North Carolina may be, but
need not be, identical with the principal office of the Corporation, and the
address of the registered office may be changed from time to time as provided in
the Act.
ARTICLE III
SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders shall be
held on the first Thursday in February of each year at 11:00 a.m. for the
purpose of electing directors and for the transaction of such other business as
may come before the meeting. If the day fixed for the annual meeting shall be a
legal holiday in the State of North Carolina, such meeting shall be held on the
next succeeding business day.
Section 2. Substitute Annual Meeting. If the annual meeting shall not be
held within the period designated by these Bylaws, a substitute annual meeting
may be called in accordance with the provisions of Section 3 of this Article
III. A meeting so called shall be designated and treated for all purposes as the
annual meeting.
Section 3. Special Meetings. Special meetings of the shareholders, for any
purpose or purposes, unless otherwise prescribed by the Act, may be called by
the Chairman of the Board or the President of the Corporation, or by the
Secretary acting under instructions of the Chairman of the Board or the
President, or by the Board of Directors.
Section 4. Place of Meeting. The Board of Directors or the Chairman of the
Board or the President of the Corporation, or the Secretary acting under
instructions of the Chairman of the Board or the President, may designate any
place, either within or without the State of North Carolina, as the place of
meeting for any annual meeting of shareholders or for any special meeting of
shareholders called by the Board of Directors, the Chairman of the Board, the
President or the Secretary. If no designation is made, or if a special meeting
of shareholders is
2
<PAGE>
otherwise called, the place of meeting shall be the principal office of the
Corporation in the State of North Carolina.
Section 5. Notice of Meeting. Written or printed notice stating the date,
time and place of the meeting shall be delivered not less than 10 nor more than
60 days before the date of the meeting, either personally or by mail, by or at
the direction of the Chairman of the Board or the President or the Secretary, or
the other person calling the meeting, to each shareholder of record entitled to
vote at such meeting. If mailed, such notice shall be deemed to be effective
when deposited in the United States mail, with postage thereon prepaid and
correctly addressed to the shareholder at such shareholder's address as shown in
the Corporation's current record of shareholders.
In the case of an annual or substitute annual meeting, the notice of
meeting need not specifically state the business to be transacted thereat unless
it is a matter, other than election of directors, on which the vote of
shareholders is expressly required by the provisions of the Act. In the case of
a special meeting, the notice of meeting shall state the purpose or purposes for
which the meeting is called.
If a meeting is adjourned to a date more than 120 days after the date
fixed for the original meeting, or if a new record date is fixed for the
adjourned meeting, or if the new date, time or place for an adjourned meeting is
not announced at the meeting before adjournment, notice of the adjourned meeting
shall be given as in the case of an original meeting. Otherwise, it is not
necessary to give any notice of the adjourned meeting other than by announcement
at the meeting at which the adjournment is taken.
Section 6. Fixing of Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or shareholders entitled to receive payment of any
dividend or other distribution, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors may fix in
advance a date for any such determination of shareholders, such date in any case
to be not more than 70 days and, in case of a meeting of shareholders, not less
than 10 days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or for determination of the shareholders entitled to receive
payment of a dividend or other distribution, the close of business on the day
before the first notice is delivered to shareholders or the date on which the
resolution of the Board of Directors declaring or authorizing such dividend or
distribution is adopted, as the case may be, shall be the record date for such
determination. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof unless the Board of
Directors fixes a new record date, which it must do if the meeting is adjourned
to a date more than 120 days after the date fixed for the original meeting.
3
<PAGE>
Section 7. Shareholders List. After the record date for a meeting of
shareholders is fixed or determined, the officer or agent having charge of the
stock transfer books for shares of the Corporation shall prepare an alphabetical
list of the names of all shareholders of the Corporation who are entitled to
notice of such shareholders meeting. The list will be arranged by voting group
(and within each voting group by class or series of shares) and show the address
of and number of shares held by each shareholder. Such shareholders list will be
available for inspection by any shareholder, beginning two business days after
notice of the meeting is given for which the list was prepared and continuing
through the meeting, at the Corporation's principal office or at a place
identified in the meeting notice in the city where the meeting will be held. A
shareholder, or a shareholder's agent or attorney, is entitled on written demand
to inspect and, subject to compliance with the applicable provisions of the Act,
to copy the list, during regular business hours and at the shareholder's
expense, during the period it is available for inspection. Such list shall also
be available at the meeting of shareholders, and any shareholder, or such
shareholder's agent or attorney, is entitled to inspect the list at any time
during the meeting or any adjournment thereof.
Section 8. Quorum. A majority of the votes entitled to be cast on a
particular matter by a voting group constitutes a quorum of that voting group
for action on that matter, unless the Articles of Incorporation or the Act
provides otherwise. Shares entitled to vote as a separate voting group may take
action on a matter at a meeting of shareholders only if a quorum of those shares
exists with respect to that matter, except that, in the absence of a quorum at
the opening of any meeting of shareholders, such meeting may be adjourned from
time to time by the vote of a majority of the shares voting on the motion to
adjourn.
Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting.
Section 9. Proxies. A shareholder may vote his or her shares in person or
by proxy. A shareholder may appoint a proxy to vote or otherwise act for the
shareholder by signing an appointment form, either personally or by such
shareholder's attorney-in-fact. A telegram, telex, facsimile or other form of
wire or wireless communication appearing to have been transmitted by a
shareholder, or a photocopy or equivalent reproduction of a writing appointing
one or more proxies, shall be deemed a valid appointment form within the meaning
of these Bylaws.
An appointment of a proxy is effective when received by the Secretary or
other officer or agent authorized to tabulate votes. An appointment is valid for
11 months unless a different period is expressly provided in the appointment
form. An appointment of a proxy is revocable by the shareholder unless the
appointment form conspicuously states that it is irrevocable and the appointment
is coupled with an interest, which may include any such interest specified in
the Act.
4
<PAGE>
Section 10. Voting of Shares. Each outstanding share of Common Stock and
Preference Stock is entitled to one vote on each matter voted on at a
shareholders meeting. Other shares, if any, are entitled to vote only as
provided in the Articles of Incorporation or the Act. If a quorum exists, action
on a matter (other than election of directors) by a voting group is approved if
the votes cast within the voting group favoring the action exceed the votes cast
opposing the action, unless the Articles of Incorporation or the Act requires a
greater number of affirmative votes. Classes or series of shares shall not be
entitled to vote separately by voting group unless expressly required by the
Articles of Incorporation or as otherwise provided by the Act.
Section 11. Voting for Directors. The directors of the Corporation shall
be elected by a plurality of the votes cast by the shares entitled to vote in
the election at a meeting at which a quorum is present, unless otherwise
provided in the Articles of Incorporation or in an agreement valid under the
Act. The shareholders do not have a right to cumulate their votes for directors.
Section 12. Notice of Shareholder Business and Nominees for Election as
Directors. In addition to the requirements of any applicable securities laws
with respect to any proposal presented by a shareholder for action at a meeting
of the shareholders of the Corporation, any shareholder desiring to introduce
any new business before any meeting, annual or special, of the shareholders of
the Corporation shall be required to deliver timely notice to the Secretary of
the Corporation, in writing, containing the following information: the
shareholder's name and address; number of shares of each class of capital stock
owned by the shareholder; a description of the business to be introduced to the
shareholders; and any material interest, direct or indirect, that the
shareholder may have in the business described in the notice.
Any shareholder desiring to nominate a person for election as a director
of the Corporation shall be required to deliver timely notice to the Secretary
of the Corporation, in writing, containing such information as set forth in the
immediately preceding paragraph and such additional information concerning the
nominee for election as a director of the Corporation as is disclosed in the
proxy materials concerning all persons nominated by the Board of Directors for
election as a director of the Corporation.
With respect to an annual meeting of shareholders, to be timely, notice
must be delivered to the Secretary of the Corporation not later than the 45th
day prior to the first anniversary of the date the Corporation first mailed its
proxy materials for the preceding year's annual meeting of shareholders;
provided, however, that in the event that the date of the annual meeting of
shareholders is more than 30 days before the first anniversary date of the prior
years annual meeting of shareholders, to be timely, notice must be delivered not
later than the 10th day following the day on which public announcement of the
date of such meeting is first made by the Corporation. With respect to a special
meeting of shareholders, to be timely, notice must be delivered to the Secretary
of the Corporation not later than the 10th day following the day on which public
announcement of the date of such meeting is first made by the Corporation.
In no event shall the public announcement of an adjournment of a
shareholder meeting commence a new time period for the giving of a shareholder's
notice as described above. For
5
<PAGE>
purposes of this section, "public announcement" shall mean disclosure in a press
release reported on a national news service or in a document publicly filed by
the Corporation with the Securities and Exchange Commission pursuant to Section
13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended.
Failure of any shareholder to provide timely notice as set forth herein
shall authorize the presiding officer at the meeting of shareholders before
which such business is to be introduced or at which such nominee is to be
considered for election as a director to rule such proposal or nomination out of
order and not to be introduced or considered.
Section 13. Conduct of Meetings. The Chairman of the Board shall preside
at each meeting of shareholders or, in the absence or at the request of the
Chairman of the Board, the President shall preside. At the request of the
Chairman of the Board or the President, in both their absences, such other
officer as the Board of Directors shall designate shall preside at any such
meeting. In the absence of a presiding officer determined in accordance with the
preceding sentence, any person may be designated to preside at a shareholders
meeting by a plurality vote of the shares represented and entitled to vote at
the meeting. The Secretary or, in the absence or at the request of the
Secretary, any person designated by the person presiding at a shareholders
meeting shall act as secretary of such meeting.
So far as applicable, and unless otherwise determined by the presiding
officer, the order of business at each meeting of the shareholders shall be as
follows:
1. Call to order.
2. Proof of due notice of meeting or waiver thereof.
3. Call of roll or other method of ascertaining the amount of stock
entitled to voting rights that is represented in person or by proxy.
4. Declaration of presence or absence of a quorum.
5. Presentation and approval or other disposition of any unapproved
minutes.
6. Reports of officers.
7. Election of directors.
8. Unfinished business.
9. New business.
10. Adjournment.
6
<PAGE>
Any item of business not included in the foregoing order of business may be
taken up at such time during the meeting as may be determined by the officer
presiding at the meeting.
Section 14. Inapplicability of the North Carolina Control Share
Acquisition Act. The provisions of the North Carolina Control Share Acquisition
Act, being Article 9A of Chapter 55 of the North Carolina Business Corporation
Act, shall not be applicable to the Corporation.
ARTICLE IV
BOARD OF DIRECTORS
Section 1. General Powers. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the Corporation shall be
managed under the direction of, its Board of Directors, except as otherwise
provided in the Articles of Incorporation or permitted under the Act.
Section 2. Number, Term, Qualification, and Removal. The Board shall
consist of not less than nine nor more than thirteen members and the number of
members shall be fixed and determined from time to time by resolution of the
shareholders at any meeting thereof. The Directors shall be divided into three
classes, as nearly equal in number as possible, with respect to the time for
which they shall severally hold office. Directors of one of the classes first
elected shall hold office until the first annual meeting of shareholders
following their election; Directors of another of the classes first elected
shall hold office until the second annual meeting of shareholders following
their election; and Directors of the remaining class first elected shall hold
office until the third annual meeting of shareholders following their election.
At each annual meeting of the shareholders after the meeting at which the three
classes are first elected, the successors of the Directors of the class the
terms of which shall expire at the meeting shall be elected to hold office until
the third annual meeting of shareholders following their election, so that the
term of one class of Directors shall expire at each annual meeting of
shareholders.
Each Director shall hold office until his death, resignation, retirement,
removal, disqualification, or his successor is elected and qualified.
If the size of the Board is increased, the Directors elected by the
shareholders in the year of increase shall be elected to serve until the first,
second, or third annual meeting thereafter so that the three classes shall
remain as nearly equal as possible.
Directors need not be residents of the State of North Carolina or
shareholders of the Corporation.
Directors may be removed from office only for cause and only by a vote of
shareholders holding a majority of the shares entitled to vote at an election of
directors. However, unless the entire board is removed, an individual director
may not be removed when the number of shares voting against the proposal for
removal would be sufficient to elect a director if such shares could
7
<PAGE>
be voted cumulatively at an annual election. If any or all directors are so
removed, new directors may be elected at the same meeting.
Section 3. Vacancies. Except in those instances where the Articles of
Incorporation or the Act provides otherwise, the Board of Directors may fill a
vacancy on the Board of Directors. The term of a director elected to fill a
vacancy expires at the next shareholders' meeting at which directors are
elected.
Section 4. Compensation. The Board of Directors may provide for the
compensation of directors for their services as such and may provide for the
payment or reimbursement of any or all expenses reasonably incurred by them in
attending meetings of the Board or of any committee of the Board or in the
performance of their other duties as directors. Nothing herein contained,
however, shall prevent any director from serving the Corporation in any other
capacity or receiving compensation therefor.
Section 5. Executive Committee. The Board of Directors, by resolution
adopted by a majority of the number of directors fixed in the manner provided in
Section 2 of this Article IV, may designate 3 or more directors who shall
constitute the Executive Committee of the Corporation. The Executive Committee,
between meetings of the Board of Directors and subject to such limitations as
may be required by law or imposed by resolution of the Board of Directors, shall
have and may exercise all of the authority of the Board of Directors in the
management of the Corporation. The designation of the Executive Committee and
the delegation thereto of authority shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility or liability imposed
upon it or such director by law.
Meetings of the Executive Committee may be held at any time on call of the
President or its Chairman or any two members of the Committee. A majority of the
members shall constitute a quorum at all meetings. The Executive Committee shall
keep minutes of its proceedings and shall report its actions to the next
succeeding meeting of the Board of Directors.
Section 6. Other Committees. The Board of Directors may create one or more
additional committees and appoint members of the Board of Directors to serve on
them. Each committee must have two or more members, who serve at the pleasure of
the Board of Directors. The creation of a committee and appointment of members
of the Board of Directors to it must be approved by the greater of a majority of
all of the directors in office when the action is taken or the number of
directors required by the Articles of Incorporation for the taking of action by
the Board of Directors. The provisions of the Act and these Bylaws that govern
meetings, action without meetings, notice and waiver of notice, and quorum and
voting requirements of the Board of Directors, shall apply to committees and
their members as well. To the extent specified by the Board of Directors or in
the Articles of Incorporation, each committee may exercise the authority of the
Board of Directors, except as to the matters which the Act specifically excepts
from the authority of such committees. Nothing contained in this Section shall
preclude the Board of Directors from establishing and appointing any committee,
whether of directors or otherwise, not having or exercising the authority of the
Board of Directors.
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<PAGE>
ARTICLE V
MEETINGS OF DIRECTORS
Section 1. Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than this Bylaw immediately after, and at the
same place as, the annual meeting of the shareholders. In addition, the Board of
Directors may provide, by resolution, the date, time and place, either within or
without the State of North Carolina, for the holding of additional regular
meetings.
Section 2. Special Meetings. Special meetings of the Board of Directors
may be held at any date, time and place upon the call of the Chairman of the
Board or the President or of the Secretary acting under instructions from the
Chairman of the Board or the President, or upon the call of any 3 directors.
Special meetings may be held at any date, time and place and without special
notice by unanimous consent of the directors.
Section 3. Notice. The person or persons calling a special meeting of the
Board of Directors shall, at least 2 days before the meeting, give notice
thereof by any usual means of communication. Such notice may be communicated,
without limitation, in person; by telephone, telegraph, teletype or other form
of wire or wireless communication, or by facsimile transmission; or by mail or
private carrier. Written notice of a directors meeting is effective at the
earliest of the following:
(a) When received;
(b) Upon its deposit in the United States mail, as evidenced by the
postmark, if mailed with postage thereon prepaid and correctly
addressed;
(c) If by facsimile, by acknowledgment of the facsimile;
(d) On the date shown on the return receipt, if sent by registered or
certified mail, return receipt requested, and the receipt is signed
by or on behalf of the addressee; or
(e) On the date shown on the confirmation of delivery issued by a
private carrier, if sent by private carrier to the address of the
director last known to the Corporation.
Oral notice is effective when actually communicated to the director. Notice of
an adjourned meeting of directors need not be given if the time and place are
fixed at the meeting adjourning and if the period of adjournment does not exceed
10 days in any one adjournment. The notice of any meeting of directors need not
describe the purpose of the meeting unless otherwise required by the Act or the
Articles of Incorporation.
9
<PAGE>
Section 4. Waiver of Notice. A director may waive any notice required by
the Act, the Articles of Incorporation or these Bylaws before or after the date
and time stated in the notice. The waiver must be in writing, signed by the
director entitled to the notice, and filed with the minutes or corporate
records, except that, notwithstanding the foregoing requirement of written
notice, a director's attendance at or participation in a meeting waives any
required notice to the director of the meeting unless the director at the
beginning of the meeting (or promptly upon the director's arrival) expressly
objects to holding the meeting or transacting business at the meeting and does
not thereafter vote for or assent to action taken at the meeting.
Section 5. Quorum. A majority of the number of directors prescribed
pursuant to Section 2 of Article IV, or if no number is prescribed, the number
of directors in office immediately before the meeting begins, shall constitute a
quorum for the transaction of business at any meeting of the Board of Directors,
but if less than such majority is present at a meeting, a majority of directors
present may adjourn the meeting from time to time without further notice.
Section 6. Manner of Acting. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, except as otherwise provided by the Act. Notwithstanding the
foregoing, the vote of a majority of all of the directors in office when the
action is taken shall be required for the creation of a committee and the
appointment of members of the Board of Directors to it.
Section 7. Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board of Directors or a committee of the Board of
Directors when corporate action is taken shall be deemed to have assented to the
action taken unless (i) the director expressly objects at the beginning of the
meeting (or promptly upon the director's arrival) to holding it or transacting
business at the meeting, (ii) the director's contrary vote is recorded or such
director's dissent or abstention from the action shall be entered in the minutes
of the meeting or (iii) the director shall file written notice of dissent or
abstention to such action with the presiding officer of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
Secretary of the Corporation immediately after adjournment of the meeting. Such
right of dissent or abstention shall not apply to a director who voted in favor
of the action taken.
Section 8. Conduct of Meetings. The Chairman of the Board shall preside at
all meetings of the Board of Directors; provided, however, that in the absence
or at the request of the Chairman of the Board, or if there shall not be a
person holding such office, the person selected to preside at a meeting of
directors by a vote of a majority of the directors present shall preside at such
meeting. The Secretary, or in the absence or at the request of the Secretary,
any person designated by the person presiding at a meeting of the Board of
Directors, shall act as secretary of such meeting.
So far as applicable, and unless otherwise determined by the person
presiding at such meeting, the order of business at each meeting of the Board of
Directors shall be as follows:
1. Call to order.
10
<PAGE>
2. Proof of notice of meeting or waiver thereof.
3. Determination of presence or absence of a quorum.
4. Presentation and approval or other disposition of any unapproved
minutes.
5. Reports of officers.
6. Unfinished business.
7. New business.
8. Adjournment.
Any item of business not included in the foregoing order of business may be
taken up at such time during the meeting as the directors may determine.
Section 9. Action Without a Meeting. Any action required or permitted to
be taken at a Board of Directors meeting may be taken without a meeting if the
action is taken by all members of the Board. The action must be evidenced by one
or more written consents signed by each director before or after such action,
describing the action taken, which consent or consents shall be included in the
minutes or filed with the corporate records. Action taken as provided in this
Section is effective when the last director signs the consent, unless the
consent specifies a different effective date. A consent signed pursuant to this
Section has the effect of a meeting vote and may be described as such in any
document.
Section 10. Participation Other Than in Person. The Board of Directors may
permit any or all directors to participate in a regular or special meeting by,
or conduct the meeting through the use of, any means of communication by which
all directors participating may simultaneously hear each other during the
meeting. A director participating in a meeting by this means is deemed to be
present in person at such meeting.
ARTICLE VI
OFFICERS
Section 1. Officers of the Corporation. The officers of the Corporation
may include a Chairman of the Board, a President, one or more Vice Presidents, a
Secretary, a Treasurer, and such other officers, assistant officers and agents
as may be appointed from time to time by or under the authority of the Board of
Directors. The same individual may simultaneously hold more than one office in
the Corporation, but no individual may act in more than one capacity where
action of two or more officers is required. The title of any officer may include
any additional designation descriptive of such officer's duties as the Board of
Directors may prescribe.
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Section 2. Appointment and Term. The officers of the Corporation shall be
appointed by the Board of Directors or by a duly appointed officer authorized by
the Board of Directors to appoint one or more officers or assistant officers;
provided, however, that no officer may be authorized to appoint the Chairman of
the Board, or the President. Each officer shall hold office until his or her
death, resignation, retirement, removal or disqualification or until such
officer's successor is elected and qualified.
Section 3. Compensation. The compensation of all officers of the
Corporation shall be fixed by or under the authority of the Board of Directors.
No officer shall be prevented from receiving such salary by reason of the fact
that such officer is also a director.
Section 4. Resignation and Removal of Officers. An officer may resign at
any time by communicating such officer's resignation to the Corporation. A
resignation is effective when it is communicated unless it specifies in writing
a later effective date. If a resignation is made effective at a later date and
the Corporation accepts the future effective date, the Board of Directors may
fill the pending vacancy before the effective date if the Board of Directors
provides that the successor does not take office until the effective date. The
Board of Directors, by the affirmative vote of a majority of its members, may
remove the Chairman of the Board, or the President whenever in its judgment the
best interests of the Corporation would be served thereby. In addition, the
Board of Directors or an officer authorized by the Board of Directors may remove
any other officer at any time with or without cause.
Section 5. Contract Rights of Officers. The appointment of an officer does
not itself create contract rights. An officer's removal does not itself affect
the officer's contract rights, if any, with the Corporation, and an officer's
resignation does not itself affect the Corporation's contract rights, if any,
with the officer.
Section 6. Bonds. The Board of Directors may by resolution require any
officer, agent or employee of the Corporation to give bond to the Corporation,
with sufficient sureties, conditioned on the faithful performance of the duties
of the applicable office or position, and to comply with such other conditions
as may from time to time be required by the Board of Directors.
Section 7. Chairman of the Board. The Board of Directors may appoint from
among its members an officer designated as the Chairman of the Board, but the
appointment of a Chairman of the Board shall not be required. If a Chairman of
the Board shall be appointed, then the Chairman of the Board shall, when
present, preside at meetings of the shareholders and of the Board of Directors.
In general the Chairman of the Board shall perform all duties incident to the
position of chairman of the board and shall have such other duties and authority
as may be prescribed by the Board of Directors or these Bylaws from time to
time.
Section 8. President. The Board of Directors may appoint a President, who
shall be the principal executive officer of the Corporation and, subject to the
control of the Board of Directors, shall in general supervise and control all of
the business and affairs of the Corporation. In
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<PAGE>
addition, in the absence of the Chairman of the Board or in the event of the
Chairman's death or inability or refusal to act, the President shall perform the
duties and exercise the powers of that office. The Board of Directors shall, if
it deems such action necessary or desirable, designate the officer of the
Corporation who is to perform the duties of President in the event of such
officer's absence or inability to act. In general the President shall perform
the duties incident to the office of the president or as may be prescribed by
the Board of Directors or these Bylaws from time to time.
Section 9. Vice Presidents. In the absence of the President or in the
event of the President's death, inability or refusal to act, the Vice
Presidents, in the order of their length of service as such, unless otherwise
determined by the Board of Directors, shall have the authority and perform the
duties of the President. In addition, each Vice President shall perform such
other duties and shall have such other powers as are normally incident to the
office of vice president or as shall be prescribed by the President, the Board
of Directors or these Bylaws from time to time.
Section 10. Secretary. The Secretary shall: (a) keep the minutes of
meetings of the shareholders and of the Board of Directors in one or more books
provided for that purpose; (b) have the responsibility and authority to maintain
and authenticate the records of the Corporation; (c) see that all notices are
duly given in accordance with the provisions of these Bylaws or as required by
law; (d) be custodian of the corporate records and of the seal of the
Corporation and see that the seal of the Corporation is affixed to all documents
the execution of which on behalf of the Corporation under its seal is duly
authorized; (e) keep a register of the post office address of each shareholder
which shall be furnished to the Secretary by such shareholder; (f) sign with the
Chairman of the Board or President certificates for shares of the Corporation,
the issuance of which shall have been authorized by resolution of the Board of
Directors; (g) have general charge of the stock transfer books of the
Corporation; and (h) in general perform all duties incident to the office of the
Secretary and such other duties as from time to time may be assigned to the
Secretary by the President, the Board of Directors or these Bylaws from time to
time.
Section 11. Treasurer. The Treasurer shall: (a) have charge and custody of
all funds and securities of the Corporation; receive and give receipts for
moneys due and payable to the Corporation from any source whatsoever, and
deposit all such moneys in the name of the Corporation in such banks, trust
companies or other depositaries as shall be selected in accordance with the
provisions of Section 4 of Article VII; and (b) in general perform all of the
duties incident to the office of Treasurer and such other duties as from time to
time may be assigned to the Treasurer by the President, the Board of Directors
or these Bylaws from time to time.
Section 12. Assistant Vice Presidents, Secretaries and Treasurers. The
Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers, if
any, shall, in the event of the death or inability or refusal to act of any Vice
Presidents, the Secretary or the Treasurer, respectively, have all the powers
and perform all of the duties of those offices, and they shall, in general,
perform such duties as shall be assigned to them by any Vice President, the
Secretary or the Treasurer, respectively, or by the President of the Corporation
or the Board of Directors. The
13
<PAGE>
Assistant Secretaries, when authorized by the Board of Directors, may sign
documents with the Chairman of the Board or the President or any Vice President.
ARTICLE VII
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instruments in the name of and on behalf of the Corporation, and such authority
may be general or confined to specific instances. The Chairman of the Board and
the President and any Vice President shall have the authority to execute deeds,
mortgages, bonds, contracts or other instruments in the name of and on behalf of
the Corporation, except in those cases where execution has been delegated
expressly by the Board of Directors to some other officer or agent of the
Corporation. Any resolution of the Board of Directors authorizing the execution
of any contract or other document by the proper officers of the Corporation or
by the officers of the Corporation generally and not specifying particular
officers shall be deemed to authorize such execution by the Chairman of the
Board, the President or any Vice President, or by any other officer if such
execution is within the scope of the duties of such other officer.
Section 2. Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
Section 3. Checks and Drafts. All checks, drafts or other orders for the
payment of money and notes or other evidences of indebtedness issued in the name
of the Corporation shall be signed by such officer or officers, agent or agents
of the Corporation and in such manner as shall from time to time be determined
by resolution of the Board of Directors.
Section 4. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositaries as may be selected by or under the
authority of the Board of Directors.
ARTICLE VIII
SHARES AND THEIR TRANSFER
Section 1. Shares. Shares of the Corporation may but need not be
represented by certificates. When shares are represented by certificates, the
Corporation shall issue such certificates in such form as shall be required by
the Act and as determined by the Board of Directors to every shareholder for the
fully paid shares owned by such shareholder. Each certificate shall be signed
by, or shall bear the facsimile signature of, the Chairman of the Board or the
President and the Secretary or an Assistant Secretary of the Corporation and may
bear the corporate seal of the Corporation or its facsimile. All certificates
for the Corporation's shares
14
<PAGE>
shall be consecutively numbered or otherwise identified. The name and address of
the person to whom the shares represented by a certificate are issued, with the
number of shares and date of issue, shall be entered on the stock transfer books
of the Corporation. Such information may be stored or retained on discs, tapes,
cards or any other approved storage device relating to data processing
equipment; provided, however, that such device shall be capable of reproducing
all information contained therein in legible and understandable form, for
inspection by shareholders or for any other corporate purpose.
When shares are not represented by certificates, then within a reasonable
time after the issuance or transfer of such shares, the Corporation shall send
the shareholder to whom such shares have been issued or transferred a written
statement of the information required by the Act to be on certificates.
Section 2. Stock Transfer Books and Transfer of Shares. The Corporation or
its agent shall keep a book or set of books to be known as the stock transfer
books of the Corporation, containing the name of each shareholder of record,
together with such shareholder's address and the number and class or series of
shares held by such shareholder. Transfer of shares of the Corporation
represented by certificates shall be made on the stock transfer books of the
Corporation only upon surrender of the certificates for the shares sought to be
transferred by the holder of record thereof or by such holder's duly authorized
agent, transferee or legal representative, who shall furnish proper evidence of
authority to transfer. All certificates surrendered for transfer shall be
canceled before new certificates for the transferred shares shall be issued.
Section 3. Lost Certificates. The Board of Directors or an officer so
authorized by the Board may authorize the issuance of a new certificate in place
of a certificate claimed to have been lost, destroyed or mutilated, upon receipt
of an affidavit of such fact from the persons claiming the loss or destruction
and any other documentation satisfactory to the Board of Directors or such
officer. At the discretion of the party reviewing such claim, any such claimant
may be required to give the Corporation a bond in such sum as it may direct to
indemnify the Corporation against loss from any claim with respect to the
certificate claimed to have been lost or destroyed.
Section 4. Holder of Record. Except as otherwise required by the Act, the
Corporation may treat the person in whose name the shares stand of record on its
books as the absolute owner of the shares and the person exclusively entitled to
receive notification and distributions, to vote, and to otherwise exercise the
rights, powers and privileges of ownership of such shares.
Section 5. Transfer Agent and Registrar; Regulations. The Corporation may,
if and whenever the Board of Directors so determines, maintain in the State of
North Carolina or any other state of the United States, one or more transfer
offices or agencies and also one or more registry offices, which offices and
agencies may establish rules and regulations for the issue, transfer and
registration of certificates. No certificates for shares of stock of the
Corporation in respect of which a Transfer Agent and Registrar shall have been
designed shall be valid unless countersigned by such Transfer Agent and
registered by such Registrar. The Board may also
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<PAGE>
make such additional rules and regulations as it may deem expedient concerning
the issue, transfer and registration of certificates.
ARTICLE IX
INDEMNIFICATION
Section 1. General. In addition to the indemnification provided in
Sections 55-8-50 to 55-8-56 of the General Statutes of North Carolina, the
Corporation shall indemnify its directors, officers, employees or agents against
liability and expenses, including reasonable attorneys' fees, arising out of
their status as such or their activities in any of the foregoing capacities;
provided, however, that the Corporation shall not indemnify a person against
liability or expenses he or she may incur on account of his or her activities
which were at the time taken known or believed by him or her to be clearly in
conflict with the best interests of the Corporation. The Corporation shall
likewise and to the same extent indemnify any person who, at the request of the
Corporation, is or was serving as a director, officer, partner, trustee,
employee or agent of another foreign or domestic corporation, partnership, joint
venture, trust or other enterprise or as a trustee or administrator under an
employee benefit plan. The Corporation shall also indemnify any such person for
reasonable costs, expenses, and attorneys' fees in connection with the
enforcement of rights to indemnification granted herein, if it is determined, by
judicial decision or by agreement of the parties, that such person is entitled
to indemnification hereunder.
Section 2. Determination Requirement. Any indemnification under Section 1
of this Article IX shall be paid by the Corporation in any specific case only
after a determination that the person did not act in a manner, at the time the
activities were taken, known or believed by him or her to be clearly in conflict
with the best interests of the Corporation. Such determination shall be made (a)
by the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to such action, suit or proceeding, or (b) if such quorum
is not obtainable, or, even if obtainable, a quorum of disinterested directors
so directs, by independent legal counsel in a written opinion, or (c) by the
vote of a majority of all of the voting shares other than those owned or
controlled by the adversely interested directors, or by a unanimous vote of all
of the voting shares, or (d) by a court of competent jurisdiction.
Section 3. Expenses. Expenses incurred by a director or officer in
defending a civil or criminal action, suit or proceeding may be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director or
officer to repay such amount unless it shall ultimately be determined that he or
she is entitled to be indemnified against such expenses by the Corporation.
Section 4. Constituent Corporations. For purposes of this Article IX,
references to "the Corporation" include all constituent corporations absorbed in
a consolidation or merger as well as the resulting or surviving corporation so
that any person who is or was a director or officer of such a corporation or is
or was serving at the request of such constituent corporation as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise shall stand
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in the same position under the provisions of this Article IX with respect to the
resulting or surviving corporation as he or she would if he or she had served
the resulting or surviving corporation in the same capacity.
ARTICLE X
GENERAL PROVISIONS
Section 1. Fiscal Year. The fiscal year of the Corporation shall begin on
the Monday nearest to October 1 and shall end on the Sunday nearest to September
30 in each year.
Section 2. Distributions. The Board of Directors may from time to time
authorize, and the Corporation may pay or distribute, dividends or other
distributions on its outstanding shares in such manner and upon such terms and
conditions as are permitted by the Articles of Incorporation or the Act.
Section 3. Seal. The Board of Directors shall provide a corporate seal
which shall be circular in form and shall have inscribed thereon the name of the
Corporation and the word "Seal".
Section 4. Amendments. Except as hereinafter otherwise provided, these
Bylaws may be amended or repealed and new Bylaws may be adopted by the
affirmative vote of a majority of the Directors then holding office at any
regular or special meeting of the Board of Directors.
The Board of Directors shall have no power to adopt a bylaw:
(a) requiring more than a majority of the voting shares for a quorum at
a meeting of shareholders or more than a majority of the votes cast
to constitute action by the shareholders, except where higher
percentages are required by law;
(b) providing for the management of the Corporation otherwise than by
the Board of Directors or its Executive Committee; or
(c) increasing or decreasing the number of Directors.
No bylaw adopted or amended by the shareholders may be altered or repealed by
the Board of Directors. The affirmative vote of two-thirds of the total number
of voting shares outstanding shall be required to amend, alter, change, or
repeal Section 2 of Article IV or this Section 4 of Article X of these Bylaws.
17
EXHIBIT 11
RUDDICK CORPORATION
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
SEPTEMBER 27, SEPTEMBER 28
1998 1997
-------------- -------------
<S> <C> <C>
NET INCOME PER SHARE COMPUTED AS FOLLOWS:
BASIC:
1. Net Income available to common shareholders $ 46,771,696 $ 47,730,519
============== =============
2. Weighted Average Common Shares Outstanding -
Basic 46,667,416 46,542,505
3. Basic net income per share (Item 1 divided by
Item 2) $ 1.00 $ 1.02
============== =============
DILUTED:
1. Net Income available to common shareholders $ 46,771,696 $ 47,730,519
============== =============
2. Weighted Average Common Shares Outstanding -
Basic 46,667,416 46,542,505
3. Weighted potential shares under stock options
for the periods using the Treasury Stock
Method. 297,007 282,964
4. Weighted Average Common Shares Outstanding -
Diluted Common Equivalent Shares Outstanding
============== =============
46,964,423 46,825,469
============== =============
5. Net Income Per Share (Item 1 divided by Item
4) $ 1.00 $ 1.02
============== =============
</TABLE>
EXHIBIT 13
RUDDICK CORPORATION
1998 ANNUAL REPORT TO SHAREHOLDERS:
CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - FISCAL 1998 COMPARED TO FISCAL 1997
For fiscal year 1998, consolidated sales of $2.5 billion increased 8% over the
$2.3 billion reported in fiscal 1997. Consolidated net income of $46.8 million
fell 2% from the $47.7 million reported last year. Basic and diluted earnings
per share were $1.00 in fiscal 1998 compared to $1.02 in fiscal 1997. 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. The decrease in net income for
fiscal 1998 was primarily due to lower operating profits at American & Efird
(A&E), the Company's industrial thread subsidiary, which related largely to its
Korean operations, not fully offset by the increased operating profit of Harris
Teeter, the retail grocery subsidiary. Further, in fiscal 1998, the Company's
effective income tax rate rose to 33.8% (33.0% in 1997), driven by reduced tax
benefits from Company owned life insurance (COLI).
HARRIS TEETER, INC. Sales advanced by 10% in fiscal 1998 to $2.1 billion.
Despite the highly competitive environment for the supermarket industry in
general, Harris Teeter sales for stores in operation in both periods increased
by 4.8% in fiscal 1998, compared to .1% in fiscal 1997. Sales increases were due
to the 7% expansion in store square footage over the course of the year and the
favorable comparable store sales growth which was primarily attributable to
successful promotional and merchandising activities related to the Very
Important Customer (VIC) loyalty card program. Grocery sales grew by 10% and
accounted for 49% of the sales increase. Dairy, meat, produce and frozen
products had sales increases ranging from 8% to 14% and accounted for 39% of the
sales increase. Gross profit increased by 11% to $581.3 million in fiscal 1998
from $525.4 million in the prior year. Operating profit expanded by 14%, to
$52.1 million in fiscal 1998 from $45.7 million in fiscal 1997. These results
were primarily due to the very specific productivity enhancement and cost
management initiatives put in place during 1997 and 1998, and the higher sales
level in fiscal 1998.
At the end of fiscal 1998, 144 stores were in operation, compared to 138 a
year ago. During the year, ten new stores were opened, one of which was a
replacement, and four less profitable stores were closed. A similar number of
store openings planned for fiscal 1999 will include two stores in Jacksonville,
Florida, the company's first operations in that state.
AMERICAN & EFIRD, INC. Sales fell by 4% from fiscal 1997 to $355.2 million. This
sales decline was primarily due to a relative softness in demand for thread in
U.S. markets and a reduction in exports, offset in part by strong growth in
A&E's foreign sales. In fiscal 1997, sales growth was driven by good market
conditions in most major industries served by A&E, while in fiscal 1998 U.S.
sales were impacted by the shift of business to Latin America and Mexico, the
growth of low-priced Asian imports and a shift in consumer buying trends to more
designer apparel, resulting in fewer units sold. In A&E's foreign operations,
sales increases were achieved in all markets except Korea and Hong Kong, and
were especially strong in Mexico and Central America.
In fiscal 1998, the sales decline was primarily in industrial sewing thread,
while consumer thread and notions sales increased. In addition to the
anticipated continuation of growth in international sales, A&E expects that its
ability to meet the increasing demands of its customers for top quality, high
performance industrial thread in both the apparel and home furnishings markets
should provide an opportunity for future growth. Gross profit declined by 5% to
$101 million in fiscal 1998 from $106.8 million in the prior year as a result of
lower sales and the pressure on margins in the very competitive environment.
Operating profit fell by 14% to $42.1 million in fiscal 1998 compared to $49.1
million in the prior year and was negatively impacted by the decrease in volume,
the deterioration of business conditions in Korea and costs associated with the
withdrawal from that country. In total, Korean operations and withdrawal reduced
operating profit for the fiscal year by $5.4 million, or $3.8 million after tax.
In addition to the $3.1 million pre-tax charge for the costs of withdrawal,
Korean losses were affected by currency translation, bad debt write-offs and
inventory adjustments. A&E Korea's sales were $3.8 million in nine months in
1998 and $5.8 million in 1997. Further, A&E's profitability declined as improved
manufacturing productivity from the completion of the integration of Threads USA
was more than offset by the unfavorable effects of reduced manufacturing
schedules. A new customer support center, which opened at year end 1998,
consolidated all customer interface functions, including sales support and
administration, customer service, credit and marketing. A&E expects further
streamlining of its distribution process and continued improvements in customer
service during fiscal 1999.
Excluding Korea, sales by foreign operations made up 25% of A&E's total sales
and 8% of its operating profit in
20
<PAGE>
fiscal 1998. While foreign sales and profits were still not material to the
Company's consolidated results of operations, international sales continued to
build significantly. NAFTA and the Caribbean Basin Initiative continued to drive
strong performances in Canada, Mexico and the Caribbean, and apparel
manufacturing continued to increase in Latin America. The A&E majority-owned
joint venture in China also evidenced growth.
RESULTS OF OPERATIONS - FISCAL 1997 COMPARED TO FISCAL 1996
For fiscal year 1997, consolidated sales of $2.3 billion increased 7% over the
$2.1 billion reported in fiscal 1996. Consolidated net income of $47.7 million
was up 12% from the $42.8 million reported last year. Basic and diluted earnings
per share were $1.02 for fiscal 1997, an increase of 11% when compared to $.92
reported in fiscal 1996. Fiscal 1997 consolidated operating profit increased 14%
due to record profitability at American & Efird.
In fiscal 1997, the 12% increase in net income was achieved despite a rise in
the Company's effective income tax rate to 33% (31% in 1996), driven by a
combination of reduced tax benefits from COLI and higher relative pre-tax income
from operations.
HARRIS TEETER, INC. Sales advanced by 5% in fiscal 1997. In an intensely
competitive environment, which showed no signs of abating, for the supermarket
industry in general, Harris Teeter sales for stores in operation in both periods
were marginally ahead by .1% in fiscal 1997, compared to 3.9% in fiscal 1996.
Sales increases were primarily due to an 8% expansion in store square footage
over the course of the year, increased advertising and promotion and the
successful system-wide rollout of the new customer loyalty card introduced in
1996. Grocery sales grew by 4% and accounted for 36% of the sales increase.
Dairy, meat, produce and frozen products had sales increases ranging from 4% to
10% and accounted for 44% of the sales increase. Operating profit fell by 6% to
$45.7 million in fiscal 1997, primarily as a result of expenses related to the
opening of a record number of new stores, as well as several major store
remodels during the year and higher fixed costs associated with those stores.
These costs were partially offset by greater sales volume and a favorable
product mix of higher margin items.
At the end of fiscal 1997, 138 stores were in operation, compared to 134 at
the end of fiscal 1996. During fiscal 1997 thirteen new stores were opened, five
of which were replacements, and four additional, less profitable stores were
sold or closed. During fiscal 1997, charges to a $5.3 million reserve
established in 1993 for the closing of specified stores to be replaced, which
stores have been closed, totaled $1.3 million, for a cumulative total of $4.4
million for all periods to date.
AMERICAN & EFIRD, INC. Sales increased 19% over fiscal 1996. This sales growth
was primarily due to the inclusion of a full year's sales from the June 1996
acquisition of certain assets of Threads USA, moderate additions to business
with existing U.S. customers and an increase in foreign sales. Further, sales
growth was driven by good market conditions in most major industries served by
A&E, while during the prior year relative weakness in thread sales was related
to weak apparel sales at retail. Sales increases were primarily in industrial
sewing thread, and consumer thread and notions sales declined modestly. A&E
expected that its ability to meet the increasing demands of its customers for
top quality, high performance industrial thread in both the apparel and home
furnishings markets would provide an opportunity for significant future growth.
Operating profit advanced by 42% to $49.1 million in fiscal 1997 compared to
$34.7 million in the prior year. Operating profit was positively impacted by
additional sales volume and the successful integration of the Threads USA
business into existing facilities, which resulted in improved operating
efficiency, by the renovation and upgrading of a Threads USA manufacturing
facility and by the improved performance in a number of foreign operations.
The integration of Threads USA was near completion, including the
consolidation of manufacturing and administrative operations, customer
conversion and sales force reorganization. A new customer support center was
also planned, with construction expected to begin by early 1998.
Sales by foreign operations made up 20% of A&E's total sales and 14% of its
operating profit. While foreign sales and profits were still not material to the
Company's consolidated results of operations, they continued to build
significantly. NAFTA and the Caribbean Basin Initiative continued to drive
strong performances in Mexico and the Caribbean, due to the growth of apparel
manufacturing in Central and South America. The A&E majority-owned joint venture
in China also evidenced strong growth, and export sales continued to expand.
Slightly offsetting such improvements were weak financial results in the Korean
and Malaysian operations, due to poor economic conditions and currency
devaluation. Lastly, A&E had begun the process of establishing operations in
India.
OTHER EFFECTS ON RESULTS OF OPERATIONS
During the second fiscal 1996 quarter, the Company elected to begin paying
directly to its ESOP employee-shareholders the cash dividends on ESOP shares.
Favorable tax treatment of the ESOP dividend pass-through under the applicable
income tax statutes along with favorable tax attributes of COLI reduced the
effective income tax rate of the Company. The favorable tax attributes of COLI,
however, were significantly diminished as of January 1, 1996 as a
21
<PAGE>
result of federal legislation which will phase out interest deductions
completely on policy loans by January 1, 1999.
On January 23, 1996, certain assets of Jordan Graphics, Inc. were sold to The
Reynolds and Reynolds Company. The revenues of the discontinued operations for
the fiscal year prior to the sale were $17.3 million (16 weeks). The operating
results for fiscal year 1996 were not significant. Substantially all the value
of assets of Jordan was realized during fiscal year 1996 by collection or sale.
The disposition had no significant impact on the consolidated earnings or the
financial condition of Ruddick.
CAPITAL RESOURCES AND LIQUIDITY
Ruddick Corporation is a holding company which, through its wholly owned
subsidiaries, American & Efird, Inc. and Harris Teeter, Inc., is engaged in the
primary businesses of industrial sewing thread manufacture and distribution, and
regional supermarket operations, respectively. Ruddick has no material
independent operations, nor material assets, other than the investments in its
operating subsidiaries. Ruddick provides a variety of services to its
subsidiaries and is dependent upon income and upstream dividends from its
subsidiaries. There exist no restrictions on such dividends, which are
determined as a percentage of net income of each subsidiary.
The Company strives to achieve a goal of earning at least a 15% return on
beginning shareholders' equity. In fiscal 1998, the return on beginning equity
was 12.3%, compared to 13.8% in the prior year. At the same time, the Company
seeks to limit long-term debt such that it constitutes no more than 40% of
capital employed, which includes long-term debt, minority interest and
shareholders' equity. As of the end of fiscal 1998, this percentage was 31.6%, a
decrease from last year's 33.1%.
The Company's principal source of liquidity has been revenue from operations.
The Company also has the ability to borrow up to an aggregate of $100 million
under established revolving lines of credit with three banks. The maximum amount
outstanding under these credit facilities during fiscal 1998 was $86.7 million,
and $36.0 million was outstanding at year end. The majority of the borrowings
under Ruddick's revolving credit facilities were used for capital expenditures.
Borrowings and repayments under these revolving credit facilities are of the
same nature as short-term credit lines; however, due to the nature and terms of
the agreements allowing up to five years for repayment, all borrowings under
these facilities are classified as long-term debt.
On April 15, 1997, the Company executed unsecured 7.72% Senior Notes in the
amount of $50 million, due April 15, 2017, and an additional uncommitted $50
million Private Shelf Facility with a major insurance company. Subsequently, on
July 15, 1997, the Company executed unsecured 7.55% Senior Notes in the amount
of $50 million due July 15, 2017, under the Private Shelf Facility. Proceeds
from these notes were used to repay an 8.57% Term Note and reduce the amount
borrowed under the revolving lines of credit, which borrowings and term debt had
been primarily undertaken for capital expenditures.
Working capital as of the fiscal years ended 1998, 1997 and 1996 was $87.3
million, $88.9 million and $65.1 million, respectively. The decrease of $1.6
million in fiscal 1998 was primarily the result of a rise in accounts payable
and other accrued liabilities approximately commensurate with the increase in
inventories, corresponding to sales levels. The current ratio was 1.4 at both
September 27, 1998 and September 28, 1997.
Covenants in certain of the Company's long-term debt agreements limit the
total indebtedness that the Company may incur. The Company remains well within
such covenants. Management believes that the limit on indebtedness does not
significantly restrict the Company's liquidity and that such liquidity is
adequate to meet foreseeable requirements.
In fiscal 1998, capital expenditures were $95.5 million. In fiscal 1999,
capital expenditures are expected to be not more than $130 million. For further
modernization and expansion, American & Efird expects to spend $31 million. In
the very competitive Southeast U.S. grocery market, Harris Teeter has capital
expenditure plans totaling $99 million. The Harris Teeter estimates include the
fiscal 1999 opening of nine new stores. New store locations include six in North
Carolina, one in northern Virginia and two in Jacksonville, Florida, a new
market for Harris Teeter and its sixth state. Management expects that internally
generated funds, supplemented by available borrowing capacity, will be adequate
to finance such expenditures. The expansion of Harris Teeter's two distribution
centers that began in 1997 to increase capacity for future growth and improve
distribution efficiency was completed in mid 1998.
OTHER MATTERS
The Company is in the process of the modification or conversion of Company
computer (IT) systems, as well as non-IT systems which have embedded technology
such as microcontrollers, 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 April 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
22
<PAGE>
the requirements of the Year 2000 remediation plan. At both Harris Teeter and
A&E, the assessment and technical plan development phases have been completed
and the companies are at various levels of completion of the remediation
implementation and testing phases. As of September 27, 1998, Harris Teeter
remediation was 70% complete and A&E remediation was 97% complete in the U.S. in
their respective mission-critical, IT and non-IT systems. A&E has foreign
operations which are not material to the Company as a whole; and still, the
programming for just the Latin American IT system model is 93% complete and all
foreign entities are scheduled for completion between December 31, 1998 and June
30, 1999. At both Harris Teeter and A&E, the integration testing of most U.S.
systems is already underway and testing will proceed on a priority basis
throughout much of 1999. 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 $2.9 to $3.1 million. The combined companies have spent
$1.2 million prior to September 27, 1998, and expect to spend $1.7 million more
in fiscal year 1999 in order to complete the Year 2000 remediation and testing.
Maintenance and modification costs will be expensed as incurred, while the costs
of new software will be capitalized and amortized over the software's useful
life. The Company has formal correspondence programs with its major suppliers
and thread customers, of which no single customer exceeds 8% of A&E sales, for
inquiry, monitoring and assessing 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 is currently developing contingency plans to address the
potential worst-case scenarios which could conceivably evolve in
mission-critical systems, presumably as a result of the lack of readiness of
outside parties. This will include temporary and manual procedures to follow in
the event of a system or subsystem failure. In reference to the supply of goods
and services by vendors, the contingency plans will largely take into account
the vendors' progress to adequately address the Year 2000 issue. The contingency
plans are scheduled to be completed by the end of the second calendar quarter of
1999.
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 COLI as of January 1, 1999, the Company expects that its effective
income tax rate will rise to a level slightly below statutory rates
domestically. The Company has recorded income tax reductions of approximately
$24 million cumulatively as the result of COLI interest deductions from October
1993 through fiscal year ending September 27, 1998. The Internal Revenue
Service, on a comprehensive national level, is evaluating its 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.
The foregoing discussion contains some forward-looking statements about the
Company's financial condition and results of operations, which are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those reflected in the forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
reflect management's judgment only as of the date hereof. The Company undertakes
no obligation to publicly revise these forward-looking statements to reflect
events and circumstances that arise after the date hereof.
Factors that might cause the Company's actual results to differ materially
from those anticipated in forward-looking statements include the following:
o 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,
o changes in the competitive environment, including increased competition in
our primary geographic markets, the entry of new competitors and consolidation
in the supermarket industry,
o economic or political changes in the countries in which we operate
overseas or adverse trade regulations,
o the passage of future tax legislation or any regulatory position which
prevails, if any, that could have an adverse impact on the tax benefits of the
ESOP dividends and the COLI,
o management's ability to accurately predict the adequacy of the Company's
present liquidity to meet future requirements,
o changes in the Company's capital expenditures, new store openings and
store closings, and
o changes in the availability of computer programming resources required to
complete the Year 2000 compliance effectively.
23
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 27 SEPTEMBER 28
(Dollars in thousands) 1998 1997
- ----------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash and Cash Equivalents $16,668 $17,150
Accounts Receivable, Less Allowance For Doubtful
Accounts: 1998, $2,046; 1997, $2,005 76,948 77,852
Inventories 211,404 196,049
Other Current Assets 27,733 32,249
- ----------------------------------------------------------------------------------
Total Current Assets 332,753 323,300
- ----------------------------------------------------------------------------------
Property
Land and Buildings 166,334 127,600
Machinery and Equipment 568,078 522,627
Leasehold Improvements 146,926 130,078
Assets Under Capital Leases 1,920 1,920
- ----------------------------------------------------------------------------------
Total, at Cost 883,258 782,225
Accumulated Depreciation and Amortization 369,470 315,666
- ----------------------------------------------------------------------------------
Property, Net 513,788 466,559
- ----------------------------------------------------------------------------------
Investments and Other Assets
Investments 17,675 27,529
Other Assets 67,402 67,855
- ----------------------------------------------------------------------------------
Total Assets $931,618 $885,243
==================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes Payable $2,411 $8,100
Current Portion of Long-term Debt 571 575
Dividends Payable 3,726 3,727
Accounts Payable 146,149 139,085
Federal and State Income Taxes 5,456 5,758
Accrued Compensation 28,033 28,349
Accrued Interest 19,602 21,217
Other Accrued Liabilities 39,472 27,596
- ----------------------------------------------------------------------------------
Total Current Liabilities 245,420 234,407
- ----------------------------------------------------------------------------------
Non-Current Liabilities
Long-term Debt 191,360 189,919
Deferred Income Taxes 55,906 52,447
Other Liabilities 23,694 23,376
Minority Interest 4,513 4,587
- ----------------------------------------------------------------------------------
Commitments and Contingencies
- ----------------------------------------------------------------------------------
Shareholders' Equity
Common Stock - Shares Outstanding:
1998 - 46,554,591; 1997 - 46,599,301 54,686 56,779
Retained Earnings 358,328 326,488
Cumulative Translation Adjustments (2,289) (2,760)
- ----------------------------------------------------------------------------------
Shareholders' Equity 410,725 380,507
- ----------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $ 931,618 $ 885,243
==================================================================================
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these balance sheets.
24
<PAGE>
STATEMENT OF CONSOLIDATED INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED,
-------------------------------------
SEPTEMBER 27 SEPTEMBER 28 SEPTEMBER 29
(Dollars in thousands except per share data) 1998 1997 1996
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $2,487,370 $2,300,089 $2,142,501
- ----------------------------------------------------------------------------------------
Cost of Sales 1,805,088 1,667,858 1,561,098
Selling, General and Administrative Expenses 588,086 537,395 498,260
- ----------------------------------------------------------------------------------------
Operating Profit 94,196 94,836 83,143
- ----------------------------------------------------------------------------------------
Net Interest Expense 15,973 14,558 12,155
Other Administrative Expense, Net 7,529 8,976 8,979
- ----------------------------------------------------------------------------------------
Income Before Taxes 70,694 71,302 62,009
Taxes 23,922 23,571 19,207
- ----------------------------------------------------------------------------------------
Net Income 46,772 47,731 42,802
Retained Earnings at Beginning of Fiscal Year 326,488 293,654 262,921
Common Dividend:
1998 and 1997 - $.32 a share; 1996 - $.26 a share 14,932 14,897 12,069
- ----------------------------------------------------------------------------------------
Retained Earnings at End of Fiscal Year $ 358,328 $ 326,488 $ 293,654
========================================================================================
Net Income Per Share - Basic and Diluted $ 1.00 $ 1.02 $ .92
========================================================================================
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
25
<PAGE>
STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED,
--------------------------------------
SEPTEMBER 27 SEPTEMBER 28 SEPTEMBER 29
(Dollars in thousands) 1998 1997 1996
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flow from Operating Activities
Net Income $ 46,772 $ 47,731 $ 42,802
Non-cash Items Included in Net Income
Depreciation and Amortization 66,184 58,723 51,226
Deferred Taxes 3,064 6,133 6,863
Restructuring Charge (846) (1,298) (1,512)
Other, Net 6,668 4,459 (49)
Decrease (Increase) in Accounts Receivable 904 (7,043) (12,903)
Decrease (Increase) in Inventories (15,356) (12,400) (6,254)
Decrease (Increase) in Other Current Assets 4,911 (6,965) 11,466
Increase (Decrease) in Current Liabilities 11,018 5,742 11,874
- --------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 123,319 95,082 103,513
- --------------------------------------------------------------------------------------------
Net Cash Provided by Discontinued Activities -- 413 12,650
- --------------------------------------------------------------------------------------------
Investing Activities
Capital Expenditures (95,473) (115,299) (123,280)
Cash Proceeds from Sale of Property 1,719 1,038 4,127
COLI, Net (1,405) (2,883) (9,098)
Other, Net (13,860) 5,492 (10,668)
- --------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (109,019) (111,652) (138,919)
- --------------------------------------------------------------------------------------------
Financing Activities
Proceeds from Long-term Borrowings 2,100 87,650 44,950
Payments of Principal on Long-term Debt (508) (61,493) (8,285)
Dividends Paid (14,932) (14,897) (12,069)
Other, Net (1,442) 1,014 234
- --------------------------------------------------------------------------------------------
Net Cash Provided by (Used in) Financing Activities (14,782) 12,274 24,830
- --------------------------------------------------------------------------------------------
Increase (Decrease) in Cash and Cash Equivalents (482) (3,883) 2,074
Cash and Cash Equivalents at Beginning of Year 17,150 21,033 18,959
- --------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Year $ 16,668 $ 17,150 $ 21,033
============================================================================================
Supplemental Disclosures of Cash Flow Information Cash
Paid During the Year for:
Interest $ 16,516 $ 13,937 $ 11,201
Income Taxes $ 20,201 $ 13,725 $ 11,056
- --------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
26
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNT POLICIES
PRINCIPLES OF CONSOLDATION
The accompanying consolidated financial statements include the accounts of
Ruddick Corporation and its wholly owned operating companies, American & Efird,
Inc. and Harris Teeter, Inc., and in fiscal 1996, Jordan Graphics, Inc.
(disposed in 1996), collectively referred to herein as the Company. All material
intercompany amounts have been eliminated. To the extent that non-affiliated
parties held minority equity investments in joint ventures of the Company, such
investments are classified as minority interest.
CASH EQUIVALENTS
For purposes of the statements of consolidated cash flows, the Company
considers all highly liquid cash investments purchased with a maturity of three
months or less to be cash equivalents.
INVENTORIES
Inventories are valued at the lower of cost or market with the cost of
substantially all domestic U.S. inventories being determined using the last-in,
first-out (LIFO) method. The LIFO cost of such inventories was $21,036,000 and
$20,949,000 less than the first-in, first-out (FIFO) cost method at September
27, 1998 and September 28, 1997, respectively. Foreign inventories and limited
categories of domestic inventories, totaling $35,186,000 for fiscal 1998 and
$36,660,000 for fiscal 1997, are valued on the weighted average (foreign) and
FIFO (domestic) cost methods.
PROPERTY AND DEPRECIATION
Property is at cost and is depreciated, using principally the straight-line
method, over the following useful lives:
- --------------------------------------------------------------------------------
Land improvements 10 - 40 years
Buildings 10 - 50 years
Machinery and equipment 3 - 15 years
- --------------------------------------------------------------------------------
Leasehold improvements are depreciated over the lesser of the estimated useful
life or the remaining term of the lease. Assets under capital leases are
amortized on a straight-line basis over the lesser of 20 years or the lease
term. Maintenance and repairs are charged against income when incurred.
Expenditures for major renewals, replacements and betterments are added to
property. The cost and the related accumulated depreciation of assets retired
are eliminated from the accounts; gains or losses on disposal are added to or
deducted from income. Property categories include $28,854,000 and $35,635,000
undepreciated construction in progress at September 27, 1998 and September 28,
1997, respectively.
INVESTMENTS
The Company holds a financial position in certain shopping centers in which
Harris Teeter, Inc., is an anchor tenant. Additionally it makes loans to and
equity investments in a number of emerging growth companies, primarily through
investments in certain venture capital funds. Real estate and financial
investments are carried at the lower of cost or market. In management's opinion,
the net aggregate carrying value of financial instruments of $7,924,000 and
$8,435,000 held for investment approximated their aggregate fair values at
September 27, 1998 and September 28, 1997, respectively.
OTHER ASSETS
Other assets include cash surrender value of Company owned life insurance
(COLI), investment in unconsolidated foreign subsidiaries and various
acquisition costs. The cash surrender value of life insurance is recorded net of
policy loans. The net life insurance expense, including interest expense of
$16,831,000 in 1998, $18,490,000 in 1997, and $18,564,000 in 1996, is
27
<PAGE>
included in other administrative expense in the statements of consolidated
income and retained earnings. Acquisition costs allocated to other assets,
including favorable lease rights and goodwill, are being amortized over 10 - 15
years.
FAIR VALUE DISCLOSURES
The carrying amounts for certain of the Company's financial instruments,
including cash and cash equivalents, accounts and notes receivable, accounts
payable and other accrued liabilities approximate fair value because of their
short maturities. The fair value of fixed rate obligations exceeds their
recorded amounts by approximately $10,000,000 based on borrowing rates currently
available to the Company for loans with similar terms and maturities. The
Company reviews the carrying value of property and equipment whenever events or
changes in circumstances indicate that the carrying value may not be
recoverable. Measurement of any impairment would include a comparison of
estimated future operating cash flows anticipated to be generated during the
remaining life to the net carrying value of the asset. At September 27, 1998,
the carrying value of the Company's long-lived assets and intangibles, including
goodwill, was recoverable in all material respects.
ADVERTISING
Costs incurred to produce media advertising are expensed in the period in
which the advertising first takes place. All other advertising costs are also
expensed when incurred. Cooperative advertising income from vendors is recorded
in the period in which the related expense is incurred. Net advertising expenses
of $20,721,000, $15,555,000 and $12,839,000 were included in the Company's
results of operations for fiscal 1998, 1997 and 1996, respectively.
INCOME TAXES
Ruddick and its subsidiaries file a consolidated federal income tax return.
Tax credits are recorded as a reduction of federal income taxes in the years in
which they are utilized. Deferred tax liabilities or assets at the end of each
period are determined using the tax rate expected to be in effect when taxes are
actually paid or recovered. Accordingly, income tax expense will increase or
decrease in the same period in which a change in tax rates is enacted.
PER SHARE AMOUNTS
The Company adopted Statement of Financial Accounting Standards (SFAS) No.
128, "Earnings per Share," effective with the beginning of its first fiscal
quarter of 1998 and, accordingly, basic and diluted net income per share amounts
were determined based on the weighted average number of shares of common stock
and common stock equivalents (non-cumulative, voting $.56 convertible preference
stock and stock options) outstanding. The weighted average basic shares
outstanding were 46,667,416 in 1998, 46,542,505 in 1997, and 46,416,242 in 1996.
As a result of outstanding stock options, the weighted average diluted shares
outstanding were 46,964,423 in 1998, 46,825,469 in 1997 and 46,617,837 in 1996.
Common stock equivalents had no effect on the earnings for determination of per
share amounts in 1998, 1997 and 1996.
STOCK OPTIONS
As permitted by SFAS No. 123, "Accounting for Stock-Based Compensation," the
Company continues to record compensation cost for stock option plans in
accordance with Accounting Principles Board Opinion No. 25. Accordingly,
compensation cost of stock options is measured as the excess, if any, of the
market price of the Company's stock at the date of the grant over the option
exercise price and is charged to operations over the vesting period. Income tax
benefits attributable to stock options exercised are credited to capital stock.
DISCONTINUED OPERATIONS
In fiscal 1996, the assets of Jordan Graphics, Inc., the business forms
segment, were sold. The revenues of the discontinued operation were $17,293,000
(16 weeks) in fiscal year 1996. Operating profits were $123,000 for the same
period and applicable taxes were $47,000.
28
<PAGE>
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual amounts could differ from those estimates.
RECLASSIFICATIONS
To conform with classifications adopted in the current year, the financial
statements for prior years reflect certain reclassifications which have no
effect on net income.
NEW ACCOUNTING STANDARDS
COMPREHENSIVE INCOME: SFAS No. 130, "Reporting Comprehensive Income," will
require, effective for the Company's fiscal year ending October 3, 1999, and for
inclusive interim reporting periods, reporting in an additional basic financial
statement the net income, as historically reported under generally accepted
accounting principles, adjusted for each component of nonowner changes in
shareholders' equity.
BUSINESS SEGMENTS AND RELATED INFORMATION: SFAS No. 131, "Disclosures About
Segments of an Enterprise and Related Information," will require, effective for
the Company's fiscal year ending October 3, 1999, annual financial statements,
and for interim and annual reporting periods in fiscal 2000 and thereafter, new
standards of disclosure for information about operating segments of the
enterprise and related disclosures about products and services, geographic areas
and major customers.
DERIVATIVE INSTRUMENTS AND HEDGING: SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," will be effective for the Company's fiscal
year 2000. The Statement established 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 a liability measured at its fair value. The Statement
requires that changes in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met, and requires that a
company must formally document, designate and assess the effectiveness of
transactions that receive hedge accounting. The Company has not yet quantified
the impacts of adopting SFAS No. 133 on its consolidated financial statements
and has not determined the timing of or method of adoption. Management does not
expect the impact of adoption of this statement on the Company's financial
position and results of operations to be material.
LEASES
The Company leases certain equipment under agreements expiring during the next
four years. Harris Teeter leases most of its stores under leases that expire
during the next 21 years. It is expected that such leases will be renewed by
exercising options or replaced by leases of other properties. Most store leases
provide for additional rentals based on sales, and certain store facilities are
sublet under leases expiring during the next seven years. Rent expenses were as
follows:
- --------------------------------------------------------------------------------
(In thousands) 1998 1997 1996
- --------------------------------------------------------------------------------
Operating Leases:
Minimum $59,720 $52,327 $43,282
Contingent 1,157 941 1,175
- --------------------------------------------------------------------------------
Total $60,877 $53,268 $44,457
- --------------------------------------------------------------------------------
29
<PAGE>
Future minimum lease commitments at September 27, 1998 (excluding leases
assigned or expected to be assigned - see below) were as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
(In thousands) Capital Leases Operating Leases
- ------------------------------------------------------------------------------------------
<S> <C> <C>
1999 $ 268 $ 58,764
2000 268 56,119
2001 268 52,995
2002 268 51,672
2003 173 50,826
Later years 36 498,165
- ------------------------------------------------------------------------------------------
Total minimum lease payments $ 1,281 $768,541
- ------------------------------------------------------------------------------------------
Less amount representing interest
(Store premises, 6.75% - 10.25%, store equipment, 8% - 15%) 600
- ------------------------------------------------------------------------------------------
Present value of minimum lease obligations 681
Less current portion 113
- ------------------------------------------------------------------------------------------
Long-term capital lease obligations $ 568
- ------------------------------------------------------------------------------------------
Total minimum sublease rentals to be received
under noncancelable subleases $ 2,504
- ------------------------------------------------------------------------------------------
</TABLE>
In connection with the closing of certain store locations, Harris Teeter has
assigned leases to other merchants with recourse. These leases expire over the
next 11 years and the future minimum lease payments of $10,040,000 over this
period have been assumed by these merchants. In addition, Harris Teeter leases
certain store locations which are not currently in use but are expected to be
assigned to other merchants. These leases expire over the next 19 years and the
future minimum lease payments related to these locations total $23,171,000
(approximating $2,074,000 per year for each of the next five years).
LONG-TERM DEBT
Long-term debt at September 27, 1998 and September 28, 1997 was as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
(In thousands) 1998 1997
- ------------------------------------------------------------------------------------
<S> <C> <C>
6.48% Senior Note due $7,143 annually March, 2005 through 2011 $ 50,000 $ 50,000
7.72% Senior Note due April, 2017 50,000 50,000
7.55% Senior Note due July, 2017 50,000 50,000
Revolving line of credit, variable rate, due February 2003 36,000 33,900
Industrial revenue bond, variable rate, due November 2000 2,500 2,500
Obligations under capital leases and other 3,431 4,094
- ------------------------------------------------------------------------------------
Total 191,931 190,494
- ------------------------------------------------------------------------------------
Less current portion 571 575
- ------------------------------------------------------------------------------------
Total long-term debt $191,360 $189,919
- ------------------------------------------------------------------------------------
</TABLE>
Long-term debt maturities, excluding obligations under capital leases, in each
of the next five fiscal years are as follows: 1999 - $458,000; 2000 - $333,000;
2001 - $2,693,000; 2002 - $137,000; 2003 - $139,000. Additionally, in fiscal
2003, the revolving line of credit ($36,000,000 as of September 27, 1998) would
mature; however, management expects to obtain the one year extension of term
upon receipt of the mutual consent of lenders under the "evergreen" provisions
of the loan agreement.
In fiscal 1997, the Company executed an unsecured $50,000,000 7.72% Senior
Promissory Note due April 15, 2017 and an unsecured $50,000,000 7.55% Senior
Promissory Note due July 15, 2017, with a major insurance company. Proceeds from
the Notes were used to repay a term note and reduce the amount borrowed under
the revolving line of credit with three banks. During 1998 and 1997 the maximum
outstanding borrowing under the revolving line of credit was $86,700,000 and
30
<PAGE>
$100,000,000, respectively, and the average for the 364 days outstanding was
$63,272,000 and $70,942,000, respectively. The daily weighted average interest
rate (a variable rate related to the current published CD rate) was 6.1% and a
commitment fee of .15% of the unused line was charged during 1998 and 1997. As
of September 27, 1998, the Company had $64,000,000 of committed capacity
available under its revolving credit facility.
Various loan agreements provide, among other things, for maintenance of
minimum levels of consolidated shareholders' equity or tangible net worth. At
September 27, 1998, consolidated tangible net worth exceeded by $87,761,000 the
balance which, under the most restrictive provisions, must be maintained through
October 3, 1999. The requirement shall increase annually by 40% of consolidated
net income for such year.
Total interest expense on long-term debt was $16,596,000, $14,615,000, and
$12,748,000 in 1998, 1997 and 1996, respectively.
CAPITAL STOCK
The capital stock of the Company authorized at September 27, 1998 was
1,000,000 shares of Additional Preferred, 4,000,000 shares of
Preference-noncumulative $.56 convertible, voting ($10 liquidation value), and
75,000,000 shares of Common.
Changes in shares issued and outstanding and in shareholders' equity accounts
other than retained earnings are summarized as follows:
<TABLE>
<CAPTION>
Common
(In thousands except share amounts) Shares Amount
- ------------------------------------------------------------------------
<S> <C> <C>
Balance at October 1, 1995 46,373,666 $ 54,816
- ------------------------------------------------------------------------
Shares issued under exercised stock options 94,424 661
Tax effect of disqualifying option stocks -- 117
Other (6,800) 5
- ------------------------------------------------------------------------
Balance at September 29, 1996 46,461,290 $ 55,599
- ------------------------------------------------------------------------
Shares issued under exercised stock options 138,011 1,008
Tax effect of disqualifying option stocks -- 106
Other -- 66
- ------------------------------------------------------------------------
Balance at September 28, 1997 46,599,301 $ 56,779
- ------------------------------------------------------------------------
Shares issued under exercised stock options 223,710 2,107
Shares purchased and retired (268,420) (4,676)
Tax effect of disqualifying option stocks -- 381
Other -- 95
- ------------------------------------------------------------------------
Balance at September 27, 1998 46,554,591 $ 54,686
- ------------------------------------------------------------------------
</TABLE>
One preferred share purchase right is attached to each outstanding share of
common stock, which rights expire on November 15, 2000. Each right entitles the
holder to purchase one four-hundredth of a share of a new Series A Junior
Participating Additional Preferred Stock at $26.25. The rights will become
exercisable only under certain circumstances related to a person or group
acquiring or offering to acquire a substantial portion of the Company's common
stock. If certain additional events then occur, each right would entitle the
rightholder to acquire common stock of the Company, or in some cases of an
acquiring entity, having a value equal to twice the exercise price. Under
certain circumstances the Board of Directors may exchange all or part of the
outstanding rights at an exchange ratio per right of one share of common stock,
or one four-hundredth of a share of Series A Junior Participating Additional
Preferred Stock, or may redeem each right at a price of $.0025. There are
200,000 shares of Series A Junior Participating Additional Preferred Stock
reserved for issuance upon exercise of the rights.
31
<PAGE>
STOCK OPTIONS
At September 27, 1998, the Company has 1982, 1988, 1993, 1995 and 1997
stock option plans which authorized options for 4,700,000 shares of common
stock. Under the plans, the Company may grant to officers and management
personnel incentive stock options which become exercisable in installments of
20% per year at each of the first through fifth anniversaries from grant date,
and which expire seven years from grant date. Additionally under the 1995 plan,
the Company grants a single, one-time, nonqualified stock option of 10,000
shares, generally vested immediately, to each of its outside directors. Further,
under the 1997 plan the Company may grant performance shares, stock awards,
restricted stock and nonqualified stock options to employees and outside
directors as well as incentive stock options to employees. Under each of the
plans the exercise price of each option shall be no less than the market price
of the Company's stock on the date of grant, and an option's maximum term is ten
years. At the discretion of the Company, under certain plans a stock
appreciation right may be granted and exercised in lieu of the exercise of the
related option (which is then forfeited). Under the plans, as of September 27,
1998, the Company may grant additional options for the purchase of 992,800
shares.
A summary of the status of the Company's stock option plans as of September
27, 1998, September 28, 1997 and September 29, 1996, changes during the years
ending on those dates, and related weighted average exercise price is presented
below:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
(Shares in thousands) 1998 1997 1996
Shares Price Shares Price Shares Price
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 1,011 $ 10.99 1,116 $ 10.40 696 $ 9.07
Granted 610 19.29 120 13.45 573 11.50
Exercised (235) 9.89 (181) 9.05 (97) 7.21
Forfeited (43) 14.10 (44) 10.64 (56) 10.81
- --------------------------------------------------------------------------------------------
Outstanding at end of year 1,343 14.85 1,011 10.99 1,116 10.40
- --------------------------------------------------------------------------------------------
Options exercisable at year-end 399 $ 11.50 422 $ 10.29 368 $ 9.14
- --------------------------------------------------------------------------------------------
</TABLE>
The following table summarizes options outstanding and options exercisable as
of September 27, 1998, and the related weighted average remaining contractual
life (years) and weighted average exercise price (shares in thousands):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
OPTIONS OUTSTANDING OPTIONS EXERCISEABLE
Shares Remaining Shares
Options Price per Share Outstanding Life Price Exercisable Price
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$8.13 to $ 11.44 601 3.3 $10.89 302 $ 10.58
11.94 to 18.47 166 6.3 13.70 91 13.96
19.31 to 20.28 576 6.3 19.32 6 20.28
- ---------------------------------------------------------------------------------
$8.13 to $ 20.28 1,343 5.0 $14.85 399 $ 11.50
- ---------------------------------------------------------------------------------
</TABLE>
The weighted average fair value at date of grant for options granted during
fiscal 1998, 1997 and 1996 was $5.44, $3.82 and $2.95 per option, respectively.
The fair value of options at date of grant was estimated using the Black-Scholes
model with the following weighted average assumptions:
- -----------------------------------------------------
1998 1997 1996
- -----------------------------------------------------
Expected life (years) 5.1 4.9 5.0
Risk-free interest rate 5.80% 5.91% 5.74%
Volatility 28.44% 28.65% 26.01%
Dividend yield 2.20% 2.10% 2.40%
- -----------------------------------------------------
32
<PAGE>
The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." Accordingly, no compensation cost has been recognized for the
stock options granted in fiscal 1998, 1997 or 1996. Had compensation cost been
determined based on the fair value at the grant date consistent with the
provisions of this statement, the Company's pro forma net income and basic and
diluted net income per share would have been as follows:
- -------------------------------------------------------------------
(In thousands, except per share data) 1998 1997 1996
- -------------------------------------------------------------------
Net income - as reported $46,772 $47,731 $ 42,802
- pro forma 45,846 47,381 42,375
Net income per share - as reported $1.00 $1.02 $.92
- pro forma .98 1.01 .91
- -------------------------------------------------------------------
The pro forma effect on net income for fiscal 1998, 1997 and 1996 is not
representative of the pro forma effect on net income in future years because it
does not take into consideration pro forma compensation expense related to
grants made prior to fiscal year 1996.
INCOME TAXES
The provision for income taxes consisted of the following:
- --------------------------------------------------------
(In thousands) 1998 1997 1996
- --------------------------------------------------------
Current
Federal $15,903 $12,803 $10,556
State and other 4,955 4,687 2,486
- --------------------------------------------------------
20,858 17,490 13,042
- --------------------------------------------------------
Deferred
Federal 3,004 5,034 5,196
State and other 60 1,047 969
- --------------------------------------------------------
3,064 6,081 6,165
- --------------------------------------------------------
Provision for income taxes $23,922 $23,571 $19,207
- --------------------------------------------------------
Income from foreign operations before income taxes in fiscal 1998, 1997 and
1996 was $1,402,000, $4,520,000 and $1,390,000, respectively.
Income tax expense differed from an amount computed by applying the statutory
tax rates to pre-tax income as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
(In thousands) 1998 1997 1996
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income tax on pre-tax income at the statutory
federal rate of 35% $ 24,743 $ 24,956 $ 21,703
Increase (decrease) attributable to:
State and other income taxes, net of federal income tax benefit 3,748 3,265 1,806
COLI (3,528) (3,528) (4,261)
Other items, net (1,041) (1,122) (41)
- ---------------------------------------------------------------------------------------------------
Income tax expense $ 23,922 $ 23,571 $ 19,207
- ---------------------------------------------------------------------------------------------------
</TABLE>
33
<PAGE>
The tax effects of temporary differences giving rise to the Company's
consolidated deferred tax liability at September 27, 1998 and September 28, 1997
are as follows:
- --------------------------------------------------------------------------------
(In thousands) 1998 1997
- --------------------------------------------------------------------------------
Deferred Tax Assets
Employee benefits $6,483 $6,485
Reserves not currently deductible 7,344 6,888
Other 4,501 3,256
- --------------------------------------------------------------------------------
Total deferred tax assets $18,328 $16,629
- --------------------------------------------------------------------------------
Deferred Tax Liabilities
Property, plant and equipment $(55,607) $(52,300)
Other capitalized costs (4,337) (3,747)
Other (9,276) (8,410)
- --------------------------------------------------------------------------------
Total deferred tax liabilities $(69,220) $(64,457)
- --------------------------------------------------------------------------------
INDUSTRY SEGMENT INFORMATION
The Company operates primarily in two businesses: industrial thread (textile
primarily) - American & Efird, and retail grocery (including the real estate and
store development activities of the Company) - Harris Teeter. American & Efird
manufactures sewing thread for the apparel and other markets. Harris Teeter
operates a regional chain of supermarkets. Summarized information for fiscal
1998, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Industrial Retail
(In millions) Thread Grocery Corporate (1) Consolidated
- -------------------------------------------------------------------------------------
1998
<S> <C> <C> <C> <C>
Net Sales $ 355.2 $ 2,132.2 $ 2,487.4
- -------------------------------------------------------------------------------------
Gross Profit 101.0 581.3 682.3
- -------------------------------------------------------------------------------------
Operating Profit 42.1 52.1 94.2
- -------------------------------------------------------------------------------------
Assets Employed at Year End $ 285.7 $ 578.9 $ 67.0 $ 931.6
Depreciation and Amortization 16.6 48.6 1.0 66.2
Capital Expenditures 20.2 75.1 0.2 95.5
1997
Net Sales $ 368.9 $ 1,931.2 $ 2,300.1
- -------------------------------------------------------------------------------------
Gross Profit 106.8 525.4 632.2
- -------------------------------------------------------------------------------------
Operating Profit 49.1 45.7 94.8
- -------------------------------------------------------------------------------------
Assets Employed at Year End $ 299.7 $ 521.7 $ 63.8 $ 885.2
Depreciation and Amortization 15.4 42.5 0.8 58.7
Capital Expenditures 28.9 86.2 0.2 115.3
- -------------------------------------------------------------------------------------
1996
Net Sales $ 309.5 $ 1,833.0 $ 2,142.5
- -------------------------------------------------------------------------------------
Gross Profit 89.0 492.4 581.4
- -------------------------------------------------------------------------------------
Operating Profit 34.7 48.4 83.1
- -------------------------------------------------------------------------------------
Assets Employed at Year End $ 263.5 $ 476.9 $ 61.3 $ 801.7
Depreciation and Amortization 12.3 37.6 1.3 51.2
Capital Expenditures 35.6(2) 83.2 4.5 123.3
- -------------------------------------------------------------------------------------
</TABLE>
(1) Corporate Assets Employed include investment assets and the net cash
surrender value of Company owned life insurance.
(2) Includes the purchase of certain assets of Threads USA.
34
<PAGE>
COMMITMENTS AND CONTINGENCIES
Substantially all domestic full-time employees of the Company and its
subsidiaries participate in non-contributory defined benefit pension plans.
Employees in foreign subsidiaries participate to varying degrees in local
pension plans, which, in the aggregate, are not significant. Employee retirement
benefits are a function of both the years of service and compensation for a
specified period of time before retirement. The Company's current funding policy
is to contribute annually the minimum amount required by regulatory authorities.
The following table sets forth the defined benefit plans' funded status and
amounts recognized in the Company's consolidated balance sheets at September 27,
1998 and September 28, 1997:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
(In thousands) 1998 1997
- ----------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits $ 98,533 $ 82,676
Nonvested benefits 4,732 3,677
- ----------------------------------------------------------------------------------
Accumulated benefit obligations 103,265 86,353
Effect of projected future compensation levels 25,657 23,838
- ----------------------------------------------------------------------------------
Projected benefit obligations 128,922 110,191
Plans' assets at fair market value 98,412 92,611
- ----------------------------------------------------------------------------------
Projected benefit obligations in excess of plans' assets (30,510) (17,580)
Unrecognized net asset at September 30, 1985, net of
amortization, being amortized over 15 - 20 years 1,147 1,541
Unrecognized net loss due to past experience
different from assumptions made (26,761) (14,215)
- ----------------------------------------------------------------------------------
Unfunded accrued pension cost $ (4,896) $ (4,906)
- ----------------------------------------------------------------------------------
</TABLE>
The plans' assets consist primarily of U. S. government securities, corporate
bonds, cash equivalents and domestic equities, all managed by two banks. The
contribution payable at September 27, 1998 and September 28, 1997, required to
be paid by due date of the federal income tax return, was $2,501,000 and
$1,462,000, respectively.
In 1998 (1997), a 6.8% (7.5%) weighted average discount rate and 4.5% (5%)
rate of increase in future payroll costs were used in determining the actuarial
present value of the projected benefit obligations. The expected long-term rate
of return on assets was 8% for both years.
Pension expense for defined benefit plans for fiscal 1998, 1997, and 1996
included the following components:
- ----------------------------------------------------------------------------
(In thousands) 1998 1997 1996
- ----------------------------------------------------------------------------
Benefits earned by employees $ 5,592 $ 4,464 $ 4,033
Interest on projected benefit obligations 8,531 7,789 7,135
Actual return on plan assets (4,366) (11,560) (4,635)
Net amortization and deferral (3,142) 5,356 (1,143)
- ----------------------------------------------------------------------------
Net pension expense $ 6,615 $ 6,049 $ 5,390
- ----------------------------------------------------------------------------
35
<PAGE>
The Company also has an Employee Stock Ownership Plan (ESOP), a profit-sharing
plan and certain other plans. Expenses under these plans were as follows:
- ----------------------------------------------------------------------------
(In thousands) 1998 1997 1996
- ----------------------------------------------------------------------------
ESOP $ 8,043 $ 8,733 $ 7,866
- ----------------------------------------------------------------------------
Profit-sharing 1,609 3,098 1,699
- ----------------------------------------------------------------------------
Other 2,525 2,517 2,266
- ----------------------------------------------------------------------------
The Company is involved in various lawsuits and environmental and patent
matters arising in the normal course of business. Management believes that such
matters will not have a material effect on the financial condition or results of
operations of the Company.
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. The Company recorded income tax reductions of
approximately $24 million cumulatively as the result of COLI interest deductions
from October 1993 through fiscal year ending September 27, 1998. The Internal
Revenue Service, on a comprehensive national level, is evaluating its 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.
See "Leases" for additional commitments and contingencies.
QUARTERLY INFORMATION (UNAUDITED)
The following table sets forth certain financial information, the high and low
sales prices and dividends declared for the common stock for the periods
indicated. The Company's common stock is listed and traded on the New York Stock
Exchange. As of September 27, 1998, there were 5,517 holders of record of common
stock.
- --------------------------------------------------------------------------------
First Second Third Fourth
(In millions, except per share data Quarter Quarter Quarter Quarter
- --------------------------------------------------------------------------------
1998 Operating Results
Net Sales $ 617.6 $ 616.3 $ 620.5 $ 633.0
Net Income 12.0 11.4 10.3 13.1
Net Income Per Share .26 .24 .22 .28
Dividend Per Share .08 .08 .08 .08
Market Price Per Share
High 21 3/8 19 7/8 19 1/16 18 5/16
Low 14 5/8 15 7/8 17 15
- --------------------------------------------------------------------------------
1997 Operating Results
Net Sales $ 574.1 $ 563.9 $ 579.8 $ 582.3
Net Income 11.6 11.2 13.0 11.9
Net Income Per Share .25 .24 .28 .25
Dividend Per Share .08 .08 .08 .08
Market Price Per Share
High 13 7/8 17 3/4 16 3/4 16 5/8
Low 12 3/8 13 1/4 14 14
- --------------------------------------------------------------------------------
36
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of Ruddick Corporation:
We have audited the accompanying consolidated balance sheets of Ruddick
Corporation (a North Carolina corporation) and subsidiaries as of September
27, 1998, and September 28, 1997, and the related statements of consolidated
income and retained earnings and consolidated cash flows for each of the
three years in the period ended September 27, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated
financial position of Ruddick Corporation and subsidiaries as of September
27, 1998 and September 28, 1997, and the results of their operations and
their cash flows for each of three years in the period ended September 27,
1998 in conformity with generally accepted accounting principles.
Charlotte, North Carolina /s/ Arthur Anderson LLP
October 23, 1998
37
<PAGE>
ELEVEN-YEAR FINANCIAL AND OPERATING SUMMARY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share data) 1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales
American & Efird $ 355,147 $ 368,877 $ 309,459 $ 297,963 $ 277,016
Harris Teeter 2,132,223 1,931,212 1,833,042 1,711,813 1,578,880
- ----------------------------------------------------------------------------------------------------------------------------
Total Net Sales $ 2,487,370 $ 2,300,089 $ 2,142,501 $ 2,009,776 $ 1,855,896
- ----------------------------------------------------------------------------------------------------------------------------
Operating Profit
American & Efird $ 42,070 $ 49,165 $ 34,684 $ 34,614 $ 26,916
Harris Teeter 52,126 45,671 48,459 42,114 37,032
- ----------------------------------------------------------------------------------------------------------------------------
Total Operating Profit $ 94,196 $ 94,836 $ 83,143 $ 76,728 $ 63,948
- ----------------------------------------------------------------------------------------------------------------------------
Net Income $ 46,772 $ 47,731 $ 42,802 $ 39,267 $ 31,811
Net Income Per Share 1.00 1.02 .92 .84 .67
Common Dividend .32 .32 .26 .25 .22
- ----------------------------------------------------------------------------------------------------------------------------
Earnings Before Interest, Taxes,
Depreciation and Amortization $ 152,851 $ 144,583 $ 125,390 $ 114,385 $ 99,166
- ----------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity $ 410,725 $ 380,507 $ 346,856 $ 316,236 $ 291,209
Percent Return on Beginning Equity 12.3% 13.8% 13.5% 13.5% 11.6%
Book Value Per Share $ 8.82 $ 8.17 $ 7.47 $ 6.82 $ 6.28
- ----------------------------------------------------------------------------------------------------------------------------
Capital Expenditures
American & Efird $ 20,246 $ 28,878 $ 35,605(2) $ 16,359 $ 20,416
Harris Teeter 75,082 86,237 83,204 81,447 46,349
Corporate 145 184 4,471 399 35
- ----------------------------------------------------------------------------------------------------------------------------
Total Capital Expenditures $ 95,473 $ 115,299 $ 123,280 $ 98,205 $ 66,800
- ----------------------------------------------------------------------------------------------------------------------------
Working Capital $ 87,333 $ 88,893 $ 65,134 $ 73,741 $ 93,387
Total Assets $ 931,618 $ 885,243 $ 801,702 $ 715,318 $ 634,599
Long-Term Debt - Including Current Portion $ 191,931 $ 190,494 $ 164,435 $ 128,952 $ 109,567
Long-Term Debt as a Percent of Capital Employed 31.6% 33.1% 32.2% 29.0% 27.3%
Number of Employees 20,700 19,700 20,100 19,850 18,610
Number of Beneficial Shareholders
Including Employee/Owners 21,000 19,100 16,700 14,500 14,100
Common Shares Outstanding 46,554,591 46,599,301 46,461,290 46,373,666 46,352,214
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share data) 1993(1) 1992 1991 1990 1989
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Sales
American & Efird $ 264,814 $ 243,324 $ 208,649 $ 199,115 $ 190,004
Harris Teeter 1,412,315 1,270,430 1,213,127 1,164,445 1,053,467
- --------------------------------------------------------------------------------------------------------------------------
Total Net Sales $ 1,677,129 $ 1,513,754 $ 1,421,776 $ 1,363,560 $ 1,243,471
- --------------------------------------------------------------------------------------------------------------------------
Operating Profit
American & Efird $ 30,551 $ 28,510 $ 22,589 $ 18,403 $ 17,732
Harris Teeter 29,845 31,067 34,329 32,212 27,444
- --------------------------------------------------------------------------------------------------------------------------
Total Operating Profit $ 60,396 $ 59,577 $ 56,918 $ 50,615 $ 45,176
- --------------------------------------------------------------------------------------------------------------------------
Net Income $ 33,873 $ 30,789 $ 26,786 $ 24,031 $ 20,190
Net Income Per Share .71 .65 .59 .55 .47
Common Dividend .21 .20 .19 .18 .16
- --------------------------------------------------------------------------------------------------------------------------
Earnings Before Interest, Taxes,
Depreciation and Amortization $ 97,490 $ 96,047 $ 89,025 $ 80,389 $ 71,927
- --------------------------------------------------------------------------------------------------------------------------
Shareholders' Equity $ 274,740 $ 255,403 $ 233,566 $ 184,371 $ 158,921
Percent Return on Beginning Equity 13.3% 13.2% 14.5% 15.1% 14.0%
Book Value Per Share $ 5.87 $ 5.44 $ 4.98 $ 4.54 $ 4.07
- --------------------------------------------------------------------------------------------------------------------------
Capital Expenditures
American & Efird $ 19,433 $ 16,399 $ 11,417 $ 15,923 $ 14,742
Harris Teeter 33,683 25,910 30,903 27,376 31,611
Corporate 27 4,039 60 2,323 2,975
- --------------------------------------------------------------------------------------------------------------------------
Total Capital Expenditures $ 53,143 $ 46,348 $ 42,380 $ 45,622 $ 49,328
- --------------------------------------------------------------------------------------------------------------------------
Working Capital $ 103,191 $ 105,527 $ 79,640 $ 74,688 $ 60,724
Total Assets $ 580,807 $ 535,407 $ 498,458 $ 468,295 $ 439,104
Long-Term Debt - Including Current Portion $ 104,173 $ 97,280 $ 83,850 $ 115,266 $ 115,757
Long-Term Debt as a Percent of Capital Employed 27.5% 27.6% 26.4% 38.5% 42.1%
Number of Employees 17,120 13,720 13,500 13,185 13,100
Number of Beneficial Shareholders
Including Employee/Owners 14,600 12,900 11,400 11,100 11,000
Common Shares Outstanding 46,036,146 46,124,798 46,002,708 39,321,300 37,551,972
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------
(Dollars in thousands, except per share data) 1988(1)
- --------------------------------------------------------------
<S> <C>
Net Sales
American & Efird $ 181,733
Harris Teeter 894,035
- --------------------------------------------------------------
Total Net Sales $ 1,075,768
- --------------------------------------------------------------
Operating Profit
American & Efird $ 17,645
Harris Teeter 21,102
- --------------------------------------------------------------
Total Operating Profit $ 38,747
- --------------------------------------------------------------
Net Income $ 18,379
Net Income Per Share .44
Common Dividend .15
- --------------------------------------------------------------
Earnings Before Interest, Taxes,
Depreciation and Amortization $ 61,078
- --------------------------------------------------------------
Shareholders' Equity $ 144,727
Percent Return on Beginning Equity 14.0%
Book Value Per Share $ 3.72
- --------------------------------------------------------------
Capital Expenditures
American & Efird $ 17,219
Harris Teeter 31,168
Corporate 81
- --------------------------------------------------------------
Total Capital Expenditures $ 48,468
- --------------------------------------------------------------
Working Capital $ 52,415
Total Assets $ 419,465
Long-Term Debt - Including Current Portion $ 109,332
Long-Term Debt as a Percent of Capital Employed 43.0%
Number of Employees 12,300
Number of Beneficial Shareholders
Including Employee/Owners 10,500
Common Shares Outstanding 37,391,660
- --------------------------------------------------------------
</TABLE>
(1) 53-week year
(2) Includes purchase of assets of Threads USA
38
EXHIBIT 21
RUDDICK CORPORATION
Affiliated Companies
as of December 28, 1998
Listed below are the domestic subsidiaries of Ruddick Corporation, (the
"Registrant") all of which are wholly owned and are owned directly by the
Registrant, unless otherwise indicated.
American & Efird, Inc.
American & Efird Services, Inc.(1)
A&E Export, Inc.(1)
Harris Teeter, Inc.
Harris Teeter Properties, LLC(2)
Harris-Teeter Services, Inc.(2)
Harris Teeter Resources, Inc. (2)
Ruddick of Delaware, Inc.
R. S. Dickson & Company (dba Ruddick Investment Company)
Ruddco Management, Inc.(3)
(1) Owned by American & Efird, Inc.
(2) Owned by Harris Teeter, Inc.
(3) Owned by R. S. Dickson & Company
Listed below are the foreign subsidiaries of the Registrant, all of which
are wholly owned through American & Efird, Inc., unless otherwise indicated.
American & Efird (HK) Limited (1)
A&E Korea Ltd.
American & Efird (GB) Limited (2)
American & Efird Canada, Inc.
Hilos A&E de Costa Rica, S.A.
Hilos A&E de Honduras, S.A. de C.V. (3)
American & Efird International (FE) Limited
American & Efird de Mexico, S.A. de C.V.(4)
American & Efird Mills (S) Pte. Ltd.
American & Efird (Malaysia) SDN BHD
Hengmei Spinning Company, Ltd. - Joint venture, 60% owned
Hilos A&E Dominicana, Ltd. - Joint venture, 49% owned
American & Efird Italia S.p.A. - Joint venture, 49% owned
A&E Amann India Private Ltd. - Joint venture, 33 1/3% owned (5)
In addition, in the normal course of business, R. S. Dickson & Company
from time to time makes investments in corporations and partnerships that may
result in ownership of capital stock or other interests as an investment.
<PAGE>
(1) In order to comply with Hong Kong law, one share of such entity is owned of
record by a person designated by American & Efird, Inc.
(2) In order to comply with British law, one share each of such entity is
owned of record by two persons designated by American & Efird, Inc.
(3) In order to comply with Honduran law, one share each of such entity is
owned of record by four persons designated by American & Efird, Inc.
(4) In order to comply with Mexican law, one share each of such entity is
owned of record by three persons designated by American & Efird, Inc.
(5) In order to comply with Indian law, 100 shares of such entity is owned
of record by a person designated by American & Efird, Inc.
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports included in and incorporated by reference in this Form 10-K, into
Ruddick Corporation's previously filed Registration Statements on Form S-8,
Registration No. 33-26302, No. 33-56567, No. 333-19085, No. 333-22659 and No.
333-53671. It should be noted that we have not audited any financial statements
of the Company subsequent to September 27, 1998 or performed any audit
procedures subsequent to the date of our report.
/s/ ARTHUR ANDERSEN LLP
Charlotte, North Carolina
December 28, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
RUDDICK CORPORATION
FINANCIAL DATA SCHEDULE FOR THE FISCAL YEAR ENDED 9/27/98
</LEGEND>
<CIK> 0000085704
<NAME> RUDDICK CORPORATION
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-27-1998
<PERIOD-START> SEP-29-1997
<PERIOD-END> SEP-27-1998
<CASH> 16,668,000
<SECURITIES> 0
<RECEIVABLES> 78,994,000
<ALLOWANCES> 2,046,000
<INVENTORY> 211,404,000
<CURRENT-ASSETS> 332,753,000
<PP&E> 883,258,000
<DEPRECIATION> 369,470,000
<TOTAL-ASSETS> 931,618,000
<CURRENT-LIABILITIES> 245,420,000
<BONDS> 191,360,000
0
0
<COMMON> 54,686,000
<OTHER-SE> 356,039,000
<TOTAL-LIABILITY-AND-EQUITY> 931,618,000
<SALES> 2,487,370,000
<TOTAL-REVENUES> 2,487,370,000
<CGS> 1,805,088,000
<TOTAL-COSTS> 2,393,174,000
<OTHER-EXPENSES> 7,529,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,973,000
<INCOME-PRETAX> 70,694,000
<INCOME-TAX> 23,922,000
<INCOME-CONTINUING> 46,772,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 46,772,000
<EPS-PRIMARY> 1.00
<EPS-DILUTED> 1.00
</TABLE>
