10-Q 1 g74190e10-q.txt RUDDICK CORPORATION FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 30, 2001 ----------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________to_____________ Commission file number 1-6905 ------ RUDDICK CORPORATION ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) NORTH CAROLINA 56-0905940 -------------------------------------------- ---------------------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 301 S. Tryon Street, Suite 1800 Charlotte, North Carolina 28202 -------------------------------------------- ---------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (704) 372-5404 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Outstanding Shares Class as of February 7, 2002 --------------------------------- ---------------------- Common Stock 46,384,199 shares RUDDICK CORPORATION INDEX PAGE NO. -------- PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED CONDENSED BALANCE SHEETS - DECEMBER 30, 2001 AND SEPTEMBER 30, 2001 2 CONSOLIDATED CONDENSED STATEMENTS OF INCOME - THREE MONTHS ENDED DECEMBER 30, 2001 AND DECEMBER 31, 2000 3 CONSOLIDATED CONDENSED STATEMENTS OF TOTAL NON-OWNER CHANGES IN EQUITY - THREE MONTHS ENDED DECEMBER 30, 2001 AND DECEMBER 31, 2000 4 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - THREE MONTHS ENDED DECEMBER 30, 2001 AND DECEMBER 31, 2000 5 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 6-7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8-13 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 13 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 14 SIGNATURES 14 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS RUDDICK CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (IN THOUSANDS) DECEMBER 30, SEPTEMBER 30, 2001 2001 (UNAUDITED) (UNAUDITED) ------------ ------------- ASSETS CURRENT ASSETS: Cash and Temporary Cash Investments $ 38,805 $ 34,901 Accounts Receivable, Net 65,454 60,712 Inventories 220,925 212,467 Other 43,048 33,171 --------- --------- Total Current Assets 368,232 341,251 PROPERTY, NET 510,280 527,956 INVESTMENTS AND OTHER ASSETS 70,308 70,781 --------- --------- TOTAL $ 948,820 $ 939,988 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Notes Payable $ 2,930 $ 1,964 Current Portion of Long-Term Debt 685 676 Accounts Payable 137,445 139,449 Income Taxes Payable 10,609 4,242 Other Accrued Liabilities 79,357 82,648 --------- --------- Total Current Liabilities 231,026 228,979 LONG-TERM DEBT 156,246 156,437 DEFERRED LIABILITIES 101,420 100,613 MINORITY INTEREST 7,943 8,606 SHAREHOLDERS' EQUITY: Capital Stock - Common 50,206 49,549 Retained Earnings 417,017 410,665 Accumulated Non-Owner Changes in Equity (15,038) (14,861) --------- --------- Shareholders' Equity 452,185 445,353 --------- --------- Total $ 948,820 $ 939,988 ========= ========= 2 RUDDICK CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) THREE MONTHS ENDED ----------------------------- DECEMBER 30, DECEMBER 31, 2001 2000 (UNAUDITED) (UNAUDITED) ------------ ------------ NET SALES American & Efird $ 65,685 $ 84,480 Harris Teeter 587,490 632,936 ----------- ----------- Total 653,175 717,416 ----------- ----------- GROSS PROFIT American & Efird 14,466 22,832 Harris Teeter 166,534 171,046 --------- --------- Total 181,000 193,878 --------- --------- OPERATING PROFIT American & Efird 640 8,224 Harris Teeter 20,601 16,431 ----------- ----------- Total 21,241 24,655 ----------- ----------- OTHER COSTS AND DEDUCTIONS Interest expense, net 2,803 4,086 Other expense, net 1,453 1,521 Minority interest 72 418 ----------- ----------- Total 4,328 6,025 ----------- ----------- Income before income taxes 16,913 18,630 Income taxes 6,386 7,441 ----------- ----------- Net income $ 10,527 $ 11,189 =========== =========== WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING: Basic 46,351,969 46,241,930 Diluted 46,527,769 46,284,944 NET INCOME PER SHARE - BASIC $ .23 $ .24 DILUTED $ .23 $ .24 DIVIDENDS DECLARED PER SHARE - Common $ .09 $ .09 3 RUDDICK CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF TOTAL NON-OWNER CHANGES IN EQUITY (IN THOUSANDS) THREE MONTHS ENDED ----------------------------- DECEMBER 30, DECEMBER 31, 2001 2000 (UNAUDITED) (UNAUDITED) ------------ ------------ Net Income $ 10,527 $ 11,189 Other Non-Owner Changes in Equity, Net of Tax: Foreign currency translation adjustment (177) 151 -------- -------- Total Non-Owner Changes in Equity $ 10,350 $ 11,340 ======== ======== 4 RUDDICK CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (IN THOUSANDS) THREE MONTHS ENDED --------------------------- DECEMBER 30, DECEMBER 31, 2001 2000 ------------ ------------ (UNAUDITED) (UNAUDITED) ------------ ------------ CASH FLOW FROM OPERATING ACTIVITIES Net Income $ 10,527 $ 11,189 Non-Cash Items Included in Net Income Depreciation and Amortization 18,510 20,452 Other, Net (358) 455 Decrease (Increase) in Current Assets (13,501) (25,829) Increase (Decrease) in Current Liabilities 1,073 11,762 ---------- ---------- NET CASH PROVIDED BY OPERATING ACTIVITIES 16,251 18,029 ---------- ---------- INVESTING ACTIVITIES Capital Expenditures (13,162) (29,154) Cash Proceeds from Sale of Property 12,410 2,736 Company Owned Life Insurance, Net (819) (2,744) Other, Net (8,042) 2,533 ---------- ---------- NET CASH USED IN INVESTING ACTIVITIES (9,613) (26,629) ---------- ---------- FINANCING ACTIVITIES Proceeds of Long-Term Revolver -- 14,100 Proceeds of Long-Term Borrowings 899 -- Payment of Principal on Long-Term Debt (71) (4,478) Dividends (4,173) (4,163) Other, Net 611 495 ---------- ---------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (2,734) 5,954 ---------- ---------- INCREASE (DECREASE) IN BALANCE SHEET CASH 3,904 (2,646) BALANCE SHEET CASH AT BEGINNING OF PERIOD 34,901 9,527 ---------- ---------- BALANCE SHEET CASH AT END OF PERIOD $ 38,805 $ 6,881 ========== ========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash Paid During the Period for: Interest $ 2,815 $ 4,151 Income Taxes $ 2,903 $ 16,376 5 RUDDICK CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) In the opinion of management, the information furnished reflects all adjustments (consisting only of normal recurring accruals) necessary to present fairly the results for the interim periods presented. SHIPPING AND HANDLING COSTS - In accordance with Emerging Issues Task Force (EITF) Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs", freight expenses are accounted for as a component of the cost of sales. In addition, approximately $1,492,000 and $1,784,000 of shipping and handling costs are included in selling, general and administrative expenses in the first fiscal quarter of 2002 and 2001, respectively. IMPAIRMENT AND EXIT COSTS - In fiscal year 2001, the Company's supermarket subsidiary sold 26 stores in certain of its non-core markets and recorded a non-recurring charge of $45,035,000 for exit costs. As of September 30, 2001, the remaining balance of the exit cost reserve was $6,532,000, primarily related to lease liabilities. During the fiscal quarter ended December 30, 2001, charges against the reserve for costs paid totaled $128,000, leaving a reserve balance of $6,404,000 at quarter end. LEASE RELATED OBLIGATIONS - The Company currently maintains a lease arrangement with an expiration date of September 13, 2004 with a non-related national bank as owner-trustee and two additional banks as lenders. The lease arrangement covers the real property of primarily three Harris Teeter stores, having an aggregate cost value of $34,054,000 at December 30, 2001. The arrangement, commonly referred to as a synthetic lease, receives accounting treatment as an operating lease under generally accepted accounting principles resulting in the recording of rent expense. The total rent expense for these properties was $215,000 in the fiscal quarter ended December 30, 2001. The lease includes an option for the Company to purchase the properties on or before the expiration date, or otherwise a requirement for the sale of the properties to liquidate the lease termination obligations estimated to be approximately $34,200,000. The Company guarantees repayment of approximately $30,200,000 if it elects the sale option. 6 CONTINGENCIES On January 17, 2001, a complaint was filed against Harris Teeter, Inc. and Ruddick Corporation in the U.S. District Court for the Northern District of Georgia alleging violations of certain civil rights laws and race-based discriminatory treatment of employees and retaliation. In the complaint, the plaintiffs sought class representative status as well as various forms of relief. On July 30, 2001, the Court entered an order denying plaintiffs' request for class discovery. Subsequently, the named plaintiffs agreed to a settlement of all claims with Ruddick and Harris Teeter, and documentation of that settlement is in process. By order of the Court dated October 18, 2001 the lawsuit was dismissed, without prejudice to the right of either party to reopen the action if the settlement is not consummated. The terms of the settlement will not be material to the financial or operating condition of Ruddick or Harris Teeter. Both Ruddick and Harris Teeter remain committed to full compliance with all applicable civil rights laws. Consistent with this commitment, both Ruddick and Harris Teeter have firm and long-standing policies in place prohibiting discrimination, harassment and retaliation. NEW STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS (SFAS) SFAS No. 142, "Goodwill and Other Intangibles" will be effective for the Company's fiscal year ending in 2003. This statement will require the cessation of amortization of goodwill and an assessment of its impairment by applying a fair-value-based test at least annually. At December 30, 2001, the Company's goodwill balances were $9,094,000. In the quarter ended December 30, 2001, amortization of goodwill was $222,000. SFAS No. 143, "Accounting for Asset Retirement Obligations" will be effective for the Company's fiscal year ending in 2003. This statement will require that the fair value of a liability for an asset retirement obligation for tangible long-lived assets be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. Management expects that the adoption of this statement will have no material impact on the Company's results of operations or financial position. SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" will be effective for financial statements issued in the Company's fiscal year ending in 2003. This statement addresses financial accounting and reporting for the impairment of long-lived assets and for long-lived assets to be disposed of, and establishes criteria and methodologies for the recognition and measurement, classification and valuations of such assets. Management has not completed an assessment of the impacts of this statement. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The following table shows net sales, gross profit and operating profit for each of Ruddick Corporation's operating subsidiaries for the quarters ended December 30, 2001 and December 31, 2000:
(In Thousands) Quarter Ended ---------------------------- December 30, December 31, 2001 2000 ------------ ------------ Net Sales American & Efird $ 65,685 $ 84,480 Harris Teeter 587,490 632,936 -------- -------- Total $653,175 $717,416 -------- -------- Gross Profit American & Efird $ 14,466 $ 22,832 Harris Teeter 166,534 171,046 -------- -------- Total $181,000 $193,878 -------- -------- Operating Profit American & Efird $ 640 $ 8,224 Harris Teeter 20,601 16,431 -------- -------- Total $ 21,241 $ 24,655 -------- --------
Consolidated sales of $653.2 million in the first quarter of fiscal 2002 decreased 9.0% from the $717.4 million reported for the comparable period last year. The decline in sales during the quarter was attributable to the displacement of sales by 26 Harris Teeter stores in non-core markets which were divested on July 9, 2001, lower Harris Teeter same store sales and the continuation of weak business conditions at American & Efird (A&E), the Company's textile subsidiary. Total gross profit was down 6.6% to $181.0 million in the first quarter of fiscal 2002 from $193.9 million in the first quarter of fiscal 2001. Total operating profit of $21.2 million decreased 13.8% from $24.7 million for the comparable period last year. Net income of $10.5 million decreased by 5.9% from the $11.2 million reported in the first fiscal quarter last year, and basic and diluted earnings per share for the quarter were $.23 in fiscal 2002 compared to $.24 in fiscal 2001. The decline in earnings resulted primarily from a substantial reduction in operating profit at A&E, reflective of general conditions in the textile industry, while a 25.4% operating profit improvement at supermarket subsidiary Harris Teeter partially offset the A&E decline. Harris Teeter sales in the first quarter of fiscal 2002 of $587.5 million decreased by 7.2% from the $632.9 million reported for the comparable period last year. This decrease in sales reflected the displaced sales of the 26 divested stores and one additional closed store and a 1.1% decline in comparable store sales, partially offset by the growth from the opening 8 of nine new stores in the company's core markets since the end of the prior year quarter. Five of those new stores were opened during this first fiscal quarter of 2002. The comparable store sales decline reflects the warm weather in the southeastern U.S. during the quarter and the increased sluggishness in the economy. Additionally, the comparable store sales measurement reflects in part the impact of four of the new store openings during the current quarter having proximity to existing stores and therefore reducing same store sales. Although those four stores had a short-term negative impact on comparable store sales measurements, management expects them to have a strategic benefit of enabling the company to capture sales and expand market share as the markets they serve continue to grow. The market environment for supermarkets in the southeastern U.S. continued to be highly competitive and characterized by the opening of competitors' new stores in the region and aggressive feature pricing by competitors. In response, Harris Teeter continued its aggressive promotional activities. The company plans to continue to utilize customer data obtained from the Very Important Customer ("VIC") loyalty card program to help develop customized merchandising and promotional programs to drive customer traffic in its markets. Gross profit of $166.5 million in the first fiscal quarter of 2002 declined by 2.6% from $171.0 million in the comparable prior year period, while gross margin on sales improved to 28.3% from 27.0% last year. Total gross profit dollars were lower primarily due to the displaced sales of divested stores. Gross profit as a percent of sales increased primarily as a result of improvements in purchasing and merchandising, increased sales of higher margin premium private label products and better control of waste, partially offset by the increased costs associated with the sales promotional programs. Harris Teeter's operating profit of $20.6 million in the first quarter of 2002 rose 25.4% from the $16.4 million reported for the comparable period last year. Operating margin on sales of 3.51% in the first quarter of fiscal 2002 improved significantly from the 2.60% in the comparable prior year quarter. This improvement resulted primarily from the above stated factors driving improved gross margin and from improved operating efficiencies, offset in part by primarily higher fringe benefit costs, most notably healthcare. Management further believes that the results for first quarter of 2002 continue to demonstrate the positive impact of the strategic sale of the 26 stores in non-core markets. The company continues to concentrate on its core markets, which management believes have greater potential for improved returns on investment in the foreseeable future. Harris Teeter opened five stores during the first quarter, three in Charlotte, NC, one in Raleigh, NC and one in Fairfax in its northern Virginia market, resulting in 142 stores in operation at December 30, 2001, compared to 160 stores at December 31, 2000. The company currently plans to open another seven stores during the remainder of fiscal 2002. In the first quarter of fiscal 2002, A&E sales of $65.7 million declined 22.2% from $84.5 million reported for the comparable period last year. Business conditions in the textile and apparel industry remained extremely challenging, particularly in North America, which continued to be negatively impacted by weak U.S. consumer apparel and home fashions sales, deflationary pricing and increased imports from Asia. A&E's customers continued to be adversely impacted by these factors. A&E has also been unfavorably affected by the shift of apparel manufacturing out of the U.S. As a result, U.S. sales by A&E in the first quarter of 2002 were 26.6% below the comparable prior year quarter. A&E continues to proactively address these challenges by managing production schedules and expanding the company's presence in foreign markets. Management expects business conditions to remain weak in the 9 short term. Weak demand for apparel and home fashions in the U.S. also adversely affected sales by A&E to foreign customers which export to the U.S. Although A&E's foreign operations in aggregate are not material to the consolidated Company, A&E's foreign sales in the first fiscal quarter contracted by 15.6% compared to the prior year period and accounted for approximately 43% of A&E's total sales, compared to approximately 40% in the first quarter of fiscal 2001. Sales weakness was observed in most of the foreign operations of A&E in the first quarter of fiscal 2002. Management recognizes that a major challenge facing A&E is the geographic shift of its customer base and as a result the company has been pursuing global expansion over the past several years. A&E continues to focus on increasing its market share in key foreign markets. During the first quarter of fiscal 2002, A&E began production in a new dyehouse facility in southern China to expand sales and customer service in the far east. A&E's gross profit of $14.5 million in the first quarter of fiscal 2002 declined 36.6% from $22.8 million in the first quarter last year and gross margin on sales declined to 22.0% from 27.0% last year. Operating profit was $640,000 in the first quarter of fiscal 2002 compared to $8.2 million in the comparable period last year and operating margin on sales decreased to 1.0% in fiscal 2002 from 9.7% in fiscal 2001. A&E's operating profit in the U.S. market declined by 83.4% in comparison to the prior year quarter. Further, the majority of the foreign operations of A&E experienced declines in operating profitability. Lower volume, resulting in reduced manufacturing schedules, and competitive pricing pressures had negative impacts on total A&E profitability during the first quarter of fiscal 2002. Given the general economic slowdown in the U.S., A&E's management expects business conditions for the foreseeable future to remain weak. A&E management has lowered its sales and profitability projections for the balance of fiscal 2002 and is examining opportunities for cost savings throughout the organization, which could result in further rationalization of manufacturing operations. While the performance of Harris Teeter has been strong, the economic conditions in A&E's industry have remained very difficult. The depth of and duration of softness in apparel, home furnishings and other markets will obviously have an impact on A&E profitability. A&E will find it difficult to generate profitability in the absence of a more favorable economic climate. At Harris Teeter the consistent execution of productivity initiatives implemented at under-performing stores will dictate the pace at which its margins could improve. Further, the competitive environment for supermarkets is not expected to ease significantly within the foreseeable future. Given the complex factors currently impacting sales and costs at both subsidiaries, Ruddick Corporation management remains conservative in its outlook and believes that net income for fiscal 2002 could be as much as 5% below the net income of fiscal 2001, before non-recurring charges. 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 10 subsidiaries. There exist no restrictions on such dividends, which are determined as a percentage of net income of each subsidiary. The Company seeks to limit long-term debt so that it constitutes no more than 40% of capital employed, which includes long-term debt, minority interest and shareholders' equity. As of December 30, 2001, this percentage was 25.4%, as compared to 25.7% at September 30, 2001. The Company's principal source of liquidity has been cash generated from operating activities. As of December 30, 2001, the Company had cash and temporary cash investment balances of $38.8 million compared to $34.9 million at September 30, 2001. During the first quarter of fiscal 2002, due to reductions of capital spending as planned, the net cash provided by operating activities was sufficient to fund both the net investing activities and dividend payments of the Company. The Company also has the ability to borrow up to an aggregate of $100 million under established revolving lines of credit with three banks (during the fiscal quarter ended December 30, 2001, two of these banks have merged with no effect under the revolving credit agreements). The maximum amount outstanding under these credit facilities during the quarter ended December 30, 2001 was $0.9 million, and $0.9 million was outstanding at quarter end and at September 30, 2001. 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 providing for maturity of the repayment obligations on January 2, 2003, all borrowings under these facilities are classified as long-term debt. Company management expects to successfully negotiate a new revolving credit facility during fiscal 2002. The Company also has $150 million of senior unsecured debt outstanding, with annual repayments of $7.1 million due in each of fiscal years 2005 - 2011 and $100 million due in fiscal 2017. Further, as of December 30, 2001, the Company had $8.2 million of various debt obligations and capital leases of which $2.6 million is either due upon demand or within 12 months. In addition, the Company has a short-term, uncommitted bank line of credit for $10 million on which no borrowing was outstanding at quarter end. Further, the Company has the capacity to borrow up to an aggregate amount in excess of $27 million from two major U.S. life insurance companies utilizing certain insurance assets as collateral. Covenants in certain of the Company's long-term debt agreements limit the total indebtedness that the Company may incur. Management believes that the limit on indebtedness does not significantly restrict the Company's liquidity and that such liquidity is adequate to meet foreseeable requirements. The Company currently maintains a lease arrangement with an expiration date of September 13, 2004 with a non-related national bank as owner-trustee and two additional banks as lenders. The lease arrangement covers the real property of primarily three Harris Teeter stores, having an aggregate cost value of $34.1 million at December 30, 2001. The arrangement, commonly referred to as a synthetic lease, receives accounting treatment as an operating lease under generally accepted accounting principles resulting in the recording of rent expense. The total rent expense for these properties was $215,000 in the fiscal quarter ended December 30, 2001. The lease includes an option for the Company to purchase the properties on or before the expiration date, or otherwise a requirement for the sale of the properties to liquidate the lease termination obligations estimated currently to be 11 approximately $34.2 million. The Company guarantees repayment of approximately $30.2 million if it elects the sale option. In accordance with certain covenants contained in the Company's structured debt agreements, the Company considers the aggregate off-balance sheet financing amount of $34.1 million to be funded debt for debt compliance purposes. Additionally, the Company utilizes various standby letters of credit and bonds as required from time to time by certain programs, most significantly for self-insured programs such as workers compensation and certain casualty insurance. The total contingent liability under those instruments was approximately $14.5 million as of December 30, 2001. Working capital of $137.2 million at December 30, 2001 increased $24.9 million from $112.3 million at September 30, 2001, primarily the result of increases in cash balances, accounts receivable, inventories and other current assets. The current ratio was 1.6 at December 30, 2001 and 1.5 at September 30, 2001. During the first three months of fiscal 2002, capital expenditures totaled $13.2 million. A&E spent $1.5 million in the quarter and estimates its total capital spending will be approximately $8 million for fiscal year 2002. Harris Teeter has spent $11.7 million of an anticipated $72 million of capital expenditures in fiscal year 2002. Harris Teeter anticipates that its capital for new store growth will be applied in its core markets in fiscal 2002 as well as the foreseeable future. In both operating companies, these expenditures are for modernization and expansion. Management expects that internally generated funds, supplemented by available borrowing capacity, will be adequate to finance such expenditures. 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: - general economic conditions, including the impact of the events of September 11, 2001, are less favorable than expected, - the occurrence of adverse industry conditions, including a continued decline in consumer demand for apparel products or significant changes in consumer food preferences or eating habits, - changes in federal, state or local legislation or regulations affecting food manufacturing, food distribution or food retailing, 12 - changes in the competitive environment, including increased competition in the Company's primary geographic markets, the entry of new competitors and consolidation in the supermarket industry, - economic or political changes in the countries in which the Company operates or adverse trade regulations, - the passage of future tax legislation, or any regulatory or judicial position which prevails, if any, that could have an adverse impact on past, current or future tax benefits, - management's ability to accurately predict the adequacy of the Company's present liquidity to meet future requirements, - changes in the Company's capital expenditures, new store openings and store closings, and - the extent and speed of the successful execution of strategic initiatives designed to increase sales and profitability in each of the operating companies. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's market risk sensitive instruments do not subject the Company to material market risk exposures. 13 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (A) EXHIBITS
Exhibit No. Description of Exhibit ----------- ---------------------- 11 Statement Re: Computation of Per Share Earnings
(B) REPORTS ON FORM 8-K The following reports on Form 8-K were filed by the Company during the quarter ended December 30, 2001. Current Report on Form 8-K dated October 30, 2001 and filed October 31, 2001; Items 5 and 7. Current Report on Form 8-K dated December 20, 2001 and filed December 21, 2001; Items 5 and 7. SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED. RUDDICK CORPORATION DATE: February 12, 2002 /s/ John B. Woodlief ---------------------------------------- John B. Woodlief VICE PRESIDENT - FINANCE (PRINCIPAL FINANCIAL OFFICER) 14 EXHIBIT INDEX
Exhibit No. (per Item 601 Description Sequential Of Reg. S-K) of Exhibit Page No. ------------- ----------- ---------- 11 Statement Re: Computation of Per Share Earnings