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: October 3, 1999
----------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the transition period
from __________ to __________
Commission File Number: 1-6905
---------
RUDDICK CORPORATION
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NORTH CAROLINA 56-0905940
------------------------------- -----------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1800 TWO FIRST UNION CENTER, CHARLOTTE, NORTH CAROLINA 28282
------------------------------------------------------ -----
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (704) 372-5404
-----------------
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
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
----- -----
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 10, 1999, was $488,088,059.
As of December 10, 1999, the Registrant had outstanding 46,350,986 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 October 3, 1999. (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
October 3, 1999, is not deemed to be filed or incorporated by reference as part
of this report).
Part III: Definitive Proxy Statement dated December 27, 1999, as filed pursuant
to Section 14 of the Securities Exchange Act of 1934 in connection with the 2000
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.)
<PAGE>
RUDDICK CORPORATION
AND CONSOLIDATED SUBSIDIARIES
Form 10-K for the Fiscal Year ended October 3, 1999
TABLE OF CONTENTS
PART I
Page
Item 1. Business ...............................................1
Item 2. Properties .............................................4
Item 3. Legal Proceedings ......................................5
Item 4. Submission of Matters to a Vote of Security Holders.....6
Item 4A. Executive Officers of the Registrant ...................6
PART II
Item 5. Market for Registrant's Common Equity and Related
Shareholder Matters ....................................7
Item 6. Selected Financial Data ................................7
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations ....................7
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 ....................8
PART III
Item 10. Directors and Executive Officers of the Registrant .....8
Item 11. Executive Compensation ................................ 8
Item 12. Security Ownership of Certain Beneficial Owners and
Management .............................................8
Item 13. Certain Relationships and Related Transactions .........8
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K ............................................9
<PAGE>
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 six southeastern states and American & Efird, Inc. ("A&E") manufactures and
distributes industrial and consumer sewing thread.
At October 3, 1999, the Registrant and its subsidiaries had total
consolidated assets of $970,114,000 and had approximately 19,800 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, certain 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 approach. Venture capital investment holdings will continue to be
managed but future venture investments will be made primarily in independently
managed venture capital investment funds for the foreseeable future. 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 1999 Annual Report to
Shareholders (the "1999 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 1999 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.
Net revenue received from domestic United States customers was
$2,520,502,000 in fiscal 1999, $2,394,821,000 in fiscal 1998 and $2,224,617,000
in fiscal 1997. Net revenue received from customers in foreign countries was
$104,272,000 for fiscal 1999, $92,549,000 in fiscal 1998 and $75,472,000 in
fiscal 1997. Net long-lived assets located in the domestic United
1
<PAGE>
States were $524,200,000 at fiscal year end 1999, $497,700,000 at fiscal year
end 1998 and $446,200,000 at fiscal year end 1997. Net long-lived assets located
in foreign countries were $20,600,000, $20,300,000 and $21,300,000 at fiscal
year end 1999, 1998 and 1997, respectively.
The Registrant employs nineteen people, including four executives who
formulate and implement overall corporate objectives and policies. The
Registrant's employees perform functions in a number of areas including finance,
accounting, audit, insurance, reporting, employee benefits and public and
shareholder relations. The Registrant assists its subsidiaries in developing
long-range goals, in strengthening management personnel and skills and in
financing operations. Management of each subsidiary is responsible for
implementing operating policies and reports to management of the Registrant.
HARRIS TEETER
-------------
Harris Teeter operates supermarkets in North Carolina (105), South
Carolina (22), Virginia (6), Georgia (9), Tennessee (3) and Florida (2) for
sales of groceries, produce, meat and seafood, delicatessen items, bakery items,
wines and non-food items such as health and beauty care, floral and other
products normally offered for sale in supermarkets. Harris Teeter has a program
in place whereby each retail store will undergo remodels on a regular basis.
Harris Teeter remodeled 22 stores during fiscal 1999 and expects to remodel 30
stores in fiscal 2000. In addition, 16 new stores were opened, including eight
former Kroger stores in the Greensboro and Winston-Salem, North Carolina area
and 13 stores were closed, including 11 in western Virginia which were acquired
by Kroger, in fiscal 1999. As of fiscal year end, Harris Teeter had 147 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 in order that both could
function as full-service facilities by May of 1998. Harris Teeter produces dairy
products, but buys most of the products it sells, including its private label
brands. Harris Teeter's sales constituted 87% of the Registrant's consolidated
sales in fiscal 1999 (86% in 1998 and 84% in 1997).
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 9,645
full-time and 6,780 part-time employees. 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.
2
<PAGE>
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 of 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 sales constituted 13% of the Registrant's consolidated
sales in fiscal 1999 (14% in 1998 and 16% in 1997).
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 jeanswear, underwear, menswear,
womenswear, outerwear, intimate apparel, workwear and childrenswear. A&E also
manufactures 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 12
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 14 distribution centers in
the U. S. and one in Puerto Rico.
A&E also has wholly-owned operations in Belgium, Canada, Costa Rica, El
Salvador, England, Guatemala, Honduras, Hong Kong, Northern Ireland, Mexico and
Malaysia, a majority-owned joint venture in China and minority interest in
ventures in the Dominican Republic, Mauritius and Italy. The company's value of
assets in these operations totals approximately $77 million. Management expects
to continue to expand foreign production and distribution operations, through
acquisitions, joint ventures or new start-up operations.
The domestic order backlog, believed to be firm, as of the end of the
1999 fiscal year was approximately $11,132,000 versus $14,329,000 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 4,900 international
customer accounts which are active. In fiscal 1999, no single customer accounted
for more than 9% of total net sales, and the ten largest accounted for 25% 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 primarily from the principal American synthetic
fiber producers and are currently available in an adequate supply.
3
<PAGE>
A&E has two patents issued and a patent application pending in several
jurisdictions. There are no material licenses, franchises or concessions held by
A&E. Research and Development expenditures were $432,000, $405,000 and $328,000
in fiscal 1999, 1998 and 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 one
of the world's largest manufacturers of industrial sewing threads and also
manufactures and distributes consumer sewing thread. A&E's principal North
American competition includes Coats American, Inc. and imports sold primarily
through distributors. Globally, A&E competes with Coats Viyella PLC as well as
regional producers and merchants in various foreign markets served by A&E. The
key competitive factors are 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 3,350 persons worldwide as of the end of
fiscal 1999. 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.
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
includes 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 contains 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. During fiscal 1999, a new freezer was added to Harris Teeter's milk
processing and ice cream manufacturing facility located on 4.7 acres of land in
High Point, North Carolina which now totals 90,500 square feet. Harris Teeter
operates its retail stores primarily from leased properties. The base annual
rentals on leased store and warehouse properties as of October 3, 1999
aggregated approximately $52,284,000 net of sublease rentals of approximately
$1,288,000. 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 October 3, 1999, the additional rental amounted to approximately
$1,218,000. Harris Teeter's supermarkets range in size from approximately 12,000
square feet to 66,000 square feet, with an average size of approximately 40,000
square feet. The following table sets forth selected statistics with respect to
Harris Teeter stores for each of the last three fiscal years.
4
<PAGE>
HARRIS TEETER STORE DATA 1997 1998 1999
---------- ---------- ----------
Stores Open at End of Period 138 144 147
Average Weekly Net Sales Per Store* $ 272,924 $ 292,124 $ 303,206
Average Square Footage Per Store 38,076 39,155 40,347
Average Square Footage Per New
Store Opened During Period 50,191 45,966 47,323
Total Square Footage at End
of Period 5,254,457 5,638,261 5,930,991
*Computed on the basis of aggregate sales of stores open for a full year.
A&E's principal offices and twelve 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 2,158,578 square feet of floor
space and an insured value of $601,523,000. A&E has the capacity to produce
annually approximately 44,250,000 pounds of industrial sewing thread and has a
dyeing capacity of approximately 44,550,000 pounds per year. Capacities are
based on 168 hours of operations per week.
A&E leases fourteen distribution centers scattered throughout its
domestic markets with an aggregate of 329,042 square feet of floor space and an
approximate annual rent of $1,325,000.
Through subsidiaries, A&E also owns four international manufacturing
and/or distribution facilities with an aggregate of 289,608 square feet of floor
space and an approximate insured value of $21,800,000. A&E leases another 20
international facilities with an aggregate of 375,864 square feet of floor space
and an approximate annual rent of $1,400,000. 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 minority interests in
various 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
5
<PAGE>
$1,500,000. Under the interim allocation of costs agreed to by the parties to
the Administrative Order on Consent, the Registrant's share is 1.155% of the
total cost. The Registrant does not believe that this proceeding will have a
material effect on its business or financial condition.
The Registrant and its subsidiaries are involved in various matters
from time to time in connection with their operations, including various
lawsuits, patent and environmental matters. These matters considered in the
aggregate have not had, nor does the Registrant expect them to have, a material
effect on the Registrant's business or financial condition. For certain other
information regarding potential contingencies, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Other Matters" in
the 1999 Annual Report.
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 70, 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 68, 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 44, 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.
John B. Woodlief, age 49, has been Vice President - Finance of the
Registrant since November 1999. Prior to that time, and beginning in
1996, he served as Managing Partner of PricewaterhouseCoopers,
Charlotte, North Carolina office. He joined Price Waterhouse in 1972.*
Fred J. Morganthall, II, age 48, 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 49, 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.
*Richard N. Brigden, age 60, served as Vice President - Finance of the
Registrant from December 1983 until November 1999. He will retire in
early 2000.
6
<PAGE>
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 1999 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
1999 and 1998 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 sections headed
"Ruddick Corporation Financial Highlights" and "Eleven-Year Financial and
Operating Summary" in the Registrant's 1999 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 1999 Annual
Report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCUSSION 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 1999 Annual Report.
7
<PAGE>
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 1999 Annual
Report.
The financial statement schedules required to be filed herewith, and
the Report of Independent Public Accountants thereon, are listed under Item
14(a) of this Report and filed herewith pursuant to Item 14(d) of this Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
- -----------------------------------------------------------------------
FINANCIAL DISCLOSURE
- --------------------
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -----------------------------------------------------------
The information required by this item with respect to executive
officers is set forth above in Part I, Item 4A. The other information required
by this item is incorporated herein by reference to the sections entitled
"Election of Directors" and "Section 16(a) Beneficial Ownership Reporting
Compliance" in the Registrant's Proxy Statement dated December 27, 1999, filed
with the Securities and Exchange Commission with respect to the Registrant's
2000 Annual Meeting of Shareholders (the "2000 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 2000 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 2000 Proxy
Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------------------------------------------------------
None.
8
<PAGE>
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 financial statements
and report are incorporated herein by reference to the
Registrant's 1999 Annual Report:
Consolidated Balance Sheets, October 3, 1999 and September 27,
1998
Statements of Consolidated Income and Retained Earnings for
the fiscal years ended October 3, 1999, September 27, 1998 and
September 28, 1997
Statements of Consolidated Total Non-Owner Changes in Equity
for the fiscal years ended October 3, 1999, September 27, 1998
and September 28, 1997
Statements of Consolidated Cash Flows for the fiscal years
ended October 3, 1999, September 27, 1998 and September 28,
1997
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
October 3, 1999 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.
9
<PAGE>
Sequentially
Exhibit Numbered
Number Description of Exhibit Page
- ------ ---------------------- ----
3.1 Restated Articles of Incorporation of the *
Registrant, incorporated herein by reference to
Exhibit 3.1 of the Registrant's Quarterly Report on
Form 10-Q for the quarterly period ended March 29,
1992 (Commission File No. 1-6905).
3.2 Amended and Restated Bylaws of the Registrant, *
incorporated herein by reference to Exhibit 3.2 of
the Registrant's Annual Report on Form 10-K for the
fiscal year ended September 27, 1998 (Commission
File No. 1-6905).
4.1 Revolving Credit Agreements for an aggregate of *
$100,000,000, entered into as of February 15, 1995,
by and between the Registrant and each of First
Union National Bank of North Carolina, NationsBank,
National Association (formerly NationsBank,
National Association (Carolinas)) and Wachovia Bank
of North Carolina, N.A., incorporated herein by
reference to Exhibits 4.1, 4.2 and 4.3 of the
Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended April 2, 1995 (Commission
File No. 1-6905).
4.2 $50,000,000 6.48% Series A Senior Notes due March *
1, 2011 and $50,000,000 Private Shelf Facility
dated March 1, 1996 between Ruddick Corporation and
The Prudential Insurance Company of America,
incorporated herein by reference to Exhibit 4.1 of
the Registrant's Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 1996
(Commission File No. 1-6905).
4.3 $50,000,000 7.55% Senior Series B Notes due July
15, 2017 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).**
10
<PAGE>
Sequentially
Exhibit Numbered
Number Description of Exhibit Page
- ------ ---------------------- ----
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).**
11
<PAGE>
Sequentially
Exhibit Numbered
Number Description of Exhibit Page
- ------ ---------------------- ----
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).**
12
<PAGE>
Sequentially
Exhibit Numbered
Number Description of Exhibit Page
- ------ ---------------------- ----
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 1999 Annual Report to +
Shareholders: Consolidated Financial Statements on
pages 22 to 35 and sections headed "Management's
Discussion and Analysis of Financial Condition and
Results of Operations" (pages 17 to 21), "Ruddick
Corporation Financial Highlights" (page 3) and
"Eleven-Year Financial and Operating Summary"
(pages 36 and 37) only.
21 List of Subsidiaries of the Registrant. +
13
<PAGE>
23 Consent of Independent Public Accountants. +
27 Financial Data Schedule. +
- ------------------------
* 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 October 3, 1999.
(c) Exhibits
See (a )(3) above.
(d) Financial Statement Schedules
See (a) (2) above.
14
<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 22, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated:
Name Title Date
---- ----- ----
/s/ Thomas W. Dickson President and December 22, 1999
- ------------------------- Director
Thomas W. Dickson (Principal Executive
Officer)
/s/ John B. Woodlief Vice President- December 22, 1999
- ------------------------- Finance (Principal
John B. Woodlief Financial Officer)
/s/ Douglas A. Stephenson Vice President December 22, 1999
- ------------------------- and Treasurer
Douglas A. Stephenson (Principal Accounting
Officer)
/s/ John R. Belk Director December 22, 1999
- -------------------------
John R. Belk
/s/ Edwin B. Borden, Jr. Director December 22, 1999
- -------------------------
Edwin B. Borden, Jr.
/s/ John W. Copeland Director December 22, 1999
- -------------------------
John W. Copeland
/s/ Alan T. Dickson Chairman of December 22, 1999
- ------------------------- the Board
Alan T. Dickson and Director
/s/ R. Stuart Dickson Chairman of December 22, 1999
- ------------------------- the Executive
R. Stuart Dickson Committee and Director
15
<PAGE>
Name Title Date
---- ----- ----
- --------------------------- Director
Roddey Dowd, Sr.
/s/ James E. S. Hynes Director December 22, 1999
- ---------------------------
James E. S. Hynes
/s/ Hugh L. McColl, Jr. Director December 22, 1999
- ---------------------------
Hugh L. McColl, Jr.
/s/ Anna S. Nelson Director December 22, 1999
- ---------------------------
Anna S. Nelson
/s/ Harold C. Stowe Director December 22, 1999
- ---------------------------
Harold C. Stowe
- --------------------------- Director
Isaiah Tidwell
16
<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 28, 1999. Our audit was made for the
purpose of forming an opinion on those statements taken as a whole. The schedule
listed in Item 14(a)(2) is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
Charlotte, North Carolina
October 28, 1999
S-1
<PAGE>
RUDDICK CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE FISCAL YEARS ENDED
SEPTEMBER 28, 1997, SEPTEMBER 27, 1998,
AND OCTOBER 3, 1999
(in thousands)
---------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C
---------------------------------------------------------------------------
ADDITIONS
BALANCE CHARGED TO
AT BEGINNING COSTS AND
DESCRIPTION OF FISCAL YEAR EXPENSES
- --------------------------------------------------------------------------------
Fiscal Year Ended September 28, 1997:
Reserves deducted from assets
to which they apply -
Allowance For Doubtful Accounts $1,398 $1,704
=====================================
Fiscal Year Ended September 27, 1998:
Reserves deducted from assets
to which they apply -
Allowance For Doubtful Accounts $2,005 $2,145
=====================================
Fiscal Year Ended October 3, 1999:
Reserves deducted from assets
to which they apply -
Allowance For Doubtful Accounts $2,046 $1,920
=====================================
SCHEDULE II
-----------------------------------
COLUMN D COLUMN E
-----------------------------------
BALANCE
AT END
DESCRIPTION DEDUCTIONS* OF PERIOD
- --------------------------------------------------------------------------------
Fiscal Year Ended September 28, 1997:
Reserves deducted from assets
to which they apply -
Allowance For Doubtful Accounts $1,097 $2,005
=====================================
Fiscal Year Ended September 27, 1998:
Reserves deducted from assets
to which they apply -
Allowance For Doubtful Accounts $2,104 $2,046
=====================================
Fiscal Year Ended October 3, 1999:
Reserves deducted from assets
to which they apply -
Allowance For Doubtful Accounts $733 $3,233
=====================================
*Represents accounts receivable balances written off as uncollectible,
less recoveries.
S-2
EXHIBIT 11
RUDDICK CORPORATION
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
FISCAL YEAR ENDED
---------------------------
OCTOBER 3, SEPTEMBER 27,
1999 1998
------------- ------------
NET INCOME PER SHARE COMPUTED AS FOLLOWS:
BASIC:
1. Net Income available to common
shareholders $ 50,714,128 $ 46,771,696
============= ============
2. Weighted Average Common Shares
Outstanding - Basic 46,511,523 46,667,416
3. Basic net income per share
(Item 1 divided by Item 2) $ 1.09 $ 1.00
============= ============
DILUTED:
1. Net Income available to common
shareholders $ 50,714,128 $ 46,771,696
============= ============
2. Weighted Average Common Shares
Outstanding - Basic 46,511,523 46,667,416
3. Weighted potential shares under
stock options computed for the
periods using the Treasury Stock Method. 235,127 297,007
------------- ------------
4. Weighted Average Common Shares
Outstanding - Diluted Common Equivalent
Shares Outstanding 46,746,650 46,964,423
============= ============
5. Net Income Per Share (Item 1
divided by Item 4) $ 1.08 $ 1.00
============= ============
EXHIBIT 13
RUDDICK CORPORATION
1999 ANNUAL REPORT TO SHAREHOLDERS:
CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>
Exhibit 13
Ruddick Corporation Financial Highlights
(Dollars in thousands, except per share data) 1999 1998
Net Sales $2,624,774 $2,487,370
Total Operating Profit 104,055 94,196
Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) 166,699 152,851
Net Income 50,714 46,772
Net Income Per Share
Basic 1.09 1.00
Diluted 1.08 1.00
Dividend Per Share .33 .32
Total Assets 970,114 931,618
Shareholders' Equity 443,683 410,725
Book Value Per Share 9.55 8.82
(Dollars in thousands, except per share data) 1997 1996
Net Sales $2,300,089 $2,142,501
Total Operating Profit 94,836 83,143
Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) 144,583 125,390
Net Income 47,731 42,802
Net Income Per Share
Basic 1.02 .92
Diluted 1.02 .92
Dividend Per Share .32 .26
Total Assets 885,243 801,702
Shareholders' Equity 380,507 346,856
Book Value Per Share 8.17 7.47
(Dollars in thousands, except per share data) 1995
Net Sales $2,009,776
Total Operating Profit 76,728
Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) 114,385
Net Income 39,267
Net Income Per Share
Basic .84
Diluted .84
Dividend Per Share .25
Total Assets 715,318
Shareholders' Equity 316,236
Book Value Per Share 6.82
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations - Fiscal 1999 Compared to Fiscal 1998
For the 53-week fiscal year ended October 3, 1999, consolidated sales
of $2.6 billion increased 5.5% over the $2.5 billion reported in the 52-week
1998 fiscal year. Consolidated fiscal 1999 net income of $50.7 million increased
8% from the $46.8 million reported last year. Basic and diluted earnings per
share were $1.09 and $1.08, respectively, in fiscal 1999 compared to $1.00 for
both in fiscal 1998. 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 increase
in net income for fiscal 1999 resulted primarily from increased operating profit
at both Harris Teeter, the Company's retail grocery subsidiary, and American &
Efird (A&E), the industrial thread subsidiary, partially offset by a higher
effective income tax rate for the Company. The Company's effective income tax
rate rose to 37.7% (33.8% in 1998), driven by reduced tax benefits from
Company-owned life insurance (COLI). As a result of 1996 federal tax
legislation, certain policy loan interest which had been partially deductible
for income taxes during a three-year phaseout period was no longer deductible
effective January 1, 1999.
Harris Teeter, Inc. Sales grew by 7% for the 53-week fiscal 1999 to $2.3 billion
from $2.1 billion in the 52-week fiscal 1998. The sales increase was primarily
due to a 5% expansion in store square footage during the fiscal year, as well as
the promotional, advertising and customer service activities for new and
existing stores in the intensely competitive market environment in the
southeastern United States. Further, the rate of food inflation continued to be
modest. Harris Teeter sales for stores in operation during both fiscal years
increased by .9% in fiscal 1999, compared to 4.8% in fiscal 1998. Overall,
chain-wide grocery sales of the current fiscal year grew by 7% and accounted for
51% of the sales increase. Dairy, meat, produce and frozen products had sales
increases ranging from 5% to 10% and accounted for 41% of the sales increase.
The overall sales
<PAGE>
growth was achieved despite a disruption of net sales in certain stores during a
period of transition associated with the third quarter exchange of 11 western
Virginia stores for 10 Kroger stores in the Greensboro and Winston-Salem, North
Carolina market areas. This market realignment afforded the potential to achieve
enhanced distribution efficiency and better utilization of advertising costs.
Harris Teeter closed its 11 Virginia stores in May and opened eight of the newly
acquired Kroger stores during June and July of the fiscal year. Sales lost
during this transition period were partially offset by an increase in sales at
existing Harris Teeter stores in the region.
Gross profit increased by 7% to $621.3 million in fiscal 1999 from
$581.2 million in fiscal 1998. Operating profit expanded by 6%, to $55.5 million
in fiscal 1999 from $52.1 million in fiscal 1998. These results were primarily
due to higher net sales and improved expense controls, the benefits of which
were partially offset by non-recurring expenses associated with the closings of
the western Virginia stores and the opening of the new stores. The pre-tax cost
of the exchange of stores was not materially different from the $5.5 million
estimate reported by the Company at the time of the transaction. For both fiscal
1999 and 1998, the operating margin on sales remained flat at approximately
2.44%.
At the end of fiscal 1999, 147 stores were in operation, compared to
144 a year ago. Sixteen new stores were opened during the year, including eight
former Kroger stores in the Greensboro and Winston-Salem, North Carolina area,
and 13 stores were closed, including 11 in western Virginia which were acquired
by Kroger. Harris Teeter expanded its market boundaries this year by opening its
first two stores in the Jacksonville, Florida area.
American & Efird, Inc. In the 53-week fiscal 1999, A&E's sales of $351.6 million
fell 1% from $355.1 million in 52-week fiscal 1998, reflecting the approximately
$3.8 million of prior year sales of A&E's Korean operations, which were closed
in June of 1998. In 1999, the sales decline was primarily in industrial sewing
thread, although consumer thread and notions sales also decreased slightly.
Sales of A&E's industrial thread in the U.S. in both years declined as the
result of the shift of its customers' production to Mexico and the Caribbean
Basin countries, the growth of low-priced apparel imports and a change in
consumer buying trends to more designer apparel, resulting in fewer units sold
at retail. In fiscal 1999, weak demand for industrial thread in the U.S.
resulted in decreased sales during the first and second quarters, although
overall business conditions improved in the second half of the year. In A&E's
foreign operations, while business conditions were somewhat soft in Europe,
sales increases were achieved in the majority of its international markets. In
addition to the anticipated continuation of growth in international markets, A&E
expects that its ability to meet the increasing demands of its customers for top
quality, high performance industrial thread in the apparel, home furnishings and
other markets will provide an opportunity for future growth in sales.
Gross profit increased by 5% to $106.1 million in fiscal 1999 from
$101.0 million in the prior year, primarily as a result of the additional
operating week in the 1999 fiscal year and increased productivity in
manufacturing operations. Operating profit improved by 16% to $48.6 million in
fiscal 1999 compared to $42.1 million in the prior year, reflecting primarily
the negative impact of $5.4 million in operating losses in Korea in
<PAGE>
fiscal 1998. A&E's productivity improved during fiscal 1999 due to continued
modernization and due to the consolidation of a Charlotte, North Carolina
distribution center and the company's Salisbury, North Carolina dyehouse into
existing facilities in Gastonia, North Carolina.
Sales by foreign operations in fiscal 1999 increased by 13% over fiscal
1998. Foreign operations contributed 30% of A&E's total sales and 16% of its
operating profits in fiscal 1999. During the fourth quarter of fiscal 1999, A&E
withdrew from its attempt to acquire Hicking Pentecost PLC, a United
Kingdom-based industrial thread manufacturer. While foreign sales and profits
were still not material to the Company's consolidated results of operations,
growth in international sales continued during fiscal 1999. With the exception
of Europe, all major foreign operations improved profitability in fiscal 1999,
with NAFTA continuing to drive strong performances in Canada and Mexico. Export
sales also expanded during fiscal 1999.
Results of Operations - Fiscal 1998 Compared to Fiscal 1997
For fiscal 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 for fiscal 1997. 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 A&E, which
related largely to its Korean operations, not fully offset by the increased
operating profit of Harris Teeter. 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). Federal tax legislation in
1996 restricted the deductibility of certain interest on policy loans to 90% of
the total in 1997 and 80% in 1998.
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 $581.2 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 at the end of fiscal 1997. During fiscal 1998, ten new stores were opened,
one of which was a replacement, and four less profitable stores were closed.
<PAGE>
American & Efird, Inc. For fiscal 1998, sales fell by 4% from fiscal 1997 to
$355.2 million. The sales decline was primarily in industrial sewing thread,
while consumer thread and notions sales increased. The decrease was 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. During fiscal
1997, sales growth had been 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 Mexico and the Caribbean Basin countries, 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, fiscal 1998
sales increases were achieved in all markets except Korea and Hong Kong, and
were especially strong in Mexico and Central America.
Gross profit in fiscal 1998 declined by 5% to $101.0 million from
$106.8 million in fiscal 1997 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 1998 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 the nine months of operation 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 in late 1998,
consolidated all customer interface functions, including sales support and
administration, customer service, credit and marketing, and enhanced efficiency
and lowered costs.
Excluding Korea, sales by foreign operations made up 25% of A&E's total
sales and 8% of its operating profit in 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
continued to drive strong performances in Canada and Mexico, and apparel
manufacturing continued to increase in Latin America. The A&E majority-owned
joint venture in China also evidenced growth.
Capital Resources and Liquidity
Ruddick Corporation is a holding company which, through its wholly
owned subsidiaries, Harris Teeter, Inc. and American & Efird, Inc., is engaged
in the primary businesses of regional supermarket operations and industrial
sewing thread manufacture and distribution, 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. The return on beginning equity was 12.3% in
both 1999 and 1998. At the same time, the Company seeks to limit long-term debt
such that it
<PAGE>
constitutes no more than 40% of capital employed, which includes long-term debt,
minority interest and shareholders' equity. As of the end of fiscal 1999, this
percentage was 30.7%, a decrease from last year's 31.6%.
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 1999 was
$82.8 million, and $40.8 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.
Working capital as of the fiscal years ended 1999, 1998 and 1997 was
$120.0 million, $87.3 million and $88.9 million, respectively. The increase of
$32.7 million in fiscal 1999 was primarily the result of an increase in
inventories and other current assets, and a decrease in accrued liabilities. The
current ratio was 1.5 at October 3, 1999 and 1.4 at September 27, 1998.
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 1999, capital expenditures were $96.9 million. In fiscal
2000, capital expenditures are expected to be not more than $130 million. For
further modernization and expansion, American & Efird expects to spend about $30
million. In the very competitive southeast U.S. grocery market, Harris Teeter
has capital expenditure plans totaling about $100 million. The Harris Teeter
estimates include the fiscal year 2000 opening of 12 new stores. New store
locations include two in North Carolina, three in Virginia, one in Maryland,
five in Georgia and one in Tennessee. Management expects that internally
generated funds, supplemented by available borrowing capacity, will be adequate
to finance such expenditures.
Other Matters
Year 2000 Compliance The Company has substantially completed the process of the
modification or conversion of all mission-critical Company computer (IT)
systems, as well as all mission-critical 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
had 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, including final testing in all operations
worldwide by September 1999. Such remediation plans have been modified as the
project progressed, and routine periodic reports have displayed that the project
activities are on schedule with the requirements of the latest Year 2000
remediation and testing plans. At both Harris Teeter and A&E, the assessment,
technical plan development and remediation phases have been fully completed.
Management believes that, on a worldwide basis, all mission-critical systems and
programs have been
<PAGE>
remediated and are fully compliant. Date simulation testing, which has been
ongoing throughout the Year 2000 conversion, is complete on all mission-critical
systems and programs. Additional compliance testing will continue throughout
calendar year 1999 as an added safeguard and in response to any ongoing code
changes or upgrades by software suppliers. The combined companies have spent
$2.8 million cumulatively for Year 2000 compliance since project inception and
expect to spend $300,000 more during the remainder of calendar year 1999 in
order to complete the project. Maintenance and modification costs are expensed
as incurred, while the costs of new software are capitalized and amortized over
the software's useful life. The Company has formal correspondence programs with
its major suppliers and its major thread customers, of which no single customer
exceeds 9% 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 has developed 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. These plans 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.
At both A&E and Harris Teeter, the contingency plans were developed to
mitigate the potential impacts of system, equipment or supplier disruptions.
These plans include temporary, manual procedures for each function in the
procurement, production, warehousing, distribution and revenue cycles of the
businesses. Further, alternate sources to supply materials and product have been
determined, and appropriate levels of increased inventories are expected to be
maintained. These plans have been completed and fully documented in worldwide
operations. Additionally, at Harris Teeter, contingency plans further
encompassed the specific potential adversities that could effect the retail
store operations, such as the potential of disruptions in point of sale register
systems, retail price management, cash management, debit and credit card
operations and store inventory replenishment. To a large extent, the contingency
plans engage temporary, manual solutions to each potential random disruption.
While the companies will have remediated and tested all mission-critical
systems, the possibility still exists for random equipment failures, power
outages or system failures of vendors and suppliers. Although the contingency
plans of the Company have been thoroughly and prudently developed, it must be
recognized that disruptions caused by third parties which may be more than
random occurrences or may be catastrophically extensive, could have a material
adverse effect on the Company's results of operations.
Income Taxes As a result of federal legislation which phased out, effective
January 1, 1999, interest deductions on certain insurance policy loans and
thereby significantly diminished the favorable tax attributes of COLI, the
Company's effective income tax rate, in comparison to the prior fiscal year, has
risen to a level slightly below statutory
<PAGE>
rates domestically. The Company has recorded income tax reductions of
approximately $25 million cumulatively as the result of COLI interest deductions
from October 1993 through December 27, 1998. The Internal Revenue Service (IRS),
on a comprehensive national level, is pursuing an adverse position regarding the
deductibility of COLI policy loan interest for years prior to January 1, 1999.
The IRS issued Technical Advice Memoranda regarding the COLI deductibility to
taxpayers unrelated to the Company. Further, on October 19, 1999, the Tax Court
ruled, in a single judge's decision, that Winn-Dixie Stores, Inc., was not
entitled to deduct interest on policy loans from its COLI program, finding that
the program lacked economic substance. Management understands that the adverse
position taken by the IRS will be subjected to extensive further challenges in
the courts, not only by Winn-Dixie but also by many other large corporations
with similar life insurance programs. On June 17, 1999, the IRS issued a notice
of assessment of tax to the Company for the amounts of COLI loan interest
deducted in fiscal years 1994 and 1995. If the IRS were to prevail, the income
tax payable (including federal and state amounts) would total approximately $7.4
million, for 1994 and 1995, and for all years a total of $29.2 million,
including interest thereon. The Company strongly disagrees with the position of
the IRS, has begun the appeal of the assessment and intends to vigorously pursue
justice through the taxpayer appeals process and, if necessary, the judicial
system. In the event that the IRS prevails, this outcome would result in a
material impact upon the Company's future income taxes and results of
operations.
Regarding Forward-Looking Statements
The foregoing discussion contains some forward-looking statements about
the Company's financial condition and results of operations, which are subject
to certain risks and uncertainties that could cause actual results to differ
materially from those reflected in 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 the
Company's primary geographic markets, the entry of new competitors and
consolidation in the supermarket industry,
o economic or political changes in the countries in which the Company operates
or adverse trade regulations,
o the passage of future tax legislation, or any regulatory or judicial position
which prevails, if any, that could have an adverse impact on the tax benefits of
COLI,
o management's ability to accurately predict the adequacy of the Company's
present liquidity to meet future requirements,
<PAGE>
o changes in the Company's capital expenditures, new store openings and store
closings, and
o non-availability of resources for the Company, or its suppliers and customers,
to complete their respective Year 2000 compliance effectively.
Consolidated Balance Sheets
October 3 September 27
(Dollars in thousands) 1999 1998
ASSETS
Current Assets
Cash and Cash Equivalents $ 14,467 $ 16,668
Accounts Receivable, Less Allowance For Doubtful
Accounts: 1999, $3,233; 1998, $2,046 76,827 76,948
Inventories 223,694 211,404
Other Current Assets 43,886 27,733
--------- ---------
Total Current Assets 358,874 332,753
--------- ---------
Property
Land and Buildings 179,837 166,334
Machinery and Equipment 613,252 568,078
Leasehold Improvements 176,074 146,926
Assets Under Capital Leases 1,920 1,920
--------- ---------
Total, at Cost 971,083 883,258
Accumulated Depreciation and Amortization 431,526 369,470
--------- ---------
Property, Net 539,557 513,788
--------- ---------
Investments and Other Assets
Investments 16,511 17,675
Other Assets 55,172 67,402
--------- ---------
Total Assets $ 970,114 $ 931,618
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes Payable $ 177 $ 2,411
Current Portion of Long-term Debt 429 571
Dividends Payable - 3,726
Accounts Payable 143,095 146,149
Federal and State Income Taxes 14,986 5,456
Accrued Compensation 28,179 28,033
<PAGE>
Accrued Interest 4,208 19,602
Other Accrued Liabilities 47,794 39,472
-------- --------
Total Current Liabilities 238,868 245,420
-------- --------
Non-Current Liabilities
Long-term Debt 198,532 191,360
Deferred Income Taxes 59,774 55,906
Other Liabilities 24,531 23,694
Minority Interest 4,726 4,513
-------- --------
Commitments and Contingencies
Shareholders' Equity
Common Stock - Shares Outstanding:
1999 - 46,451,240;
1998 - 46,554,591 52,137 54,686
Retained Earnings 393,699 358,328
Cumulative Translation Adjustments (2,153) (2,289)
-------- --------
Shareholders' Equity 443,683 410,725
-------- --------
Total Liabilities and
Shareholders' Equity $ 970,114 $ 931,618
======== ========
The accompanying notes to consolidated financial statements are an integral part
of these balance sheets.
Statements of Consolidated Income and Retained Earnings
For the Fiscal Years Ended,
October 3 September 27
(Dollars in thousands except per share data) 1999 1998
Net Sales $2,624,774 $ 2,487,370
---------- ------------
Cost of Sales 1,897,397 1,805,088
Selling, General and Administrative Expenses 623,322 588,086
---------- ------------
Operating Profit 104,055 94,196
---------- ------------
Net Interest Expense 14,686 15,973
Other Administrative Expense, Net 7,980 7,529
---------- ------------
Income Before Taxes 81,389 70,694
Taxes 30,675 23,922
---------- ------------
Net Income 50,714 46,772
Retained Earnings at Beginning of Fiscal Year 358,328 326,488
For the Fiscal Years Ended,
September 28
(Dollars in thousands except per share data) 1997
Net Sales $ 2,300,089
------------
Cost of Sales 1,667,858
Selling, General and Administrative Expenses 537,395
------------
Operating Profit 94,836
------------
Net Interest Expense 14,558
Other Administrative Expense, Net 8,976
------------
Income Before Taxes 71,302
Taxes 23,571
------------
Net Income 47,731
Retained Earnings at Beginning of Fiscal Year 293,654
Common Dividend - 1999: $.33 a share;
1998 and 1997: $.32 a share 15,343 14,932 14,897
--------- --------- ---------
<PAGE>
Retained Earnings at End of Fiscal Year $ 393,699 $ 358,328 $ 326,488
========= ========= =========
Net Income Per Share - Basic $ 1.09 $ 1.00 $ 1.02
Net Income Per Share - Diluted $ 1.08 $ 1.00 $ 1.02
========= ========= =========
The accompanying notes to consolidated financial statements are an integral part
of these statements.
Statements of Consolidated Total Non-Owner Changes in Equity
For the Fiscal Years Ended,
October 3 September 27
(Dollars in thousands) 1999 1998
Net Income $ 50,714 $ 46,772
Other Non-Owner Changes in Equity, Net of Tax:
Foreign Currency Translation Adjustment 136 (917)
--------- ---------
Total Non-Owner Changes in Equity $ 50,850 $ 45,855
========= =========
For the Fiscal Years Ended,
September 28
(Dollars in thousands) 1997
Net Income $ 47,731
Other Non-Owner Changes in Equity, Net of Tax:
Foreign Currency Translation Adjustment (363)
---------
Total Non-Owner Changes in Equity $ 47,368
=========
The accompanying notes to consolidated financial statements are an integral part
of these statements.
Statements of Consolidated Cash Flows
For the Fiscal Years Ended,
October 3 September 27 September 28
(Dollars in thousands) 1999 1998 1997
Cash Flow from Operating Activities
Net Income $ 50,714 $ 46,772 $ 47,731
Non-cash Items Included in Net Income
Depreciation and Amortization 70,624 66,184 58,723
Deferred Taxes 1,433 3,064 6,133
Restructuring Charge - (846) (1,298)
Other, Net (3,980) 6,668 4,459
Decrease (Increase) in Accounts Receivable 121 904 (7,043)
Decrease (Increase) in Inventories (12,290) (15,356) (12,400)
Decrease (Increase) in Other Current Assets (13,718) 4,911 (6,965)
Increase (Decrease) in Current Liabilities (6,410) 11,018 5,742
------- ------- ------
Net Cash Provided by Operating Activities 86,494 123,319 95,082
------- ------- ------
<PAGE>
Net Cash Provided by Discontinued
Activities - - 413
------- ------- --------
Investing Activities
Capital Expenditures (96,937) (95,473) (115,299)
Cash Proceeds from Sale of Property 2,931 1,719 1,038
COLI, Net 11,084 (1,405) (2,883)
Other, Net 3,419 (13,860) 5,492
------- ------- --------
Net Cash Used in Investing Activities (79,503) (109,019) (111,652)
------- ------- --------
Financing Activities
Proceeds from Long-term Borrowings 7,837 2,100 87,650
Payments of Principal on Long-term Debt (735) (508) (61,493)
Dividends Paid (15,343) (14,932) (14,897)
Other, Net (951) (1,442) 1,014
------- ------- --------
Net Cash Provided by (Used in) Financing
Activities (9,192) (14,782) 12,274
------- ------- --------
Decrease in Cash and Cash Equivalents (2,201) (482) (3,883)
Cash and Cash Equivalents at Beginning of
Year 16,668 17,150 21,033
------- ------- --------
Cash and Cash Equivalents at End of Year $ 14,467 $ 16,668 $ 17,150
======= ======= ========
Supplemental Disclosures of Cash Flow
Information
Cash Paid During the Year for:
Interest $ 15,953 $ 16,516 $ 13,937
Income Taxes $ 26,439 $ 20,201 $ 13,725
------- ------- --------
The accompanying notes to consolidated financial statements are an integral part
of these statements.
Notes to Consolidated Financial Statements
Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the accounts
of Ruddick Corporation and its wholly owned operating companies, Harris Teeter,
Inc. and American & Efird, Inc., 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
<PAGE>
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 $21,589,000 and
$21,036,000 less than the first-in, first-out (FIFO) cost method at October 3,
1999 and September 27, 1998, respectively. Foreign inventories and limited
categories of domestic inventories, totaling $36,129,000 for fiscal 1999 and
$35,186,000 for fiscal 1998, are valued on the weighted average and on the FIFO
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 $12,512,000 and $28,854,000
undepreciated construction in progress at October 3, 1999 and September 27,
1998, 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 $6,662,000 and
$7,924,000 held for investment approximated their aggregate fair values at
October 3, 1999 and September 27, 1998, 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
$9,005,000 in 1999; $16,831,000 in 1998, and $18,490,000 in 1997 is included in
other administrative expense in the statements of consolidated income and
retained earnings. Acquisition costs allocated to other assets, including
favorable lease rights and goodwill, are being amortized over 10-15 years.
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 recorded amount of fixed rate obligations
approximates their fair value based on borrowing rates currently available to
the Company for loans with similar terms and maturities. The Company reviews the
carrying value of property and equipment
<PAGE>
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 October 3, 1999, 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 $22,696,000, $20,721,000, and $15,555,000 were included in the Company's
results of operations for fiscal 1999, 1998 and 1997, 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 46,511,523 in 1999, 46,667,416 in 1998, and 46,542,505 in 1997.
As the result of outstanding stock options, the weighted average diluted shares
outstanding were 46,746,650 in 1999, 46,964,423 in 1998 and 46,825,469 in 1997.
Common stock equivalents reduced earnings per share by $.01 in 1999, and had no
effect on the per share amounts in 1998 and 1997.
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.
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
<PAGE>
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
Derivative Instruments and Hedging: SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," will be effective for the
Company's fiscal year 2001. 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 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 23 years. It is expected that such leases will be renewed
by exercising options or replaced by leases of other properties. Most store
leases provide for additional rentals based on sales, and certain store
facilities are sublet under leases expiring during the next eight years. Rent
expenses were as follows:
(In thousands) 1999 1998 1997
Operating Leases:
Minimum $ 65,791 $ 59,720 $ 52,327
Contingent 1,218 1,157 941
--------- --------- ---------
Total $ 67,009 $ 60,877 $ 53,268
--------- --------- ---------
Future minimum lease commitments at October 3, 1999 (excluding leases
assigned or expected to be assigned - see below) were as follows:
(In thousands) Capital Leases Operating Leases
2000 $ 183 $ 67,854
2001 183 60,957
2002 183 56,640
2003 115 54,507
2004 6 53,342
Later years - 499,768
------ ---------
Total minimum lease payments $ 670 $ 793,068
Less amount representing interest ------ ---------
(Store premises, 6.75%-10.25%,
<PAGE>
store equipment, 8%-15%) 114
------
Present value of minimum lease obligations 556
Less current portion 136
------
Long-term capital lease obligations $ 420
------
Net book value of assets under capital leases $ 249
------
Total minimum sublease rentals to be received
under noncancelable subleases $ 18,809
--------
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 19 years and the future minimum lease payments of $42,080,000 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 18 years
and the future minimum lease payments related to these locations total
$23,261,000 (approximating $2,047,000 per year for each of the next five years).
LONG-TERM DEBT
Long-term debt at October 3, 1999 and September 27, 1998 was as
follows:
(In thousands) 1999
6.48% Senior Note due $7,143 annually
March, 2005 through 2011 $ 50,000
7.72% Senior Note due April, 2017 50,000
7.55% Senior Note due July, 2017 50,000
Revolving line of credit, variable rate, due February 2004 40,800
Industrial revenue bond, variable rate, due November 2000 2,500
Obligations under capital leases and other 5,661
----------
Total 198,961
Less current portion 429
----------
Total long-term debt $ 198,532
----------
(In thousands) 1998
6.48% Senior Note due $7,143 annually
March, 2005 through 2011 $ 50,000
7.72% Senior Note due April, 2017 50,000
7.55% Senior Note due July, 2017 50,000
Revolving line of credit, variable rate, due February 2004 36,000
Industrial revenue bond, variable rate, due November 2000 2,500
Obligations under capital leases and other 3,431
---------
Total 191,931
Less current portion 571
---------
Total long-term debt $ 191,360
---------
Long-term debt maturities, excluding obligations under capital leases,
in each of the next five fiscal years are as follows: 2000 - $293,000; 2001 -
$2,810,000; 2002 - $266,000; 2003 - $281,000; 2004 - $299,000. Additionally in
fiscal 2004, the revolving line of credit ($40,800,000 as of October 3, 1999)
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.
During 1999 and 1998 the maximum outstanding borrowing under the
revolving line of credit was $82,800,000 and $86,700,000, respectively, and the
average outstanding for the fiscal years was $57,669,000 and $63,272,000,
respectively. The daily weighted average interest rate (a variable rate related
to the current published CD rate) was 5.6% and a commitment fee of .15% of the
unused line was charged during 1999 and
<PAGE>
1998. As of October 3, 1999, the Company had available $59,200,000 of committed
capacity 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
October 3, 1999, consolidated tangible net worth exceeded by $102,847,000 the
balance which, under the most restrictive provisions, must be maintained through
October 1, 2000. The requirement shall increase annually by 40% of consolidated
net income for such year. Total interest expense on long-term debt was
$14,997,000, $16,596,000, and $14,615,000 in 1999, 1998 and 1997, respectively.
CAPITAL STOCK
The capital stock of the Company authorized at October 3, 1999 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:
Common
(In thousands except share amounts) Shares Amount
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
---------- ----------
Shares issued under exercised stock options 135,149 1,359
Shares purchased and retired (238,500) (4,233)
Tax effect of disqualifying option stocks - 282
Other - 43
---------- ----------
Balance at October 3, 1999 46,451,240 $ 52,137
---------- ----------
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
<PAGE>
substantial portion of the Company's common stock. If certain additional events
then occur, each right would entitle the rightholder to acquire common stock of
the Company, or in some cases of an acquiring entity, having a value equal to
twice the exercise price. Under certain circumstances the Board of Directors may
exchange all or part of the outstanding rights at an exchange ratio per right of
one share of common stock, or one four-hundredth of a share of Series A Junior
Participating Additional Preferred Stock, or may redeem each right at a price of
$.0025. There are 200,000 shares of Series A Junior Participating Additional
Preferred Stock reserved for issuance upon exercise of the rights.
Stock Options
At October 3, 1999, the Company has 1988, 1993, 1995 and 1997 stock
option plans which authorized options for 3,100,000 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 October 3, 1999, the Company may grant
additional options for the purchase of 695,800 shares.
A summary of the status of the Company's stock option plans as of
October 3, 1999, September 27, 1998 and September 28, 1997, changes during the
years ending on those dates and related weighted average exercise price is
presented below:
1999 1998
(Shares in thousands) Shares Price Shares Price
Outstanding at beginning of year 1,343 $ 14.85 1,011 $ 10.99
Granted 387 19.85 610 19.29
Exercised (140) 10.36 (235) 9.89
Forfeited (102) 17.79 (43) 14.10
------ ------- ----- --------
Outstanding at end of year 1,488 16.36 1,343 14.85
------ ------- ----- --------
Options exercisable at year-end 519 $ 13.59 399 $ 11.50
------ ------- ----- --------
1997
(Shares in thousands) Shares Price
Outstanding at beginning of year 1,116 $ 10.40
Granted 120 13.45
Exercised (181) 9.05
Forfeited (44) 10.64
----- -------
Outstanding at end of year 1,011 10.99
----- -------
Options exercisable at year-end 422 $ 10.29
----- -------
<PAGE>
The following table summarizes options outstanding and options exercisable as of
October 3, 1999, and the related weighted average remaining contractual life
(years) and weighted average exercise price (shares in thousands):
Options Outstanding Options Exercisable Shares Remaining Shares
Option Price per Share Outstanding Life Price Exercisable Price
$ 9.16 to $ 13.38 578 3.1 $ 11.49 362 $ 11.33
14.38 to 18.47 40 8.4 16.98 40 16.98
19.31 to 20.28 870 5.7 19.57 117 19.39
------ ------- ----- ----- -------
$ 9.16 to $ 20.28 1,488 4.8 $ 16.36 519 $ 13.59
------ ------- ----- ----- -------
The weighted average fair value at date of grant for options granted
during fiscal 1999, 1998 and 1997 was $5.12, $5.44 and $3.82 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:
1999 1998 1997
Expected life (years) 4.8 5.1 4.9
Risk-free interest rate 4.67% 5.80% 5.91%
Volatility 28.66% 28.44% 28.65%
Dividend yield 2.10% 2.20% 2.10%
The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation." Accordingly, no compensation cost has
been recognized for the stock options granted in fiscal 1999, 1998 or 1997. 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) 1999 1998 1997
Net income - as reported $ 50,714 $ 46,772 $ 47,731
- pro forma 49,727 45,846 47,381
Net income per share:
Basic - as reported $ 1.09 $ 1.00 $ 1.02
- pro forma 1.07 .98 1.01
Diluted - as reported $ 1.08 $ 1.00 $ 1.02
- pro forma 1.06 .98 1.01
<PAGE>
The pro forma effect on net income for fiscal 1999, 1998 and 1997 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) 1999 1998 1997
CURRENT
Federal $ 24,320 $ 15,903 $ 12,803
State and other 4,921 4,955 4,687
--------- --------- ----------
29,241 20,858 17,490
--------- --------- ----------
DEFERRED
Federal 1,129 3,004 5,034
State and other 305 60 1,047
--------- --------- ----------
1,434 3,064 6,081
--------- --------- ----------
Provision for income taxes $ 30,675 $ 23,922 $ 23,571
--------- --------- ----------
Income from foreign operations before income taxes in fiscal 1999, 1998
and 1997 was $1,249,000, $1,402,000 and $4,520,000, respectively.
Income tax expense differed from an amount computed by applying the
statutory tax rates to pre-tax income as follows:
(In thousands) 1999 1998 1997
Income tax on pre-tax income at
the statutory federal rate of 35% $ 28,486 $ 24,743 $ 24,956
Increase (decrease) attributable to:
State and other income taxes,
net of federal income tax benefit 4,331 3,748 3,265
COLI (1,066) (3,528) (3,528)
Other items, net (1,076) (1,041) (1,122)
--------- --------- ----------
Income tax expense $ 30,675 $ 23,922 $ 23,571
--------- --------- ----------
The tax effects of temporary differences giving rise to the Company's
consolidated deferred tax liability at October 3, 1999 and September 27, 1998
are as follows:
(In thousands) 1999 1998
Deferred Tax Assets
Employee benefits $ 6,963 $ 6,483
<PAGE>
Reserves not currently deductible 9,091 7,344
Other 6,081 4,501
-------- --------
Total deferred tax assets $ 22,135 $ 18,328
-------- --------
Deferred Tax Liabilities
Property, plant and equipment $(60,479) $(55,607)
Other capitalized costs (4,579) (4,337)
Undistributed profit on foreign subsidiaries (5,049) (3,479)
Other (4,354) (5,797)
-------- --------
Total deferred tax liabilities $(74,461) $(69,220)
-------- --------
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 1999, 1998 and 1997 is as follows:
Industrial Retail Corporate
(In millions) Thread Grocery (1) Consolidated
1999
Net Sales $ 351.6 $ 2,273.2 $ 2,624.8
-------- ---------- ----------
Gross Profit 106.1 621.3 727.4
-------- ---------- ----------
Operating Profit 48.6 55.5 104.1
-------- ---------- ----------
Assets Employed at Year End $ 284.4 $ 614.3 $ 71.4 $ 970.1
Depreciation and Amortization 17.3 52.2 1.1 70.6
Capital Expenditures 15.6 77.5 3.8 96.9
1998
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
<PAGE>
(1) Corporate Assets Employed include investment assets and net cash surrender
value of Company-owned life insurance.
Geographic information as required by SFAS No. 131 is as follows: Net
revenue received from domestic United States customers was $2,520,502,000 in
fiscal 1999 ($2,394,821,000 in 1998), and net revenue received from customers in
foreign countries was $104,272,000 for fiscal 1999 ($92,549,000 in 1998). Net
long-lived assets located in the domestic United States were $524,200,000 at
fiscal year end 1999 ($497,700,000 in 1998), and net long-lived assets located
in other foreign countries were $20,600,000 and $20,300,000 at fiscal year end
1999 and 1998, respectively.
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 change in benefit obligation and
plans' assets, as well as the defined benefit plans' funded status and amounts
recognized in the Company's consolidated balance sheets at October 3, 1999 and
September 27, 1998:
(In thousands) 1999 1998
Change in benefit obligation:
Benefit obligation at the beginning of year $ 128,922 $ 110,191
Service cost 6,446 5,592
Interest cost 9,013 8,531
Actuarial loss (gain) (13,221) 9,799
Benefits paid (5,851) (5,191)
---------- ----------
Pension benefit obligation at end of year 125,309 128,922
========== ==========
Change in plan assets:
Fair value of assets at the beginning of year 98,412 92,611
Actual return on plan assets 5,610 4,366
Employer contribution 8,387 6,626
Benefits paid (5,850) (5,191)
---------- ----------
Fair value of assets at end of year 106,559 98,412
========== ==========
Funded status (18,750) (30,510)
Unrecognized net actuarial loss 13,596 24,701
Unrecognized prior service cost 1,657 2,060
<PAGE>
Unrecognized transition asset (753) (1,147)
---------- ----------
Accrued benefit cost $ (4,250) $ (4,896)
========== ==========
Amounts recognized in the statement of
financial position consist of:
Accrued benefit liability $ (4,250) $ (4,896)
========== ==========
The plans' assets consist primarily of U. S. government securities,
corporate bonds, cash equivalents and domestic equities, managed primarily by
two banks. The contribution payable at October 3, 1999 and September 27, 1998,
required to be paid by due date of the federal income tax return, was $1,686,000
and $2,501,000, respectively.
In 1999 (1998), a 7.5% (6.8%) weighted average discount rate and 4.5%
(4.5%) 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 8.75% for 1999 and 1998.
Net periodic pension expense for defined benefit plans for fiscal 1999,
1998, and 1997 included the following components:
(In thousands) 1999 1998 1997
Service cost $ 6,446 $ 5,592 $ 4,464
Interest cost 9,013 8,531 7,789
Expected return on plan assets (8,750) (7,907) (6,213)
Amortization of transition asset (394) (394) (394)
Amortization of prior service cost 403 403 403
Recognized net actuarial loss 1,024 390 -
--------- --------- ---------
Net periodic benefit cost $ 7,742 $ 6,615 $ 6,049
--------- --------- ---------
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) 1999 1998 1997
ESOP $ 7,540 $ 8,043 $ 8,733
-------- --------- ---------
Profit-sharing 2,292 1,609 3,098
-------- --------- ---------
Other 2,717 2,525 2,517
-------- --------- ---------
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 phased out, effective January
1, 1999, interest deductions on certain insurance policy loans and thereby
significantly diminished the favorable tax attributes of COLI, the Company's
effective income tax rate, in comparison to the prior fiscal year, has risen to
a level slightly below statutory rates domestically. The Company has recorded
income tax reductions of approximately $25
<PAGE>
million cumulatively as the result of COLI interest deductions from October 1993
through December 27, 1998. The Internal Revenue Service, on a comprehensive
national level, is pursuing an adverse position regarding the deductibility of
COLI policy loan interest for years prior to January 1, 1999. The IRS issued
Technical Advice Memoranda regarding COLI deductibility to taxpayers unrelated
to the Company. Further, on October 19, 1999, the Tax Court ruled, in a single
judge's decision, that Winn-Dixie Stores, Inc., was not entitled to deduct
interest on policy loans from its COLI program, finding that the program lacked
economic substance. Management understands that the adverse position taken by
the IRS will be subjected to extensive further challenges in the courts, not
only by Winn-Dixie but also by many other large corporations with similar life
insurance programs. On June 17, 1999, the IRS issued a notice of assessment of
tax to the Company for the amounts of COLI loan interest deducted in fiscal
years 1994 and 1995. If the IRS were to prevail, the income tax payable
(including federal and state amounts) would total approximately $7.4 million,
for 1994 and 1995, and for all years a total of $29.2 million, including
interest thereon. The Company strongly disagrees with the position of the IRS,
has begun the appeal of the assessment and intends to vigorously pursue justice
through the taxpayer appeals process and, if necessary, the judicial system. In
the event that the IRS prevails, this outcome would 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 October 3, 1999, there were 5,895 holders of record of common
stock.
First Second
(In millions, except per share data) Quarter Quarter
1999 Operating Results
Net Sales $ 652.1 $ 645.7
Net Income 12.6 12.7
Net Income Per Share .27 .27
Dividend Per Share .08 .08
Market Price Per Share
High 22 23
Low 15 5/8 16 1/2
1998 Operating Results
Net Sales $ 617.6 $ 616.3 $
Net Income 12.0 11.4
Net Income Per Share .26 .24
Dividend Per Share .08 .08
Third Fourth
(In millions, except per share data) Quarter Quarter
1999 Operating Results
Net Sales $ 636.6 $ 690.4
Net Income 12.3 13.1
Net Income Per Share .26 .28
Dividend Per Share .08 .09
Market Price Per Share
High 19 5/8 20
Low 16 1/8 15 1/4
1998 Operating Results
Net Sales 620.5 $ 633.0
Net Income 10.3 13.1
Net Income Per Share .22 .28
Dividend Per Share .08 .08
<PAGE>
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
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 October 3,
1999 and September 27, 1998, and the related statements of consolidated income
and retained earnings and consolidated cash flows for each of the three years in
the period ended October 3, 1999. 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 October 3, 1999 and September 27, 1998, and
the results of their operations and their cash flows for each of three years in
the period ended October 3, 1999 in conformity with generally accepted
accounting principles.
/s/Arthur Andersen LLP
Charlotte, North Carolina
October 28, 1999
Eleven-Year Financial and Operating Summary
(Dollars in thousands, except per share data)
1999(1) 1998 1997 1996 1995
Net Sales
American & Efird $ 351,618 $ 355,147 $ 368,877 $ 309,459 $ 297,963
Harris Teeter 2,273,156 2,132,223 1,931,212 1,833,042 1,711,813
----------- ---------- ---------- --------- ----------
Total Net Sales $ 2,624,774 $2,487,370 $2,300,089 2,142,501 $2,009,776
----------- ---------- ---------- --------- ----------
Operating Profit
American & Efird $ 48,617 $ 42,070 $ 49,165 $ 34,684 $ 34,614
Harris Teeter 55,438 52,126 45,671 48,459 42,114
----------- ---------- ---------- --------- ----------
Total Operating
Profit $ 104,055 $ 94,196 $ 94,836 $ 83,143 $ 76,728
----------- ---------- ---------- --------- ----------
Net Income $ 50,714 $ 46,772 $ 47,731 $ 42,802 $ 39,267
Net Income Per Share
- Diluted 1.08 1.00 1.02 .92 .84
Common Dividend .33 .32 .32 .26 .25
----------- ---------- ---------- --------- ----------
Earnings Before
Interest, Taxes,
Depreciation and
Amortization $ 166,699 $ 152,851 $ 144,583 $ 125,390 $ 114,385
----------- ---------- ---------- --------- ----------
Shareholders' Equity $ 443,683 $ 410,725 $ 380,507 $ 346,856 $ 316,236
Percent Return on
Beginning Equity 12.3% 12.3% 13.8% 13.5% 13.5%
Book Value Per Share $ 9.55 $ 8.82 $ 8.17 $ 7.47 $ 6.82
----------- ---------- ---------- --------- ----------
Capital Expenditures
American & Efird $ 15,658 $ 20,246 $ 28,878 $ 35,605(2)$ 16,359
Harris Teeter 77,513 75,082 86,237 83,204 81,447
1994 1993(1) 1992 1991
Net Sales
American & Efird $ 277,016 $ 264,814 $243,324 $ 208,649
Harris Teeter 1,578,880 1,412,315 1,270,430 1,213,127
---------- ---------- ---------- ----------
Total Net Sales $1,855,896 $1,677,129 $1,513,754 $1,421,776
---------- ---------- ---------- ----------
Operating Profit
American & Efird $ 26,916 $ 30,551 $ 28,510 $ 22,589
Harris Teeter 37,032 29,845 31,067 34,329
---------- ---------- ---------- ----------
Total Operating
Profit $ 63,948 $ 60,396 $ 59,577 $ 56,918
---------- ---------- ---------- ----------
Net Income $ 31,811 $ 33,873 $ 30,789 $ 26,786
Net Income Per Share
- Diluted .67 .71 .65 .59
Common Dividend .22 .21 .20 .19
---------- ---------- ---------- ----------
Earnings Before
Interest, Taxes,
Depreciation and
Amortization $ 99,166 $ 97,490 $ 96,047 $ 89,025
---------- ---------- ---------- ----------
Shareholders' Equity $ 291,209 $274,740 $ 255,403 $ 233,566
Percent Return on
Beginning Equity 11.6% 13.3% 13.2% 14.5%
Book Value Per Share $ 6.28 $ 5.87 $ 5.44 $ 4.98
---------- ---------- ---------- ----------
Capital Expenditures
American & Efird $ 20,416 $ 19,433 $ 16,399 $ 11,417
Harris Teeter 46,349 33,683 25,910 30,903
1990 1989
Net Sales
American & Efird $ 199,115 $ 190,004
Harris Teeter 1,164,445 1,053,467
----------- ----------
Total Net Sales $ 1,363,560 $1,243,471
----------- ----------
Operating Profit
American & Efird 18,403 $ 17,732
Harris Teeter 32,212 27,444
----------- ----------
Total Operating
Profit $ 50,615 $ 45,176
----------- ----------
Net Income 24,031 $ 20,190
Net Income Per Share
- Diluted .55 .47
Common Dividend .18 .16
----------- ----------
Earnings Before
Interest, Taxes,
Depreciation and
Amortization $ 80,389 $ 71,927
----------- ----------
Shareholders' Equity $ 184,371 $ 158,921
Percent Return on
Beginning Equity 15.1% 14.0%
Book Value Per Share $ 4.54 $ 4.07
----------- ----------
Capital Expenditures
American & Efird $ 15,923 $ 14,742
Harris Teeter 27,376 31,611
<PAGE>
1999(1) 1998 1997 1996
Corporate 3,766 145 184 4,471
-------- -------- --------- ---------
Total Capital Expenditures $ 96,937 $ 95,473 $ 115,299 $ 123,280
-------- -------- --------- ---------
Working Capital $120,006 $ 87,333 $ 88,893 $ 65,134
Total Assets $970,114 $931,618 $ 885,243 $ 801,702
Long-Term Debt - Including
Current Portion $198,961 $191,931 $ 190,494 $ 164,435
Long-Term Debt as a Percent
of Capital Employed % 30.7% 31.6% 33.1% 32.2
Number of Employees 19,800 20,700 19,700 20,100
Number of Beneficial
Shareholders Including
Employee/Owners 21,000 21,000 19,100 16,700
Common Shares Outstanding 46,451,240 46,554,591 46,599,301 46,461,290
========== ========== ========== ==========
1995 1994 1993(1) 1992
Corporate 399 35 27 4,039
--------- --------- --------- ---------
Total Capital Expenditures $ 98,205 $ 66,800 $ 53,143 $ 46,348
--------- --------- --------- ---------
Working Capital $ 73,741 93,387 $ 103,191 $ 105,527
Total Assets $ 715,318 $ 634,599 $ 580,807 $ 535,407
Long-Term Debt - Including
Current Portion $ 128,952 $ 109,567 $ 104,173 $ 97,280
Long-Term Debt as a Percent
of Capital Employed 29.0% 27.3% 27.5% 27.6%
Number of Employees 19,850 18,610 17,120 13,720
Number of Beneficial
Shareholders Including
Employee/Owners 14,500 14,100 14,600 12,900
Common Shares Outstanding 46,373,666 46,352,214 46,036,146 46,124,798
========== ========== ========== ==========
1991 1990 1989
Corporate 60 2,323 2,975
-------- --------- --------
Total Capital Expenditures $ 42,380 $ 45,622 $ 49,328
-------- --------- --------
Working Capital $ 79,640 $ 74,688 $ 60,724
Total Assets $498,458 $ 468,295 $439,104
Long-Term Debt - Including
Current Portion $ 83,850 $ 115,266 $115,757
Long-Term Debt as a Percent
of Capital Employed 26.4% 38.5% 42.1%
Number of Employees 13,500 13,185 13,100
Number of Beneficial
Shareholders Including
Employee/Owners 11,400 11,100 11,000
Common Shares Outstanding 46,002,708 39,321,300 37,551,972
========== ========== ==========
(1) 53-week year
(2) Includes purchase of assets of Threads USA
EXHIBIT 21
RUDDICK CORPORATION
AFFILIATED COMPANIES
AS OF DECEMBER 22, 1999
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)
A&E Korea, Ltd.(2)
Harris Teeter, Inc.
Harris Teeter Properties, LLC (3)
Harris-Teeter Services, Inc.(3)
Harris Teeter Resources, Inc. (3)
Ruddick of Delaware, Inc.
R. S. Dickson & Company (dba Ruddick Investment Company)
Ruddco Management, Inc. (4)
-----------------
(1) Owned by American & Efird, Inc.
(2) Owned by American & Efird Services, Inc.; domesticated in Delaware
(3) Owned by Harris Teeter, Inc.
(4) 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 (H.K.) Limited (1)
American & Efird (G.B.) Limited (2)
American & Efird (UK) Holdings Limited
American & Efird Canada, Inc.
Cranbots Enterprises B.V.
Hilos A&E de Costa Rica, S.A.
Hilos A&E de El Salvador, S.A. de C.V. (1)
Hilos American & Efird 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
<PAGE>
American & Efird Italia S.p.A. - Joint venture, 49% owned
A&E Amann India Private Ltd. - Joint venture, 33 1/3% owned (5)
A&W Thread Ltd. - Joint venture, 12% owned
In addition, in the normal course of business, R. S. Dickson & Company
from time to time makes investments in corporations and partnerships that may
result in ownership of capital stock or other interests as an investment.
(1) In order to comply with local law in Hong Kong and El Salvador, 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 October 3, 1999, or performed any audit procedures subsequent to
the date of our report.
/s/ Arthur Andersen LLP
Charlotte, North Carolina,
December 22, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-10-1999
<PERIOD-END> OCT-10-1999
<CASH> 14,467,000
<SECURITIES> 0
<RECEIVABLES> 80,060,000
<ALLOWANCES> 3,233,000
<INVENTORY> 223,694,000
<CURRENT-ASSETS> 358,874,000
<PP&E> 971,083,000
<DEPRECIATION> 431,526,000
<TOTAL-ASSETS> 970,114,000
<CURRENT-LIABILITIES> 238,868,000
<BONDS> 198,532,000
0
0
<COMMON> 52,137,000
<OTHER-SE> 391,546,000
<TOTAL-LIABILITY-AND-EQUITY> 970,114,000
<SALES> 2,624,774,000
<TOTAL-REVENUES> 2,624,774,000
<CGS> 1,897,397,000
<TOTAL-COSTS> 2,520,719,000
<OTHER-EXPENSES> 7,980,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,686,000
<INCOME-PRETAX> 81,389,000
<INCOME-TAX> 30,675,000
<INCOME-CONTINUING> 50,714,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,714,000
<EPS-BASIC> 1.09
<EPS-DILUTED> 1.08
</TABLE>
