-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, RYy7FDb90yl6pLDU1cEfE36vqQxW7YrE71anVPppY4ekWJSZsDNmaMKftoQd1BV0 +02oNp5zyJ076WvAclpPgQ== 0000950144-94-002158.txt : 19941223 0000950144-94-002158.hdr.sgml : 19941223 ACCESSION NUMBER: 0000950144-94-002158 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19941002 FILED AS OF DATE: 19941222 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RUDDICK CORP CENTRAL INDEX KEY: 0000085704 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 560905940 STATE OF INCORPORATION: NC FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06905 FILM NUMBER: 94565843 BUSINESS ADDRESS: STREET 1: 2000 TWO FIRST UNION CTR CITY: CHARLOTTE STATE: NC ZIP: 28282 BUSINESS PHONE: 7043725404 MAIL ADDRESS: STREET 1: 2000 TWO FIRST UNION CTR CITY: CHARLOTTE STATE: NC ZIP: 28282 10-K 1 FORM 10-K 1 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 (Fee Required) For the Fiscal Year Ended: October 2, 1994 ------------------- [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required) 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) 2000 TWO FIRST UNION CENTER, CHARLOTTE, NORTH CAROLINA28282 ----------------------------------------------------------- (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 October 31, 1994, was $259,760,436. As of October 31, 1994, the Registrant had outstanding 23,177,803 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 2, 1994 (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 2, 1994, is not deemed to be filed or incorporated by reference as part of this report). 2 Part III: Definitive Proxy Statement dated December 21, 1994, as filed pursuant to Section 14 of the Securities Exchange Act of 1934 in connection with the 1995 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.) ii 3 RUDDICK CORPORATION AND CONSOLIDATED SUBSIDIARIES Form 10-K for the Fiscal Year ended October 2, 1994 TABLE OF CONTENTS
PAGE ---- PART I Item 1. Business ...........................................................................1 Item 2. Properties .........................................................................4 Item 3. Legal Proceedings ..................................................................6 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 8. Financial Statements and Supplementary Data ........................................8 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
iii 4 PART I ITEM 1. BUSINESS Ruddick Corporation (the "Registrant") is a diversified holding company which, through its subsidiaries, is engaged in four primary businesses: Harris Teeter, Inc. ("Harris Teeter") operates a chain of supermarkets in five southeastern states; American & Efird, Inc. ("A&E") manufactures and distributes industrial and consumer sewing thread and sales yarn; Jordan Graphics, Inc. ("Jordan Graphics") produces and distributes business forms; and R.S. Dickson & Co., which does business as Ruddick Investment Company ("Ruddick Investment"), operates as an investment management, special situations and venture capital company. At October 2, 1994, the Registrant and its subsidiaries had total consolidated assets of $640,792,000 and had approximately 19,000 employees. The principal executive offices of the Registrant are located at 2000 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. In 1969 the Registrant acquired Harris Teeter and the predecessor company of Jordan Graphics. The businesses in which the Registrant engages through its 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 Registrant's 1994 Annual Report to Shareholders (the "1994 Annual Report"), which information is incorporated herein by reference. The only foreign operations conducted by the Registrant are through A&E. None of the businesses engaged in by the Registrant would be characterized as seasonal. The Registrant employs nineteen people, including four executives who form 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. 1 5 A & E A&E produces industrial sewing thread from natural and synthetic fibers for use by apparel, automotive, upholstered furniture, home furnishings, and footwear manufacturers. A&E also produces consumer sewing thread for use in home sewing. These products are primarily manufactured in thirteen plants, all located in North Carolina, and are sold primarily in the United States. Limited quantities of industrial sewing threads are exported. A&E also distributes sewing supplies manufactured by other companies. Thread and notion products accounted for approximately 98% of A&E's net sales in fiscal 1994. A&E also produces a limited quantity of mercerized cotton yarns for use by the knitting and weaving industries, which products accounted for 2% of A&E's net sales in fiscal 1994. This yarn production has decreased in recent years as plant capacity has been converted to the manufacture of sewing thread. Sales operations are conducted through A&E's employed salesmen and commission brokers and jobbers. A&E's sales constituted 14% of the Registrant's consolidated sales in fiscal 1994 (15% in 1993 and 15% in 1992). The order backlog, believed to be firm, as of the end of the 1994 fiscal year was approximately $17,863,000 versus $22,611,000 at the end of the preceding fiscal year. Such backlog normally is expected to be filled within three weeks of fiscal year end. A&E has approximately 9,500 active customer accounts. In fiscal 1994, no single customer accounted for more than 8% of total net sales, and the ten largest customers accounted for an aggregate of less than 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 from the principal American synthetic fiber producers and are currently available in an adequate supply. There are no material patents, licenses, franchises, or concessions held by A&E. Research and Development expenditures were $244,000 and $257,000 in fiscal 1994 and fiscal 1993, respectively, none of which expenditures were sponsored by customers. Two employees are engaged in this activity full-time. A&E has expanded into international markets as sewing thread demand has increased outside the United States in the apparel, home furnishings, and industrial markets. A&E's value of assets in its subsidiaries in England, Costa Rica, Canada, Korea, Mexico, and Hong Kong and in its joint ventures in Singapore, Dominican Republic, and Venezuela totals approximately $43 million. Management expects to continue to expand foreign production and distribution operations, primarily through additional joint ventures. The industrial sewing thread industry is highly competitive. A&E is one of the largest producers in the domestic industrial thread market. Principal competitors include Coats/American and Dixie/Threads USA. Principal competitive factors include quality, service and price. In the consumer thread market, A&E competes with a number of large, well-established companies, including Coats/American. 2 6 A&E employed approximately 2,800 persons as of the end of fiscal 1994. A&E considers its employee relations to be good. HARRIS TEETER Harris Teeter operates supermarkets in North Carolina (91), South Carolina (25), Virginia (19), Georgia (3), and Tennessee (1) for sales of groceries, produce, meat, delicatessen items, bakery items, and non-food items such as health and beauty care and other products normally offered for sale in supermarkets. In fiscal 1992, a prepared foods program was started featuring chef-prepared hot and cold entrees. This program has now been introduced in 15 stores and will be offered in approximately 29 additional stores in fiscal 1995. Harris Teeter has a program in place whereby each retail store will undergo a major remodel every eight years. Harris Teeter remodeled three stores during fiscal 1994 and expects to remodel six stores in fiscal 1995. In addition, six new stores were opened and five older, less profitable, stores were closed. In fiscal 1993, a reserve was established in anticipation of closing 12 smaller, less competitive stores and replacing them with larger stores offering increased variety and drawing from a larger market area. Two of the five stores closed in fiscal 1994 were covered by this reserve. As of fiscal year end, Harris Teeter had 139 stores in operation. Its principal offices and perishable distribution facilities are located near Charlotte, North Carolina, and its dry grocery and cold storage distribution facilities are located in Greensboro, North Carolina. Harris Teeter produces some dairy products, but buys most of the products it sells, including its private label brands. Harris Teeter's sales constituted 83% of the Registrant's consolidated sales in fiscal 1994 (82% in 1993 and 81% in 1992). 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. 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 7,200 persons full-time and 8,700 part-time. Warehouse employees and drivers at Harris Teeter's warehouse near Charlotte, North Carolina are represented by a union, but Harris Teeter is not party to a collective bargaining agreement covering such employees. Harris Teeter considers its employee relations to be good. JORDAN GRAPHICS Jordan Graphics produces a line of business forms and printed products and distributes its products through its own sales representatives. Its product line includes custom and stock continuous forms for computer use, snap-apart forms, pressure sensitive labels, sheeted and roll labels, envelopes, commercial printing, many specialty items and multi-color forms for laser printers. Jordan Graphics' offices and principal plant are located near Charlotte, North Carolina. Jordan Graphics manufactures and distributes its products, primarily through its direct sales force, mainly in the eastern United States. The principal raw materials used by Jordan Graphics include paper, carbon, cartons, and ink. Management believes that sufficient sources of these raw materials are currently available. 3 7 In fiscal 1994, the largest single customer of Jordan Graphics accounted for 4.1% of total net sales, and the ten largest customers accounted for an aggregate of 24.2% of total net sales. The loss of any one of its five largest accounts would not, in the opinion of management, materially affect Jordan Graphics' business. Jordan Graphics operates in a highly competitive industry, and many of its competitors are substantially larger, both in terms of assets and sales. The principal methods of competition in the business forms industry are price, quality, and service. At fiscal year end, Jordan Graphics employed 391 persons, of which 73 were in sales. Jordan Graphics considers its employee relations to be good. RUDDICK INVESTMENT Ruddick Investment makes direct venture capital investments from its own capital base and from internally generated funds. The company's portfolio is invested in a limited number of industries and may include securities of start-ups and early stage firms, as well as publicly traded securities. Some of the products and services produced by the current portfolio holdings include proprietary building products, textiles, pharmaceuticals, medical diagnostic instrumentation, and commercial oven and stove manufacturing. In addition, venture investment activities include the development of shopping centers where Harris Teeter serves as an anchor tenant. Ruddick Investment's principal objective is to achieve long-term gains on each of its investments. It is not an operating company and does not offer a service or product in the normal course of business. ITEM 2. PROPERTIES The executive offices of the Registrant are located in approximately 8,086 square feet of leased space in a downtown office tower at 2000 Two First Union Center, Charlotte, North Carolina 28282, in which it is a tenant under a lease which expires in May 1998. A&E's principal offices and thirteen domestic manufacturing plants are all owned by A&E and are all located in North Carolina. Manufacturing plants have an aggregate of 1,445,694 square feet of floor space and an insured value of $250,000,000. A&E has the capacity to produce annually approximately 35,000,000 pounds of industrial sewing thread and 3,250,000 pounds of sales yarn and has a dyeing capacity of approximately 33,000,000 pounds per year. Capacities are based on 168 hours of operations per week. A&E also leases 16 distribution centers scattered throughout its domestic markets at an approximate annual rent of $1,250,000. Through subsidiaries, A&E also owns six international manufacturing plants with an aggregate of 322,354 square feet of floor space and an insured value of $46,318,000. These subsidiaries have the capacity to produce annually approximately 7,830,000 pounds of sewing thread and have a dyeing capacity of approximately 9,665,000 pounds per year. Capacities are based on 144 hours of operations per week. In addition to its subsidiaries, A&E has a minority interest in three joint ventures. Harris Teeter owns its principal offices, which consist of 95,050 square feet of space located on a 10 acre tract of land near Charlotte, North Carolina. Harris Teeter owns a 104 acre 4 8 tract east of Charlotte where its cold storage distribution facility is located. This facility contains approximately 176,000 square feet, most of which is equipped to store refrigerated or perishable goods. Harris Teeter also owns a 49 acre tract in Greensboro, North Carolina, where its dry grocery and frozen goods warehouses are located. The dry grocery warehouse contains approximately 547,000 square feet and the frozen goods warehouse contains approximately 130,000 square feet. Harris Teeter owns a 18,050 square foot milk processing plant located on 8.3 acres of land in Charlotte, North Carolina and a 81,900 square foot milk processing and ice cream manufacturing facility located on 4.7 acres of land in High Point, North Carolina. Harris Teeter operates its retail stores exclusively from leased properties. The base annual rentals on leased store and warehouse properties as of October 2, 1994 aggregated approximately $29,797,000 net of sublease rentals of approximately $1,592,000. 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 2, 1994, the additional rental amounted to approximately $971,000. Harris Teeter's supermarkets range in size from approximately 15,000 square feet to 67,000 square feet, with an average size of approximately 31,000 square feet. The following table sets forth selected statistics with respect to Harris Teeter stores for each of the last three fiscal years:
HARRIS TEETER STORE DATA 1992 1993 1994 ---- ---- ---- Stores Open at End of Period 135 138 139 Average Weekly Net Sales Per Store* $ 182,865 $ 197,745 $ 223,467 Average Square Footage Per Store 29,595 30,480 30,974 Average Square Footage Per New Store 33,629 44,748 40,154 Opened During Period Total Square Footage at End 3,995,313 4,206,284 4,305,325 of Period
* Computed on the basis of aggregate sales of stores open for a full year. The corporate offices and principal manufacturing facility and warehouses for Jordan Graphics are located near Charlotte, North Carolina. Jordan Graphics owns this facility, which contains 188,000 square feet and is located on 26 acres of land. Jordan Graphics also leases a manufacturing facility in Charlotte, North Carolina, containing approximately 14,600 square feet. In addition, Jordan Graphics owns a smaller manufacturing plant and offices containing approximately 42,000 square feet located on six acres of land in Baltimore, Maryland. 5 9 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 $500,000. Under the interim allocation of costs agreed to by the parties to the Administrative Order on Consent, the Registrant's share is 1.12% 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 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. 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 65, 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 63, 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. John W. Copeland, age 59, has been President of the Registrant since February, 1994. Prior to that time he had been President of A&E since October, 1984. Richard N. Brigden, age 55, has been Vice President-Finance of the Registrant since December, 1983. Thomas W. Dickson, age 39, has been President of A&E since February, 1994. Prior to that time, he served as Executive Vice President from 1991 to 1994 and as Senior Vice President-Marketing and International from 1989 to 1991. 6 10 Edward S. Dunn, Jr., age 51, has been President of Harris Teeter since January 1, 1989. Brian F. Gallagher, age 47, has been President of Jordan Graphics, Inc. since July, 1993. From April, 1993 to July, 1993, he served as Vice President of Manufacturing. From May, 1985 to April, 1993, he served as Plant Manager at several plants for Moore Business Forms. 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 1994 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 and $.56 Convertible Preference Stock for each quarterly period in the 1994 and 1993 fiscal years (the $.56 Preference was called for redemption on May 31, 1994) is incorporated by reference to the Note headed "Quarterly Information (Unaudited)" to the Notes to Consolidated Financial Statements; and information regarding restrictions on the ability of the Registrant to pay cash dividends is incorporated by reference to "Management's Discussion and Analysis of Financial Condition and Results of Operations-Capital Resources and Liquidity" and the Note headed "Long-Term Debt" to the Notes to Consolidated Financial Statements. ITEM 6. SELECTED FINANCIAL DATA The information required for this item, for each of the last five fiscal years, is incorporated herein by reference to the section headed "Eleven-Year Financial and Operating Summary" in the Registrant's 1994 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 1994 Annual Report. 7 11 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 1994 Annual Report. The required supplementary financial information is incorporated herein by reference from the Note headed "Quarterly Information (Unaudited)" of the Notes to Consolidated Financial Statements in the Registrant's 1994 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 information required by this item with respect to directors is incorporated herein by reference to the section entitled "Election of Directors" in the Registrant's Proxy Statement dated December 21, 1994, filed with the Securities and Exchange Commission with respect to the Registrant's 1995 Annual Meeting of Shareholders (the "1995 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 1995 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 1995 Proxy Statement. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Not applicable. 8 12 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) Documents filed as part of report (1) Financial Statements: The following report and financial statements are incorporated herein by reference to the Registrant's 1994 Annual Report: Consolidated Balance Sheets, October 2, 1994 and October 3, 1993 Statements of Consolidated Income and Retained Earnings for the fiscal years ended October 2, 1994, October 3, 1993 and September 27, 1992 Statements of Consolidated Cash Flows for the fiscal years ended October 2, 1994, October 3, 1993 and September 27, 1992 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 2, 1994 Schedule V - Property, Plant, and Equipment Schedule VI - Accumulated Depreciation, Depletion and Amortization of Property, Plant, and Equipment Schedule VIII - Valuation and Qualifying Accounts and Reserves Schedule X - Supplementary Income Statement Information 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. 9 13 (3) Exhibits: The following exhibits are filed with this report or, as noted, incorporated by reference herein. Exhibit No. Description - ----------- ------------------------------------------------------------- 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, 1992 (Commission File No. 1-6905). 4.1 Loan Agreement for $70,000,000 Term Loans entered into on April 23, 1992, by and among the Registrant, First Union National Bank of North Carolina, NationsBank of North Carolina, N.A. and Wachovia Bank of North Carolina, N.A., incorporated herein by reference to Exhibit 4.1 of the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended March 29, 1992, (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.* 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 14 Exhibit No. Description - ----------- ----------------------------------------------------------- 10.5 1982 Incentive Stock Option Plan, as amended and restated.* 10.6 1988 Incentive Stock Option Plan.* 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).* 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).* 11 Statement Regarding the Computation of Per Share Earnings. 13 Ruddick Corporation 1994 Annual Report to Shareholders (consolidated financial statements on pages 20 to 31 and sections headed "Management's Discussion and Analysis of Financial Condition and Results of Operations" (pages 16 to 19) and "Eleven-Year Financial and Operating Summary" (pages 14 to 15) only). 21 List of Subsidiaries of the Registrant. 23 Consent of Independent Public Accountants. 11 15 Exhibit No. Description - ----------- ----------------------------------------------------- 27 Financial Data Schedule. ________________________ * Indicates management contract or compensatory plan required to be filed as an Exhibit. (b) Reports on Form 8-K. The Registrant did not file any reports on Form 8-K during the three months ended October 2, 1994. (c) The following exhibits are filed herewith and follow the signature pages: 10.1 Description of Incentive Compensation Plans. 10.5 1982 Incentive Stock Option Plan. 10.6 1988 Incentive Stock Option Plan. 11 Statement Regarding Computation of Per Share Earnings. 13 Ruddick Corporation 1994 Annual Report to Shareholders (consolidated financial statements on pages 20 to 31 and sections headed "Management's Discussion and Analysis of Financial Condition and Results of Operations" (pages 16 to 19) and "Eleven-Year Financial and Operating Summary" (pages 14 to 15) only). 21 List of Subsidiaries of the Registrant. 23 Consent of Independent Public Accountants. 27 Financial Data Schedule. (d) The financial statement schedules listed in Item 14(a)(2) above begin on Page S-1. 12 16 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/ John W. Copeland --------------------------- John W. Copeland, President Dated: December 21, 1994 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/ John W. Copeland President and Director December 21, 1994 - -------------------- (Principal Executive Officer) John W. Copeland /s/ Richard N. Brigden Vice President-Finance December 21, 1994 - ---------------------- (Principal Financial Officer) Richard N. Brigden /s/ Douglas A. Stephenson Treasurer December 21, 1994 - ------------------------- (Principal Accounting Officer) Douglas A. Stephenson /s/ Thomas M. Belk Director December 21, 1994 - ------------------ Thomas M. Belk /s/ Edwin B. Borden, Jr. Director December 21, 1994 - ------------------------ Edwin B. Borden, Jr. /s/ Alan T. Dickson Chairman of the Board December 21, 1994 - ------------------- and Director Alan T. Dickson /s/ R. Stuart Dickson Chairman of the Executive December 21, 1994 - --------------------- Committee and Director R. Stuart Dickson
13 17
Name Title Date ---- ----- ---- /s/ Beverly F. Dolan Director December 21, 1994 - -------------------- Beverly F. Dolan /s/ Roddey Dowd, Sr. Director December 21, 1994 - -------------------- Roddey Dowd, Sr. /s/ James E. S. Hynes Director December 21, 1994 - --------------------- James E. S. Hynes /s/ Hugh L. McColl. Jr. Director December 21, 1994 - ----------------------- Hugh L. McColl, Jr. /s/ E. Craig Wall, Jr. Director December 21, 1994 - ---------------------- E. Craig Wall, Jr.
14 18 INDEX TO FINANCIAL STATEMENT SCHEDULES
Page ---- Report of Independent Public Accountants S-2 For each of the fiscal years in the three year period ended October 2, 1994 Schedule V - Property, Plant, and Equipment S-3 Schedule VI - Accumulated Depreciation, Depletion, and Amortization of Property, Plant, and Equipment S-4 Schedule VIII - Valuation and Qualifying Accounts and Reserves S-5 Schedule X - Supplementary Income Statement Information S-6
All other schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes. S-1 19 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 in this Form 10-K and have issued our report thereon dated October 27, 1994. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedules listed in Item 14(a)(2) are the responsibility of the Company's management and are presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Charlotte, North Carolina, October 27, 1994. S-2 20 RUDDICK CORPORATION AND SUBSIDIARIES PROPERTY, PLANT AND EQUIPMENT FOR THE FISCAL YEARS ENDED SEPTEMBER 27, 1992, OCTOBER 3, 1993 AND OCTOBER 2, 1994 SCHEDULE V (in thousands)
- -------------------------------------------------------------------------------------------------------------- COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - -------------------------------------------------------------------------------------------------------------- BALANCE OTHER BALANCE AT BEGINNING ADDITIONS CHANGES AT END CLASSIFICATION OF FISCAL YEAR AT COST RETIREMENTS (DEDUCT) OF PERIOD - -------------------------------------------------------------------------------------------------------------- Fiscal Year Ended September 27, 1992: Land and Land Improvements......... $ 10,900 $ 95 $ 10,995 Buildings.......................... 75,623 2,702 356 (1) 2,229 80,198 Machinery and Equipment............ 277,327 35,206 10,056 (1) (1,967) 300,510 Leasehold Improvements............. 49,464 6,593 577 (1) (23) 55,457 Capital Projects in Progress....... 3,027 3,972 2 (1) (239) 6,758 ---------------------------------------------------------------------- Total.......................... $416,341 $48,568 $10,991 $453,918 ====================================================================== Fiscal Year Ended October 3, 1993: Land and Land Improvements......... $ 10,995 ($2) $ 54 $ 10,939 Buildings.......................... 80,198 2,155 92 82,261 Machinery and Equipment............ 300,510 49,548 18,648 (1) 2,374 333,784 Leasehold Improvements............. 55,457 4,982 2,000 58,439 Capital Projects in Progress....... 6,758 (931) 5,827 ---------------------------------------------------------------------- Total.......................... $453,918 $55,752 $20,794 $ 2,374 $491,250 ====================================================================== Fiscal Year Ended October 2, 1994: Land and Land Improvements......... $ 10,939 $ 86 $ 11,025 Buildings.......................... 82,261 4,152 86,413 Machinery and Equipment............ 333,784 47,689 $14,327 367,146 Leasehold Improvements............. 58,439 16,451 1,040 73,850 Capital Projects in Progress....... 5,827 (178) 5,649 ---------------------------------------------------------------------- Total.......................... $491,250 $68,200 $15,367 $ 0 $544,083 ======================================================================
(1) Reclassified S-3 21 RUDDICK CORPORATION AND SUBSIDIARIES ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT FOR THE FISCAL YEARS ENDED SEPTEMBER 27, 1992, OCTOBER 3, 1993 SCHEDULE VI AND OCTOBER 2, 1994 (in thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F - --------------------------------------------------------------------------------------------------------------- BALANCE OTHER BALANCE AT BEGINNING ADDITIONS CHANGES AT END CLASSIFICATION OF FISCAL YEAR AT COST RETIREMENTS (DEDUCT) OF PERIOD - --------------------------------------------------------------------------------------------------------------- Fiscal Year Ended September 27, 1992: Land Improvements.................. $ 1,143 $ 164 $ 0 $ 1,307 Buildings.......................... 21,206 2,587 356 (1) (1,468) 24,905 Machinery and Equipment............ 130,844 27,430 7,750 (1) 1,468 149,056 Leasehold Improvements............. 18,409 4,098 339 22,168 ---------------------------------------------------------------------- Total.......................... $171,602 $34,279 $ 8,445 $197,436 ====================================================================== Fiscal Year Ended October 3, 1993: Land Improvements.................. $ 1,307 $ 158 $ 1 $ 1,464 Buildings.......................... 24,905 2,594 6 27,493 Machinery and Equipment............ 149,056 29,940 14,018 164,978 Leasehold Improvements............. 22,168 4,158 1,914 24,412 ---------------------------------------------------------------------- Total.......................... $197,436 $36,850 $15,939 $ 0 $218,347 ====================================================================== Fiscal Year Ended October 2, 1994: Land Improvements.................. $ 1,464 $ 155 $ 0 $ 1,619 Buildings.......................... 27,493 2,671 0 (1) ($2) 30,166 Machinery and Equipment............ 164,978 32,810 12,565 (1) 2 185,221 Leasehold Improvements............. 24,412 4,046 357 28,101 ---------------------------------------------------------------------- Total.......................... $218,347 $39,682 $12,922 $ 0 $245,107 ======================================================================
(1) Reclassified S-4 22 RUDDICK CORPORATION AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR THE FISCAL YEARS ENDED SEPTEMBER 27, 1992, OCTOBER 3, 1993 SCHEDULE VIII AND OCTOBER 2, 1994 (in thousands)
- ----------------------------------------------------------------------------------------------------------- COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E - ----------------------------------------------------------------------------------------------------------- ADDITIONS BALANCE CHARGED TO BALANCE AT BEGINNING COSTS AND AT END DESCRIPTION OF FISCAL YEAR EXPENSES DEDUCTIONS OF PERIOD - ----------------------------------------------------------------------------------------------------------- Fiscal Year Ended September 27, 1992: Reserves deducted from assets to which they apply - Allowance For Doubtful Accounts... $ 871 $ 651 $619 * $ 903 ================================================================= Fiscal Year Ended October 3, 1993: Reserves deducted from assets to which they apply - Allowance For Doubtful Accounts... $ 903 $1,413 $337 * $1,979 ================================================================= Fiscal Year Ended October 2, 1994: Reserves deducted from assets to which they apply - Allowance For Doubtful Accounts... $1,979 $ 506 $454 * $2,031 =================================================================
*Represents accounts receivable balances written off as uncollectible, less recoveries. S-5 23 RUDDICK CORPORATION AND SUBSIDIARIES SUPPLEMENTARY INCOME STATEMENT INFORMATION FOR THE FISCAL YEARS ENDED SEPTEMBER 27, 1992, OCTOBER 3, 1993 SCHEDULE X AND OCTOBER 2, 1994 (in thousands)
- ------------------------------------------------------------------------------------ COLUMN A COLUMN B - ------------------------------------------------------------------------------------ CHARGED TO COSTS AND EXPENSES ITEM 1992 1993 1994 - ------------------------------------------------------------------------------------ Maintenance and Repairs............................ $16,980 $18,568 $21,840 Depreciation and amortization of intangible asset.. * * * Taxes other than payroll and income taxes: Property......................................... * * * Franchise and other.............................. * * * Royalties.......................................... * * * Advertising costs.................................. * * *
*Less than 1% of sales. S-6 24 INDEX TO EXHIBITS Exhibit No. (per Item 601 Sequential of Reg. S-K Description of Exhibit Page No. - ------------ ---------------------- ---------- 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, 1992 (Commission File No. 1-6905). 4.1 Loan Agreement for $70,000,000 Term Loans * entered into on April 23, 1992, by and among the Registrant, First Union National Bank of North Carolina, NationsBank of North Carolina, N.A. and Wachovia Bank of North Carolina, N.A., incorporated herein by reference to Exhibit 4.1 of the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended March 29, 1992, (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.** 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).** 25 Exhibit No. (per Item 601 Sequential of Reg. S-K Description of Exhibit Page No. - ------------ ---------------------- ---------- 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.** 10.6 1988 Incentive Stock Option Plan.** 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).** 26 Exhibit No. (per Item 601 Sequential of Reg. S-K Description of Exhibit Page No. ------------ ---------------------- ---------- 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).** 11 Statement Regarding the Computation of Per Share Earnings. 13 Ruddick Corporation 1994 Annual Report to Shareholders (consolidated financial statements on pages 20 to 31 and sections headed "Management's Discussion and Analysis of Financial Condition and Results of Operations" (pages 16 to 19) and "Eleven-Year Financial and Operating Summary" (pages 14 to 15) only). 21 List of Subsidiaries of the Registrant. 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. EX-10.1 2 INCENTIVE COMPENSATION PLAN 1 EXHIBIT 10.1 INCENTIVE COMPENSATION PLANS The Company and its subsidiaries provide annual incentive compensation through a bonus plan maintained for all salaried personnel. The bonus plan directly links incentive pay to achievement of predetermined, objective performance goals. For employees employed directly by the holding company, incentive pay is based on return on beginning shareholders' equity. For employees employed by an operating subsidiary, incentive pay is based on pre-tax earnings, as adjusted for that subsidiary, as a percentage of beginning capital employed. If the Company, or a subsidiary, as applicable, achieves the predetermined minimum goals, employees are paid a predetermined percentage of base compensation as incentive. The percentage of base compensation payable as incentive compensation increases proportionally until a maximum performance goal is achieved with respect to the applicable measure of performance. EX-10.5 3 1982 INCENTIVE STOCK OPTION PLAN 1 EXHIBIT 10.5 RUDDICK CORPORATION 1982 INCENTIVE STOCK OPTION PLAN (as amended and restated on November 17, 1988) 1. Definitions: (a) The "Act" means the Securities Exchange Act of 1934, as amended. (b) The "Code" means the Internal Revenue Code of 1986, as amended. (c) The "Committee" means the Stock Option Committee appointed by the Board of Directors of the Corporation to administer the Plan. (d) "Common Stock" means the common stock, $1.00 par value per share, of the Corporation to be issued pursuant to the Plan. (e) The "Corporation" means Ruddick Corporation, a North Carolina corporation. (f) "Disabled" means the inability of an optionee to engage in his profession by reason of any medically determinable physical or mental impairment which can be expected to result in death or which is to last or can be expected to last for a continuous period of not less than twelve months. (g) "Incentive Stock Option Agreement" means a formal written agreement between the Corporation and an optionee in such form and containing such provisions not inconsistent with the provisions of the Plan as the Committee shall from time to time approve setting forth the terms and conditions of the grant of an option to purchase shares of Common Stock pursuant to the Plan. Such Incentive Stock Option Agreement may be combined in the same written agreement as a Stock Appreciation Right Agreement. (h) "Key Employee" means an active full time employee of the Corporation or its Subsidiaries who has significant responsibility for the growth and financial success of the Corporation, including officers and other employees of the Corporation and its Subsidiaries. The term "Key Employee" does not include a director of the Corporation or a Subsidiary who is not otherwise an active employee of the Corporation or a Subsidiary, or a person who has retired from the active employment of the Corporation or a Subsidiary. (i) "Option" means the right granted by the Corporation pursuant to the Plan to a Key Employee to purchase shares of Common Stock. 2 (j) The "Plan" means the Ruddick Corporation 1982 Incentive Stock Option Plan. (k) "Right" means the right of an optionee to receive, pursuant to the terms of such optionee's Stock Appreciation Right Agreement, either cash or shares of Common Stock based on the increase in the fair market value, as defined in Section 6 hereof, of the optioned shares of Common Stock, as more particularly described in Section 9 hereof. (l) "Stock Appreciation Right Agreement" means a formal written agreement between the Corporation and an optionee in such form and containing such provisions not inconsistent with the provisions of the Plan as the Committee shall from time to time approve setting forth the terms and conditions of the grant of a Right. Such Stock Appreciation Right Agreement may be combined in the same written agreement as an Incentive Stock Option Agreement. (m) "Subsidiaries" means subsidiary corporations of the Corporation as that term is defined in Section 425(f) of the Code. 2. Purpose: This Plan is for the purpose of securing or retaining the services of Key Employees of the Corporation and its Subsidiaries. The Board of Directors of the Corporation believes the Plan will promote and increase personal interest in the welfare of the Corporation by, and provide incentive to, those who are primarily responsible not only for its regular operations but also for shaping and carrying out the long-range plans of the Corporation and aiding its continued growth and financial success. It is intended that options issued pursuant to the Plan shall constitute incentive stock options within the meaning of Section 422A of the Code. It is also intended that the Plan satisfy the conditions of Rule 16b-3 of the Act. 3. Administration: The Plan shall be administered by the Committee, which shall consist of not less than three members of the Board of Directors of the Corporation who shall be appointed by the Board. No person shall serve on the Committee who is, or within the preceding year has been, eligible to receive an Option or a Right under the Plan. The members of the Committee shall serve at the pleasure of the Board of Directors, which may fill vacancies, however caused, in the Committee. The Committee shall select one of its members as its chairman and shall hold its meetings at such times and places as it shall deem 2 3 advisable. A majority of its members shall constitute a quorum, and all actions of the Committee shall be taken by a majority of its members. Any action of the Committee evidenced by a written instrument, signed by a majority of its members, shall be fully as effective as if it had been taken by a vote of a majority of its members at a meeting duly called and held. The Committee shall appoint a secretary, who may be but need not be a member of the Committee; shall keep minutes of its meetings; and shall make such rules and regulations for the conduct of its business as it shall deem advisable. Subject to the express provisions of the Plan, the Committee shall have complete authority, in its discretion, to determine the Key Employees of the Corporation and the Subsidiaries to whom, the time or times when, and the price or prices at which, Options and Rights shall be granted, the option periods, and the number of shares to be subject to each Option and Right. The Committee shall also have complete authority to interpret the Plan, to prescribe, amend, and rescind rules and regulations relating to it, to determine the terms and provisions of the respective Incentive Stock Option Agreements (which need not be identical) and the respective Stock Appreciation Right Agreements (which need not be identical), and to make all other determinations necessary or advisable for the administration of the Plan. The Committee's determinations on the matters referred to in this section shall be conclusive and binding upon all persons including, without limitation, the Corporation and its Subsidiaries, the Committee and each of the members thereof, and the Directors, officers, and employees of the Corporation and its Subsidiaries, the optionees, and their respective successors in interest. 4. Eligibility: Options and Rights may be granted only to Key Employees. No Key Employee shall be eligible, except as provided in Section 13 hereof, to receive an Option if such employee would beneficially own, directly or indirectly, immediately after the Option was granted, capital stock of the Corporation possessing more than ten percent of the total combined voting power of all classes of capital stock of the Corporation. For the purposes of the preceding sentence, the rules of Section 425(d) of the Code shall apply, and capital stock of the Corporation which an employee may purchase under outstanding options shall be treated as stock owned by such employee. In determining the employees to whom Options and Rights will be granted and the number of shares to be covered by each Option, the Committee shall take into account the duties of the respective employees, their present and potential contributions to the 3 4 success of the Corporation, the anticipated number of years of effective service remaining, and such other factors as they shall deem relevant in connection with accomplishing the purposes of the Plan. Subject to the limits set forth in this Plan, a Key Employee who has been granted an Option and Right may be granted additional Options and Rights if the Committee shall so determine. Notwithstanding the foregoing provisions of the Plan, no employee may be granted an Option in any calendar year if the aggregate fair market value (determined as of the time the Option is granted) of the stock with respect to which incentive stock options are exercisable for the first time by such employee during any calendar year, under this and all other incentive stock option plans (as defined in Section 422A of the Code) of the Corporation or its Subsidiaries, would exceed $100,000. No member of the Committee shall be eligible to receive an Option or a Right. 5. Stock Subject to Option: An aggregate of 400,000 shares of Common Stock will be authorized and reserved for issuance for purposes of the Plan. Such shares may be in whole or in part, as the Board of Directors of the Corporation shall from time to time determine, authorized but unissued shares of Common Stock or issued shares of Common Stock which shall have been reacquired by the Corporation. If any Option granted under the Plan shall expire or terminate for any reason without having been exercised in full, Options may be granted to other Key Employees with respect to such unpurchased shares. To the extent permitted in the case of "incentive stock options" by Sections 421, 422A and 425 of the Code, the total amount of shares on which Options may be granted under the Plan and option rights (both as to the number of shares and the option price) shall be appropriately adjusted for any increase or decrease in the number of outstanding shares of Common Stock of the Corporation resulting from payment of a stock dividend on the Common Stock, a subdivision or combination of shares of the Common Stock, or a reclassification of the Common Stock, and (in accordance with the provisions contained in the next following paragraph) in the event of a merger or consolidation. After the merger of one or more corporations into the Corporation or any Subsidiary of the Corporation, any merger of the Corporation into another corporation, any consolidation of the Corporation or any Subsidiary of the Corporation and one or more corporations, or any other corporate reorganization of any form involving the Corporation as a party thereto involving any exchange, conversion, adjustment or other modification of the 4 5 outstanding shares of the Corporation's Common Stock, each optionee shall, at no additional cost, be entitled, upon any exercise of his Option, to receive, in lieu of the number of shares as to which such Option shall then be so exercised, the number and class of shares of stock or other securities or such other property to which such optionee would have been entitled pursuant to the terms of the agreement of merger or consolidation, if at the time of such merger or consolidation, such optionee had been a holder of record of a number of shares of Common Stock of the Corporation equal to the number of shares as to which such Option shall then be so exercised. Comparable rights shall accrue to each optionee in the event of successive mergers or consolidations of the character described above. The foregoing adjustments and the manner of application of the foregoing provisions shall be determined by the Committee in its sole discretion. Any such adjustment may provide for the elimination of any fractional share which might otherwise become subject to an Option. In the event of (i) the adoption of a plan of merger or consolidation of the Corporation with any other corporation or association as a result of which the holders of the voting capital stock of the Corporation as a group would receive less than 50% of the voting capital stock of the surviving or resulting corporation; (ii) the approval by the Board of Directors of an agreement providing for the sale or transfer (other than as security for obligations of the Corporation) of substantially all the assets of the Corporation, or (iii) the acquisition of more than 20% of the Corporation's voting capital stock by any person within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, other than a person, or group including a person, who beneficially owned, as of the effective date hereof, more than 5% of the Corporation's securities in the absence of a prior expression of approval of the Board of Directors of the Corporation; any Option granted hereunder shall become immediately exercisable in full, subject to any appropriate adjustments in the number of shares subject to Option and the option price, and shall remain exercisable for the remaining term of such Option, regardless of whether such Option has been outstanding for six months or of any provision contained in the Incentive Stock Option Agreement with respect thereto limiting the exercisability of the Option or any portion thereof for any length of time, subject to all of the terms hereof and of the Incentive Stock Option Agreement with respect thereto not inconsistent with this paragraph. Anything contained herein to the contrary notwithstanding, upon the dissolution or liquidation of the Corporation each Option granted under the Plan shall 5 6 terminate; provided, however, that following the adoption of a plan of dissolution or liquidation, and in any event prior to such dissolution or liquidation (and as provided above regarding certain mergers and consolidations), each Option granted hereunder shall be exercisable in full, regardless of whether such Option has been outstanding for six months or of any provision contained in the Incentive Stock Option Agreement with respect thereto limiting the exercisability of the Option or any portion thereof for any length of time, subject to all of the terms hereof and of the Incentive Stock Option Agreement with respect thereto not inconsistent with this paragraph. The grant of an Option pursuant to this Plan shall not affect in any way the right or power of the Corporation or any of its Subsidiaries to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge or consolidate, or to dissolve, liquidate or sell, or transfer all or any part of its business or assets. In the event that the number of shares of Common Stock subject to an Option or Options is adjusted pursuant to the terms of this Section 5, then any Right or Rights related to such Option or Options likewise shall be appropriately and equitably adjusted. 6. Granting of Options; Option Price: Following the selection by the Committee of a Key Employee to whom an Option shall be granted, the Corporation shall tender for a signature an Incentive Stock Option Agreement. The date on which an Option shall be granted shall be the date of the Committee's authorization of such grant, or such later date as may be determined by the Committee at the time such grant is authorized. The purchase price of the Common Stock under each Option shall be determined by the Committee, but shall be not less than 100 percent of the fair market value of the stock at the time of the granting of the Option, and in no event shall the purchase price with respect to authorized but theretofore unissued shares of stock be less than the par value of the stock. For so long as the Common Stock is listed on a national securities exchange or the NASDAQ National Market System, "fair market value" shall mean, for purposes of this Plan, as of a given date, the mean between the high and low sales prices for the stock on such date, or, if no such shares were sold on such date, the most recent date on which shares of such stock were sold, as reported in The Wall Street Journal. If the Common Stock is not listed on a national 6 7 securities exchange or the NASDAQ National Market System, fair market value shall mean the average of the closing bid and asked prices for such stock in the over-the-counter market as reported by the National Association of Securities Dealers Automated Quotation System. If the Common Stock is not listed on a national securities exchange, the NASDAQ National Market System or the over-the-counter market, fair market value shall be the fair value thereof determined in good faith by the Board of Directors of the Corporation. 7. Exercise of Option: An Option may be exercised by written notice to the Corporation at its offices at 2000 First Union Plaza, Charlotte, North Carolina 28282, or such other address to which the office may be relocated, which notice shall be signed by the employee or by the employee's successors, as hereinafter described in Section 10, which shall state the number of shares with respect to which the Option is being exercised, and shall contain the representation that it is the optionee's present intention to acquire the shares being purchased for investment and not for resale. Payment in full of the option price of said shares must be made at the time of the exercise of the Option, and payment may be made in cash or shares of Common Stock of the Corporation previously held by the optionee, or a combination of both. Payment in shares may also be made with shares received upon the exercise or partial exercise of an Option, whether or not involving a series of exercises or partial exercises and whether or not share certificates for such shares surrendered have been delivered to the Optionee. Shares of Common Stock previously held by the optionee and surrendered, in accordance with rules and regulations adopted by the Committee, for the purpose of making full or partial payment of the option price, shall be valued for such purpose at the "fair market value" thereof ("fair market value" to be determined in the manner hereinbefore provided in Section 6) on the date the Option is exercised. As soon as practicable after said notice shall have been received, the Corporation shall deliver to the optionee a stock certificate registered in the optionee's name representing the Option shares. The optionee shall not have any rights of a shareholder of the Corporation with respect to the shares covered by the Option except to the extent that, and until, one or more certificates for shares shall have been delivered to optionee upon the due exercise of the Option. 8. Option Period: The Options and Rights granted hereunder shall be exercisable in whole or in part or in installments from time 7 8 to time as may be specified by the Committee, except that no Option or Right granted hereunder shall be exercisable within six months of, or after the expiration of ten years from, the date the Option or Right is granted. 9. Rights: A Right may be granted with respect to any Option and may be granted contemporaneously with the grant of an Option or at any time after an Option is granted. Such Right may be exercised by surrendering the related Option, or any portion thereof, to the Corporation at its offices as set forth in Section 7 hereof, and to the extent Options have been so surrendered, such Options shall no longer be exercisable. A Right may be exercised only when the related Option is eligible to be exercised and also only when the fair market value, as defined in Section 6 hereof, of the Common Stock exceeds the purchase price of the Common Stock under the related Option. A Right will expire no later than the expiration of the related Option. A Right entitles the optionee to surrender to the Corporation the related unexercised Option, or any portion thereof, and to receive from the Corporation in exchange therefor the economic value thereof, which value shall be an amount equal to (i) the excess of the fair market value, as defined in Section 6 hereof, of one share of Common Stock on the date of exercise of the Right over the purchase price per share of Common Stock specified in such Option, multiplied by (ii) the number of shares of Common Stock subject to the Option, or portion thereof, which is so surrendered. Upon the exercise of a Right, the Committee shall have the sole and exclusive discretion to determine the form in which payment of the economic value of such Right shall be made, which form of payment may be in cash, in shares of Common Stock or in any combination thereof. No fractional shares of Common Stock shall be issued upon the exercise of a Right. Upon the exercise of a Right, the Option or portion thereof to which such Right is related shall be forfeited, and such forfeiture shall have the effect of an exercise of the Option for the purpose of the limitation imposed on the number of shares of Common Stock authorized and reserved for issuance under Section 5 hereof. Upon the exercise or partial exercise of an Option, the related Right or Rights shall be forfeited to the extent of such exercise. 8 9 Notwithstanding anything to the contrary contained herein, if an optionee is a person who is regularly required to report his ownership and change of ownership of Common Stock to the Securities and Exchange Commission and is subject to short-swing profit liability under the provisions of Section 16(b) of the Act, then any election to exercise such optionee's Rights, as well as any exercise of such optionee's Rights, shall be made only in accordance with the terms of this Plan and during the period beginning on the third business day and ending on the twelfth business day following the release for publication by the Corporation of quarterly or annual summary statements of sales and earnings. This condition shall be deemed to be satisfied if the specified financial data appears (i) on a wire service, (ii) in a financial news service, (iii) in a newspaper of general circulation, or (iv) is otherwise made publicly available, and shall remain in effect so long as it does not violate any applicable law or any rule or regulation adopted by appropriate governmental authority. Notwithstanding further anything to the contrary contained herein, Rights shall always be granted and exercised in such a manner as to satisfy the conditions of Rule 16b-3 of the Act. 10. Termination of Employment: (a) If the employment of any person to whom an Option has been granted is terminated for any reason other than death, disability, retirement with the consent of the Corporation, or termination without cause, his Option or Options and the related Right or Rights shall terminate immediately. If an optionee retires with the consent of the Corporation or if an optionee is terminated without cause by the Corporation, or any of its Subsidiaries, he may exercise his Option or Right to the extent that he was entitled to exercise it as of the date of said retirement or termination but only within three months after said retirement and in no event after the expiration of ten years from the date such Option and Right were granted. A temporary leave of absence approved by the Corporation or any of its Subsidiaries shall not be deemed to be a termination of employment, unless, under any applicable provisions of the Code or regulations promulgated thereunder, as then in effect, the affected optionee would be accorded different tax treatment than if such optionee were an active employee of the Corporation. (b) If any person to whom an Option or an Option and related Right has been granted shall die or become Disabled while he is an employee of the Corporation or any of its Subsidiaries, or shall die within three months after retirement with the consent of the Corporation, such Option or Right may be exercised (to the extent he would have been 9 10 entitled to do so on the date of his death or disability) by the optionee or a legatee or legatees of the optionee under his last will, or by his personal representatives or distributees, at any time within one year after the termination of his employment, but in no event after the expiration of ten years after the date such Option and Right were granted. Disability shall be determined by the Committee only upon certification thereof by a qualified physician selected by the Committee after examination of the optionee by such physician. 11. The Right of the Corporation to Terminate Employment: Nothing contained in the Plan or in any Option or Right granted pursuant to the Plan shall confer upon any optionee any right to be continued in the employment of the Corporation or one of its Subsidiaries, or shall interfere in any way with the right of the Corporation or any of its Subsidiaries as the case may be, to terminate his employment at any time for any reason. 12. Non-Transferability of Options and Rights: No Option or Right granted under the Plan shall be transferable by the optionee other than by will, or, if he dies intestate, by the laws of descent and distribution of the state of his domicile at the time of his death, and such Option or Right shall be exercisable during his lifetime only by such optionee. 13. Ten Percent Shareholders: Notwithstanding the provisions of Section 4 regarding the ineligibility of certain ten percent owners of the Corporation's capital stock, any such employee may be granted an Option hereunder which (a) provides for an option price of at least 110 percent of the fair market value of the stock at the time of the granting of the Option, (b) is not exercisable before the expiration of six months or after the expiration of five years from the date such Option is granted, and (c) is subject to all of the other terms and conditions of the Plan, including without limitation, the restrictions of Section 4 regarding Options to purchase shares having a fair market value in excess of $100,000. 14. Amendment and Termination: The Plan may be amended, modified, discontinued or terminated by the Board of Directors without stockholder approval as deemed in the best interest of the Corporation; provided, that no such amendment of modification shall (i) materially increase the benefits accruing to eligible employees, (ii) materially increase the number of shares 10 11 which may be issued, (iii) materially modify the requirements as to eligibility for participation, or (iv) without the consent of the holder, reduce the amount of any benefit or adversely change the terms and conditions thereof. 15. Effective Date of the Plan: The effective date of the Plan shall be the date upon which the adoption of the Plan is approved by the shareholders of the Corporation. Notwithstanding any other provision hereof, no Option or Right granted hereunder may be exercised prior to the approval of the Plan by the shareholders of the Corporation and, in the event the shareholders do not approve the Plan within one year from the effective date of the Plan, all Options and Rights granted hereunder shall be void. No Options or Rights may be granted under this Plan subsequent to November 15, 1991. 11 EX-10.6 4 1988 INCENTIVE STOCK OPTION PLAN 1 EXHIBIT 10.6 RUDDICK CORPORATION 1988 INCENTIVE STOCK OPTION PLAN 1. Definitions: (a) The "Act" means the Securities Exchange Act of 1934, as amended. (b) The "Code" means the Internal Revenue Code of 1986, as amended. (c) The "Committee" means the Stock Option Committee appointed by the Board of Directors of the Corporation to administer the Plan. (d) "Common Stock" means the common stock, $1.00 par value per share, of the Corporation to be issued pursuant to the Plan. (e) The "Corporation" means Ruddick Corporation, a North Carolina corporation. (f) "Disabled" means the inability of an optionee to engage in his profession by reason of any medically determinable physical or mental impairment which can be expected to result in death or which is to last or can be expected to last for a continuous period of not less than twelve months. (g) "Incentive Stock Option Agreement" means a formal written agreement between the Corporation and an optionee in such form and containing such provisions not inconsistent with the provisions of the Plan as the Committee shall from time to time approve setting forth the terms and conditions of the grant of an option to purchase shares of Common Stock pursuant to the Plan. Such Incentive Stock Option Agreement may be combined in the same written agreement as a Stock Appreciation Right Agreement. (h) "Key Employee" means an active full time employee of the Corporation or its Subsidiaries who has significant responsibility for the growth and financial success of the Corporation, including officers and other employees of the Corporation and its Subsidiaries. The term "Key Employee" does not include a director of the Corporation or a Subsidiary who is not otherwise an active employee of the Corporation or a Subsidiary, or a person who has retired from the active employment of the Corporation or a Subsidiary. (i) "Option" means the right granted by the Corporation pursuant to the Plan to a Key Employee to purchase shares of Common Stock. 2 (j) The "Plan" means the Ruddick Corporation 1988 Incentive Stock Option Plan. (k) "Right" means the right of an optionee to receive, pursuant to the terms of such optionee's Stock Appreciation Right Agreement, either cash or shares of Common Stock based on the increase in the fair market value, as defined in Section 6 hereof, of the optioned shares of Common Stock, as more particularly described in Section 9 hereof. (l) "Stock Appreciation Right Agreement" means a formal written agreement between the Corporation and an optionee in such form and containing such provisions not inconsistent with the provisions of the Plan as the Committee shall from time to time approve setting forth the terms and conditions of the grant of a Right. Such Stock Appreciation Right Agreement may be combined in the same written agreement as an Incentive Stock Option Agreement. (m) "Subsidiaries" means subsidiary corporations of the Corporation as that term is defined in Section 425(f) of the Code. 2. Purpose: This Plan is for the purpose of securing or retaining the services of Key Employees of the Corporation and its Subsidiaries. The Board of Directors of the Corporation believes the Plan will promote and increase personal interest in the welfare of the Corporation by, and provide incentive to, those who are primarily responsible not only for its regular operations but also for shaping and carrying out the long-range plans of the Corporation and aiding its continued growth and financial success. It is intended that options issued pursuant to the Plan shall constitute incentive stock options within the meaning of Section 422A of the Code. It is also intended that the Plan satisfy the conditions of Rule 16b-3 of the Act. 3. Administration: The Plan shall be administered by the Committee, which shall consist of not less than three members of the Board of Directors of the Corporation who shall be appointed by the Board. No person shall serve on the Committee who is, or within the preceding year has been, eligible to receive an Option or a Right under the Plan. The members of the Committee shall serve at the pleasure of the Board of Directors, which may fill vacancies, however caused, in the Committee. The Committee shall select one of its members as its chairman and shall hold its meetings at such times and places as it shall deem 2 3 advisable. A majority of its members shall constitute a quorum, and all actions of the Committee shall be taken by a majority of its members. Any action of the Committee evidenced by a written instrument, signed by a majority of its members, shall be fully as effective as if it had been taken by a vote of a majority of its members at a meeting duly called and held. The Committee shall appoint a secretary, who may be but need not be a member of the Committee; shall keep minutes of its meetings; and shall make such rules and regulations for the conduct of its business as it shall deem advisable. Subject to the express provisions of the Plan, the Committee shall have complete authority, in its discretion, to determine the Key Employees of the Corporation and the Subsidiaries to whom, the time or times when, and the price or prices at which, Options and Rights shall be granted, the option periods, and the number of shares to be subject to each Option and Right. The Committee shall also have complete authority to interpret the Plan, to prescribe, amend, and rescind rules and regulations relating to it, to determine the terms and provisions of the respective Incentive Stock Option Agreements (which need not be identical) and the respective Stock Appreciation Right Agreements (which need not be identical), and to make all other determinations necessary or advisable for the administration of the Plan. The Committee's determinations on the matters referred to in this section shall be conclusive and binding upon all persons including, without limitation, the Corporation and its Subsidiaries, the Committee and each of the members thereof, and the Directors, officers, and employees of the Corporation and its Subsidiaries, the optionees, and their respective successors in interest. 4. Eligibility: Options and Rights may be granted only to Key Employees. No Key Employee shall be eligible, except as provided in Section 13 hereof, to receive an Option if such employee would beneficially own, directly or indirectly, immediately after the Option was granted, capital stock of the Corporation possessing more than ten percent of the total combined voting power of all classes of capital stock of the Corporation. For the purposes of the preceding sentence, the rules of Section 425(d) of the Code shall apply, and capital stock of the Corporation which an employee may purchase under outstanding options shall be treated as stock owned by such employee. In determining the employees to whom Options and Rights will be granted and the number of shares to be covered by each Option, the Committee shall take into account the duties of the respective employees, their present and potential contributions to the 3 4 success of the Corporation, the anticipated number of years of effective service remaining, and such other factors as they shall deem relevant in connection with accomplishing the purposes of the Plan. Subject to the limits set forth in this Plan, a Key Employee who has been granted an Option and Right may be granted additional Options and Rights if the Committee shall so determine. Notwithstanding the foregoing provisions of the Plan, no employee may be granted an Option in any calendar year if the aggregate fair market value (determined as of the time the Option is granted) of the stock with respect to which incentive stock options are exercisable for the first time by such employee during any calendar year, under this and all other incentive stock option plans (as defined in Section 422A of the Code) of the Corporation or its Subsidiaries, would exceed $100,000. No member of the Committee shall be eligible to receive an Option or a Right. 5. Stock Subject to Option: An aggregate of 200,000 shares of Common Stock will be authorized and reserved for issuance for purposes of the Plan. Such shares may be in whole or in part, as the Board of Directors of the Corporation shall from time to time determine, authorized but unissued shares of Common Stock or issued shares of Common Stock which shall have been reacquired by the Corporation. If any Option granted under the Plan shall expire or terminate for any reason without having been exercised in full, Options may be granted to other Key Employees with respect to such unpurchased shares. To the extent permitted in the case of "incentive stock options" by Sections 421, 422A and 425 of the Code, the total amount of shares on which Options may be granted under the Plan and option rights (both as to the number of shares and the option price) shall be appropriately adjusted for any increase or decrease in the number of outstanding shares of Common Stock of the Corporation resulting from payment of a stock dividend on the Common Stock, a subdivision or combination of shares of the Common Stock, or a reclassification of the Common Stock, and (in accordance with the provisions contained in the next following paragraph) in the event of a merger or consolidation. After the merger of one or more corporations into the Corporation or any Subsidiary of the Corporation, any merger of the Corporation into another corporation, any consolidation of the Corporation or any Subsidiary of the Corporation and one or more corporations, or any other corporate reorganization of any form involving the Corporation as a party thereto involving any exchange, conversion, adjustment or other modification of the outstanding shares of the 4 5 Corporation's Common Stock, each optionee shall, at no additional cost, be entitled, upon any exercise of his Option, to receive, in lieu of the number of shares as to which such Option shall then be so exercised, the number and class of shares of stock or other securities or such other property to which such optionee would have been entitled pursuant to the terms of the agreement of merger or consolidation, if at the time of such merger or consolidation, such optionee had been a holder of record of a number of shares of Common Stock of the Corporation equal to the number of shares as to which such Option shall then be so exercised. Comparable rights shall accrue to each optionee in the event of successive mergers or consolidations of the character described above. The foregoing adjustments and the manner of application of the foregoing provisions shall be determined by the Committee in its sole discretion. Any such adjustment may provide for the elimination of any fractional share which might otherwise become subject to an Option. In the event of (i) the adoption of a plan of merger or consolidation of the Corporation with any other corporation or association as a result of which the holders of the voting capital stock of the Corporation as a group would receive less than 50% of the voting capital stock of the surviving or resulting corporation; (ii) the approval by the Board of Directors of an agreement providing for the sale or transfer (other than as security for obligations of the Corporation) of substantially all the assets of the Corporation, or (iii) the acquisition of more than 20% of the Corporation's voting capital stock by any person within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, other than a person, or group including a person, who beneficially owned, as of the effective date hereof, more than 5% of the Corporation's securities in the absence of a prior expression of approval of the Board of Directors of the Corporation; any Option granted hereunder shall become immediately exercisable in full, subject to any appropriate adjustments in the number of shares subject to Option and the option price, and shall remain exercisable for the remaining term of such Option, regardless of whether such Option has been outstanding for six months or of any provision contained in the Incentive Stock Option Agreement with respect thereto limiting the exercisability of the Option or any portion thereof for any length of time, subject to all of the terms hereof and of the Incentive Stock Option Agreement with respect thereto not inconsistent with this paragraph. Anything contained herein to the contrary notwithstanding, upon the dissolution or liquidation of the Corporation each Option granted under the Plan shall 5 6 terminate; provided, however, that following the adoption of a plan of dissolution or liquidation, and in any event prior to such dissolution or liquidation (and as provided above regarding certain mergers and consolidations), each Option granted hereunder shall be exercisable in full, regardless of whether such Option has been outstanding for six months or of any provision contained in the Incentive Stock Option Agreement with respect thereto limiting the exercisability of the Option or any portion thereof for any length of time, subject to all of the terms hereof and of the Incentive Stock Option Agreement with respect thereto not inconsistent with this paragraph. The grant of an Option pursuant to this Plan shall not affect in any way the right or power of the Corporation or any of its Subsidiaries to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge or consolidate, or to dissolve, liquidate or sell, or transfer all or any part of its business or assets. In the event that the number of shares of Common Stock subject to an Option or Options is adjusted pursuant to the terms of this Section 5, then any Right or Rights related to such Option or Options likewise shall be appropriately and equitably adjusted. 6. Granting of Options; Option Price: Following the selection by the Committee of a Key Employee to whom an Option shall be granted, the Corporation shall tender for a signature an Incentive Stock Option Agreement. The date on which an Option shall be granted shall be the date of the Committee's authorization of such grant, or such later date as may be determined by the Committee at the time such grant is authorized. The purchase price of the Common Stock under each Option shall be determined by the Committee, but shall be not less than 100 percent of the fair market value of the stock at the time of the granting of the Option, and in no event shall the purchase price with respect to authorized but theretofore unissued shares of stock be less than the par value of the stock. For so long as the Common Stock is listed on a national securities exchange or the NASDAQ National Market System, "fair market value" shall mean, for purposes of this Plan, as of a given date, the mean between the high and low sales prices for the stock on such date, or, if no such shares were sold on such date, the most recent date on which shares of such stock were sold, as reported in The Wall Street Journal. If the Common Stock is not listed on a national 6 7 securities exchange or the NASDAQ National Market System, fair market value shall mean the average of the closing bid and asked prices for such stock in the over-the-counter market as reported by the National Association of Securities Dealers Automated Quotation System. If the Common Stock is not listed on a national securities exchange, the NASDAQ National Market System or the over-the-counter market, fair market value shall be the fair value thereof determined in good faith by the Board of Directors of the Corporation. 7. Exercise of Option: An Option may be exercised by written notice to the Corporation at its offices at 2000 First Union Plaza, Charlotte, North Carolina 28282, or such other address to which the office may be relocated, which notice shall be signed by the employee or by the employee's successors, as hereinafter described in Section 10, which shall state the number of shares with respect to which the Option is being exercised, and shall contain the representation that it is the optionee's present intention to acquire the shares being purchased for investment and not for resale. Payment in full of the option price of said shares must be made at the time of the exercise of the Option, and payment may be made in cash or shares of Common Stock of the Corporation previously held by the optionee, or a combination of both. Payment in shares may also be made with shares received upon the exercise or partial exercise of an Option, whether or not involving a series of exercises or partial exercises and whether or not share certificates for such shares surrendered have been delivered to the Optionee. Shares of Common Stock previously held by the optionee and surrendered, in accordance with rules and regulations adopted by the Committee, for the purpose of making full or partial payment of the option price, shall be valued for such purpose at the "fair market value" thereof ("fair market value" to be determined in the manner hereinbefore provided in Section 6) on the date the Option is exercised. As soon as practicable after said notice shall have been received, the Corporation shall deliver to the optionee a stock certificate registered in the optionee's name representing the Option shares. The optionee shall not have any rights of a shareholder of the Corporation with respect to the shares covered by the Option except to the extent that, and until, one or more certificates for shares shall have been delivered to optionee upon the due exercise of the Option. 8. Option Period: The Options and Rights granted hereunder shall be exercisable in whole or in part or in installments from time 7 8 to time as may be specified by the Committee, except that no Option or Right granted hereunder shall be exercisable within six months of, or after the expiration of ten years from, the date the Option or Right is granted. 9. Rights: A Right may be granted with respect to any Option and may be granted contemporaneously with the grant of an Option or at any time after an Option is granted. Such Right may be exercised by surrendering the related Option, or any portion thereof, to the Corporation at its offices as set forth in Section 7 hereof, and to the extent Options have been so surrendered, such Options shall no longer be exercisable. A Right may be exercised only when the related Option is eligible to be exercised and also only when the fair market value, as defined in Section 6 hereof, of the Common Stock exceeds the purchase price of the Common Stock under the related Option. A Right will expire no later than the expiration of the related Option. A Right entitles the optionee to surrender to the Corporation the related unexercised Option, or any portion thereof, and to receive from the Corporation in exchange therefor the economic value thereof, which value shall be an amount equal to (i) the excess of the fair market value, as defined in Section 6 hereof, of one share of Common Stock on the date of exercise of the Right over the purchase price per share of Common Stock specified in such Option, multiplied by (ii) the number of shares of Common Stock subject to the Option, or portion thereof, which is so surrendered. Upon the exercise of a Right, the Committee shall have the sole and exclusive discretion to determine the form in which payment of the economic value of such Right shall be made, which form of payment may be in cash, in shares of Common Stock or in any combination thereof. No fractional shares of Common Stock shall be issued upon the exercise of a Right. Upon the exercise of a Right, the Option or portion thereof to which such Right is related shall be forfeited, and such forfeiture shall have the effect of an exercise of the Option for the purpose of the limitation imposed on the number of shares of Common Stock authorized and reserved for issuance under Section 5 hereof. Upon the exercise or partial exercise of an Option, the related Right or Rights shall be forfeited to the extent of such exercise. 8 9 Notwithstanding anything to the contrary contained herein, if an optionee is a person who is regularly required to report his ownership and change of ownership of Common Stock to the Securities and Exchange Commission and is subject to short-swing profit liability under the provisions of Section 16(b) of the Act, then any election to exercise such optionee's Rights, as well as any exercise of such optionee's Rights, shall be made only in accordance with the terms of this Plan and during the period beginning on the third business day and ending on the twelfth business day following the release for publication by the Corporation of quarterly or annual summary statements of sales and earnings. This condition shall be deemed to be satisfied if the specified financial data appears (i) on a wire service, (ii) in a financial news service, (iii) in a newspaper of general circulation, or (iv) is otherwise made publicly available, and shall remain in effect so long as it does not violate any applicable law or any rule or regulation adopted by appropriate governmental authority. Notwithstanding further anything to the contrary contained herein, Rights shall always be granted and exercised in such a manner as to satisfy the conditions of Rule 16b-3 of the Act. 10. Termination of Employment: (a) If the employment of any person to whom an Option has been granted is terminated for any reason other than death, disability, retirement with the consent of the Corporation, or termination without cause, his Option or Options and the related Right or Rights shall terminate immediately. If an optionee retires with the consent of the Corporation or if an optionee is terminated without cause by the Corporation, or any of its Subsidiaries, he may exercise his Option or Right to the extent that he was entitled to exercise it as of the date of said retirement or termination but only within three months after said retirement and in no event after the expiration of ten years from the date such Option and Right were granted. A temporary leave of absence approved by the Corporation or any of its Subsidiaries shall not be deemed to be a termination of employment, unless, under any applicable provisions of the Code or regulations promulgated thereunder, as then in effect, the affected optionee would be accorded different tax treatment than if such optionee were an active employee of the Corporation. (b) If any person to whom an Option or an Option and related Right has been granted shall die or become Disabled while he is an employee of the Corporation or any of its Subsidiaries, or shall die within three months after retirement with the consent of the Corporation, such Option or Right may be exercised (to the extent he would have been 9 10 entitled to do so on the date of his death or disability) by the optionee or a legatee or legatees of the optionee under his last will, or by his personal representatives or distributees, at any time within one year after the termination of his employment, but in no event after the expiration of ten years after the date such Option and Right were granted. Disability shall be determined by the Committee only upon certification thereof by a qualified physician selected by the Committee after examination of the optionee by such physician. 11. The Right of the Corporation to Terminate Employment: Nothing contained in the Plan or in any Option or Right granted pursuant to the Plan shall confer upon any optionee any right to be continued in the employment of the Corporation or one of its Subsidiaries, or shall interfere in any way with the right of the Corporation or any of its Subsidiaries as the case may be, to terminate his employment at any time for any reason. 12. Non-Transferability of Options and Rights: No Option or Right granted under the Plan shall be transferable by the optionee other than by will, or, if he dies intestate, by the laws of descent and distribution of the state of his domicile at the time of his death, and such Option or Right shall be exercisable during his lifetime only by such optionee. 13. Ten Percent Shareholders: Notwithstanding the provisions of Section 4 regarding the ineligibility of certain ten percent owners of the Corporation's capital stock, any such employee may be granted an Option hereunder which (a) provides for an option price of at least 110 percent of the fair market value of the stock at the time of the granting of the Option, (b) is not exercisable before the expiration of six months or after the expiration of five years from the date such Option is granted, and (c) is subject to all of the other terms and conditions of the Plan, including without limitation, the restrictions of Section 4 regarding Options to purchase shares having a fair market value in excess of $100,000. 14. Amendment and Termination: The Plan may be amended, modified, discontinued or terminated by the Board of Directors without stockholder approval as deemed in the best interests of the Corporation; provided, that no such amendment or modification shall (i) materially increase the benefits accruing to eligible employees, (ii) materially increase the number of shares 10 11 which may be issued, (iii) materially modify the requirements as to eligibility for participation, or (iv) without the consent of the holder, reduce the amount of any benefit or adversely change the terms and conditions thereof. 15. Effective Date of the Plan: The effective date of the Plan shall be November 17, 1988, subject to approval of the Plan by the shareholders of the Corporation. Notwithstanding any other provision hereof, no Option or Right granted hereunder may be exercised prior to the approval of the Plan by the shareholders of the Corporation and, in the event the shareholders do not approve the Plan within one year from the effective date of the Plan, all Options and Rights granted hereunder shall be void. No Options or Rights may be granted under this Plan after the expiration of ten years from and including the effective date. 11 EX-11 5 COMPUTATION OF PER SHARE EARNINGS 1 EXHIBIT 11 RUDDICK CORPORATION STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
FISCAL YEAR ENDED OCTOBER 2, OCTOBER 3, 1994 1993 --------------- --------------- NET INCOME PER SHARE WAS COMPUTED AS FOLLOWS: PRIMARY: 1. Net Income $ 31,810,847 $ 33,872,809 ============= ============ 2. Weighted Average Common Shares Outstanding 23,162,949 23,084,968 3. Incremental Shares Relating to $.56 Convertible Preference Shares 195,651 400,301 4. Incremental Shares Under Stock Options Computed Under the Treasury Stock Method Using the Average Market Price of Issuer's Stock During the Periods 237,961 324,630 ------------- ------------ 5. Weighted Average Common Shares and Common Equivalent Shares Outstanding 23,596,561 23,809,899 ============= ============ 6. Net Income Per Share (Item 1 Divided by Item 5) $ 1.35 $ 1.42 ============= ============ FULLY DILUTED: 1. Unadjusted Net Income $ 31,810,847 $ 33,872,809 ============= ============ 2. Weighted Average Common Shares Outstanding 23,162,949 23,084,968 3. Incremental Shares Relating to $.56 Convertible Preference Shares 195,651 400,301 4. Incremental Shares Under Stock Options Computed Under the Treasury Stock Method Using the Higher of the Average or Ending Market Price of Issuer's Stock at the End of the Periods 241,505 342,067 ------------- ------------ 5. Weighted Average Common Shares and Common Equivalent Shares Outstanding 23,600,105 23,827,336 ============= ============ 6. Net Income Per Share (Item 1 Divided by Item 5) $ 1.35 $ 1.42 ============= ============
EX-13 6 ANNUAL REPORT/FINANCIAL CONTENTS 1 EXHIBIT 13 Financial Contents Ruddick Corporation and Subsidiaries Eleven-year Financial and Operating Summary . . . . . . . . . . . . . 14 Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . 16 Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . 20 Statements of Consolidated Income and Retained Earnings . . . . . . . . . . . . . . . . . . . . 21 Statements of Consolidated Cash Flows . . . . . . . . . . . . . . . . 22 Notes to Consolidated Financial Statements . . . . . . . . . . . . . 23 Report of Independent Public Accountants . . . . . . . . . . . . . . 31 2 Eleven-year Financial and Operating Summary Ruddick Corporation and Subsidiaries
=========================================================================================================================== (Dollars in thousands, except per share data) 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 Jordan Graphics 52,541 55,401 55,401 56,077 - --------------------------------------------------------------------------------------------------------------------------- Total Net Sales $ 1,908,437 $ 1,732,530 $ 1,569,155 $ 1,477,853 - --------------------------------------------------------------------------------------------------------------------------- OPERATING PROFIT American & Efird $ 26,916 $ 30,551 $ 28,510 $ 22,589 Harris Teeter 37,032 29,845 31,067 34,329 Jordan Graphics (1,432) 2,006 3,635 3,660 Ruddick Investment 1,495 725 703 457 - --------------------------------------------------------------------------------------------------------------------------- Total Operating Profit $ 64,011 $ 63,127 $ 63,915 $ 61,035 - --------------------------------------------------------------------------------------------------------------------------- Net Income $ 31,811 $ 33,873 $ 30,789 $ 26,786 Net Income Per Share $ 1.35 $ 1.42 $ 1.30 $ 1.17 - --------------------------------------------------------------------------------------------------------------------------- COMMON DIVIDEND Regular $ .28 $ .26 $ .24 $ .22 Extra .15 .17 .15 .15 - --------------------------------------------------------------------------------------------------------------------------- Total Common Dividend $ .43 $ .43 $ .39 $ .37 - --------------------------------------------------------------------------------------------------------------------------- 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 $ 12.57 $ 11.74 $ 10.88 $ 9.95 - --------------------------------------------------------------------------------------------------------------------------- CAPITAL EXPENDITURES American & Efird $ 20,416 $ 19,433 $ 16,399 $ 11,417 Harris Teeter 38,802 33,683 25,910 30,903 Jordan Graphics 1,400 2,609 2,220 853 Ruddick Investment 7,547 - - 55 Corporate 35 27 4,039 5 - --------------------------------------------------------------------------------------------------------------------------- Total Capital Expenditures $ 68,200 $ 55,752 $ 48,568 $ 43,233 - --------------------------------------------------------------------------------------------------------------------------- Working Capital $ 86,243 $ 95,296 $ 98,362 $ 79,640 Total Assets $ 640,792 $ 586,815 $ 542,084 $ 498,458 Long-term Debt - Including Current Portion $ 109,567 $ 104,173 $ 97,280 $ 83,850 Long-term Debt as a Percent of Capital Employed 27.3% 27.5% 27.6% 26.4% Number of Employees 19,000 17,500 14,100 13,500 Number of Beneficial Shareholders Including Employee/Owners 14,100 14,600 12,900 11,400 Common Shares Outstanding 23,176,107 23,018,073 23,062,399 23,001,354 - ---------------------------------------------------------------------------------------------------------------------------
(1) 53-week year. 3
================================================================================================================================= 1990 1989 1988(1) 1987 - --------------------------------------------------------------------------------------------------------------------------------- NET SALES American & Efird $ 199,115 $ 190,004 $ 181,733 $146,215 Harris Teeter 1,164,445 1,053,467 894,035 798,843 Jordan Graphics 58,521 57,201 51,450 48,398 - ---------------------------------------------------------------------------------------------------------------------------------- Total Net Sales $ 1,422,081 $ 1,300,672 $ 1,127,218 $993,456 - ---------------------------------------------------------------------------------------------------------------------------------- OPERATING PROFIT American & Efird $ 18,403 $ 17,732 $ 17,645 $ 14,193 Harris Teeter 32,212 27,444 21,102 16,625 Jordan Graphics 4,815 4,811 4,690 5,039 Ruddick Investment 663 820 739 1,112 - ---------------------------------------------------------------------------------------------------------------------------------- Total Operating Profit $ 56,093 $ 50,807 $ 44,176 $ 36,969 - ---------------------------------------------------------------------------------------------------------------------------------- Net Income $ 24,031 $ 20,190 $ 18,379 $ 14,365 Net Income Per Share $ 1.09 $ .94 $ .87 $ .70 - --------------------------------------------------------------------------------------------------------------------------------- COMMON DIVIDEND Regular $ .20 $ .18 $ .16 $ .16 Extra .15 .13 .13 .07 - --------------------------------------------------------------------------------------------------------------------------------- Total Common Dividend $ .35 $ .31 $ .29 $ .23 - --------------------------------------------------------------------------------------------------------------------------------- Shareholders' Equity $ 184,371 $ 158,921 $ 144,727 $131,511 Percent Return on Beginning Equity 15.1% 14.0% 14.0% 12.1% Book Value Per Share $ 9.07 $ 8.15 $ 7.43 $ 6.75 - --------------------------------------------------------------------------------------------------------------------------------- CAPITAL EXPENDITURES American & Efird $ 15,923 $ 14,742 $ 17,219 $ 6,930 Harris Teeter 27,376 31,611 31,168 20,281 Jordan Graphics 2,436 2,346 1,649 4,330 Ruddick Investment 2,253 632 -- -- Corporate 70 2,343 81 1,619 - --------------------------------------------------------------------------------------------------------------------------------- Total Capital Expenditures $ 48,058 $ 51,674 $ 50,117 $ 33,160 - --------------------------------------------------------------------------------------------------------------------------------- Working Capital $ 74,688 $ 60,724 $ 52,415 $ 57,704 Total Assets $ 468,295 $ 439,104 $ 419,465 $321,463 Long-term Debt - Including Current Portion $ 115,266 $ 115,757 $ 109,332 $ 67,832 Long-term Debt as a Percent of Capital Employed 38.5% 42.1% 43.0% 34.0% Number of Employees 13,185 13,100 12,300 10,800 Number of Beneficial Shareholders Including Employee/Owners 11,100 11,000 10,500 9,700 Common Shares Outstanding 19,660,650 18,775,986 18,695,830 18,671,886 - --------------------------------------------------------------------------------------------------------------------------------- 1986 1985 1984 - ------------------------------------------------------------------------------------------------------------------------- NET SALES American & Efird $ 108,268 $ 99,492 $ 106,432 Harris Teeter 731,639 741,727 587,080 Jordan Graphics 43,734 40,622 36,548 - ------------------------------------------------------------------------------------------------------------------------- Total Net Sales $ 883,641 $ 881,841 $ 730,060 - ------------------------------------------------------------------------------------------------------------------------- OPERATING PROFIT American & Efird $ 11,122 $ 9,049 $ 9,998 Harris Teeter 9,001 12,959 12,010 Jordan Graphics 5,612 4,739 3,581 Ruddick Investment 2,834 1,363 2,610 - ------------------------------------------------------------------------------------------------------------------------- Total Operating Profit $ 28,569 $ 28,110 $ 28,199 - ------------------------------------------------------------------------------------------------------------------------- Net Income $ 13,425 $ 12,559 $ 13,221 Net Income Per Share $ .70 $ .65 $ .75 - ------------------------------------------------------------------------------------------------------------------------- COMMON DIVIDEND Regular $ .15 $ .14 $ .14 Extra .06 .05 .08 - ------------------------------------------------------------------------------------------------------------------------- Total Common Dividend $ .21 $ .19 $ .22 - ------------------------------------------------------------------------------------------------------------------------- Shareholders' Equity $ 118,736 $ 110,042 $ 101,515 Percent Return on Beginning Equity 12.2% 12.4% 16.8% Book Value Per Share $ 6.16 $ 5.71 $ 5.12 - --------------------------------------------------------------------------------------------------------------------------- CAPITAL EXPENDITURES American & Efird $ 4,324 $ 4,208 $ 6,224 Harris Teeter 17,972 17,376 14,941 Jordan Graphics 2,223 4,405 1,289 Ruddick Investment - - - Corporate 62 1,670 42 - --------------------------------------------------------------------------------------------------------------------------- Total Capital Expenditures $ 24,581 $ 27,659 $ 22,496 - --------------------------------------------------------------------------------------------------------------------------- Working Capital $ 42,021 $ 36,902 $ 32,237 Total Assets $ 263,779 $ 237,730 $ 227,314 Long-term Debt - Including Current Portion $ 52,935 $ 46,712 $ 42,592 Long-term Debt as a Percent of Capital Employed 30.8% 29.8% 29.6% Number of Employees 9,390 9,210 9,365 Number of Beneficial Shareholders Including Employee/Owners 8,900 8,800 8,900 Common Shares Outstanding 18,379,204 17,788,692 18,042,228 - ---------------------------------------------------------------------------------------------------------------------------
(1) 53-week year. 4 Management's Discussion and Analysis of Financial Condition and Results of Operations Ruddick Corporation and Subsidiaries RESULTS OF OPERATIONS - FISCAL 1994 COMPARED TO FISCAL 1993 For fiscal year 1994, a 52-week year, consolidated net sales of $1.91 billion increased 10% from $1.73 billion generated in the prior 53-week year. Consolidated 1994 net income of $31.8 million was up 6% from the $30.0 million before adjustment for the cumulative effect of a change in accounting principle reported last year. Net income in fiscal 1993 was $33.9 million including the effect of adopting Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes." On a per share basis, earnings were $1.35 for fiscal 1994, an increase of 7% when compared to $1.26 in fiscal 1993 before the cumulative effect of change in accounting principle, which change increased prior year earnings per share by $.16 to $1.42. Fiscal 1994 consolidated operating profit increased just over 1% compared to 1993 as profitability gains at Harris Teeter were nearly offset by lower operating results at American & Efird and Jordan Graphics. American & Efird, Inc. Sales at American & Efird increased 5% over fiscal 1993, led by industrial thread, which benefited from improved business conditions during the year. Sales increases were recorded in both domestic and international markets. Thread and notion sales increased 6% and represented 98% of all sales by A&E. This increase resulted from additional business from existing customers, improved product, greater domestic market share and growth in foreign markets. Sales yarn, representing only 2% of A&E's sales, declined 29% for the year. Operating profits declined in U.S. and foreign markets, due largely to significantly lower sales margins resulting from very competitive market conditions. However, in the last two quarters of the fiscal year, operating profit strengthened on improved sales volume as well as capacity and efficiency gains which resulted from the costs incurred in the first two quarters for equipment relocations domestically, Canadian consolidation of operations and foreign operations startups. Harris Teeter, Inc. Harris Teeter sales for the 52-week fiscal year 1994 increased 12% over the 53-week fiscal year 1993. After excluding the fifty-third week last year, sales of stores in operation in both periods were ahead 7.5%. Sales increases were attributable to strong feature-oriented merchandising in place throughout the year, from additional operating hours, and from six new stores opened during the year. Five older stores were closed during the year, two of which were closed under the marketing strategy for which a restructuring reserve was established in fiscal 1993. The resulting charges in 1994 were $82 thousand. While management expects reserve charges in future years to be more significant, it is not expected that such charges will be material in any single year. At fiscal year end, 139 stores were in operation compared to 138 a year ago. Total square footage increased just over 2% in fiscal 1994. Grocery sales were up 11%, which accounted for 47% of the sales increase. Dairy, meat, produce and frozen products had sales increases ranging from 9% to 15%, accounting for 39% of the sales increase. Operating profit showed improvement as increased gross profit, derived mainly from improved sales volume, customer count and product mix, more than offset an increase of 17% in operating expenses. Operating expenses as a percentage of sales were up less than 1%. 5 Jordan Graphics, Inc. Jordan Graphics sales of $52.5 million in fiscal 1994 were 5% lower than in fiscal 1993. Sales were lower in all product lines except for label and laser. In fiscal 1994 a $1.4 million loss was reported. This loss resulted in part from lower sales margins affected by underutilized manufacturing capacity and significant paper price increases, both of which are industry-wide difficulties. In addition, a redesign of the management information system and a redirection of some specific product lines contributed to a significant increase in costs during the year as obsolete hardware, software and manufacturing equipment were displaced. Ruddick Investment Company In fiscal 1994, Ruddick Investment reported operating profit of $1.5 million, or nearly double that of 1993. There were no significant sales of investment assets during the year and the increased earnings came largely from increased rents from the Morrocroft Village shopping center. Timing of sales opportunities for investment assets held in Ruddick Investment's portfolio is difficult to predict. Accordingly, reported profit on an annual basis in this company can vary greatly from year to year. RESULTS OF OPERATIONS - FISCAL 1993 COMPARED TO FISCAL 1992 For fiscal year 1993, a 53-week year, consolidated net sales of $1.73 billion increased 10% from the $1.57 billion generated in the prior 52-week year. Consolidated 1993 net income, including the effects of a restructuring charge and the adoption of Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes" (SFAS 109), was $33.9 million ($1.42 per share), an increase of 10% over the $30.8 million ($1.30 per share) in the prior year. A one-time before-tax charge of $5.3 million was taken in the fourth quarter to cover the costs involved in a marketing strategy of replacing, over the next three to five years, a number of smaller, less competitive retail grocery stores. Additionally, net income was increased by a $3.9 million ($.16 per share) cumulative adjustment to income taxes as a result of the first quarter adoption of SFAS 109. Further, net income was adversely affected by the retroactive increase in the federal tax rate. Earnings adjusted to exclude the after-tax effects of the restructuring charge and the accounting standards change were $33.4 million. Operating profit at American & Efird increased by approximately $2.0 million but was more than offset by declines at Harris Teeter and Jordan Graphics of $1.2 million and $1.6 million, respectively. American & Efird, Inc. American & Efird sales in fiscal 1993 increased 9% over fiscal 1992. Sales increases were recorded in both domestic and international markets. Industrial thread sales increased 13% over fiscal 1992 and represented 93% of all sales by A&E. This increase resulted from additional business from existing customers, new products, and greater market share. In addition, improvements in the quality of U.S. industrial thread contributed to the increase in sales. Sales of consumer thread were up 26% for the year while yarn sales declined 52%, a result of converting some manufacturing capacity from yarn to thread. Strong sales demand allowed A&E 6 Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Ruddick Corporation and Subsidiaries to consistently operate on a five day or more manufacturing schedule. This generated favorable results with operating profit being up 7% over last year. However, gross margins came under increasing pressure from price competition in some customer accounts as the year progressed. International subsidiaries achieved sales and profit increases in most markets for the year as well. Harris Teeter, Inc. At the end of fiscal 1992, Harris Teeter was operating 135 stores. During fiscal 1993, two new stores were opened, one store was replaced with a modern facility, five stores were purchased in or near Columbia, South Carolina, and four older, smaller stores were closed, leaving 138 in operation at the end of fiscal 1993. Harris Teeter sales increased 11% in fiscal 1993, a 53-week year. Grocery sales were up 10%, which accounted for 49% of the sales increase. Dairy, meat, produce and frozen products had sales increases ranging from 10% to 17%, accounting for 41% of the sales increase. Sales increases of 7.6% were recorded in stores in operation during both fiscal years. During fiscal 1993, Harris Teeter employed strong, feature-oriented merchandising that contributed to the increase in sales and gross profit. The gross profit in fiscal 1993 reflected increases in all departments of retail operations as well as in the dairy operations. Total operating expenses increased 14% during fiscal 1993. Approximately 40% of this increase was due largely to increases in store labor although, as a percentage of sales, store labor costs were unchanged. In the fourth quarter of fiscal 1993, operating profit was reduced by a one-time before-tax charge of $5.3 million for the costs associated with a marketing strategy of replacing, over the next few years, an anticipated 12 smaller, less competitive stores with larger stores offering increased variety and drawing from a larger marketing area. The plan established target dates for the completion of construction of replacement stores and the abandonment of the existing store(s) in each case. The restructuring reserve includes the direct costs of (1) the write-off of the projected book value, net of anticipated salvage, of store equipment and leasehold improvements to be abandoned and (2) the commitments for continuing lease payments at the abandoned store site, net of historical sublease patterns. Management anticipates that, on average, half of the operating loss associated with each store closing will be incurred in the year of the closing and the balance, within four years thereafter. Such store closings are planned to occur during fiscal years ending 1994 through 1996. Management expects that the effect on operating results of any fiscal year will not be material. Further, management believes that the restructuring will have no material effect on liquidity and that the Company's capital resources will be adequate to complete such restructuring. Jordan Graphics, Inc. Jordan Graphics recorded equal sales in fiscal 1993 and fiscal 1992. Sales were lower in stock forms, custom forms and envelopes, but these declines were offset by increases in sales of labels, commercial printing and laser-printed materials. Operating profit was substantially lower, a result of flat sales volume and an increase in production costs and raw material prices not passed on to the customer. Margins remained under pressure due to the continuing overcapacity in the industry. 7 Ruddick Investment Company In fiscal 1993, Ruddick Investment reported an operating profit increase of 3% over fiscal 1992, largely the result of increased rental income. During the year, a long-term gain was realized due to the sale of a foreign investment asset. Subsequently, a reserve was recorded to provide protection from the potential exposure to future investment losses. This reserve was deemed prudent as a result of the strategy toward investing in larger and fewer investments. CAPITAL RESOURCES AND LIQUIDITY Ruddick has an overall financial goal of earning at least a 15% return on beginning shareholders' equity. At the same time, Ruddick seeks to limit long-term debt so as to constitute no more than 40% of capital employed, which includes long-term debt and shareholders' equity. As of the end of fiscal 1994, this percentage was 27.3%, a slight decrease from last year's 27.5%. 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 $60 million under established revolving lines of credit with three banks. The maximum amount outstanding under these credit facilities during fiscal 1994 was $45.6 million, and $37.8 million was outstanding at year end. The majority of additional borrowings under Ruddick's revolving credit facilities were used for capital expenditures. Borrowings and repayments under these revolving credit facilities are of the same nature as short-term credit lines; however, due to the nature and terms of the agreements allowing up to seven years for repayment, all borrowings under these facilities are classified as long-term debt. The Company also has the ability to borrow up to $10 million under a short-term credit line with one bank, and there was no amount outstanding at year end. Working capital as of the fiscal years ended 1994, 1993, and 1992 was $86.2 million, $95.3 million, and $98.4 million, respectively. Most of the decrease in fiscal 1994 from fiscal 1993 was the result of increased accounts payable as of year end. The current ratio was 1.5 at October 2, 1994, compared to 1.6 at October 3, 1993. Covenants in certain of the Company's long-term debt agreements limit the total indebtedness that the Company may incur. Management believes that the limit on indebtedness does not significantly restrict the Company's liquidity and that such liquidity is adequate to meet foreseeable requirements. In fiscal 1994, capital expenditures were $68.2 million. While an increase in capital expenditures is expected in fiscal 1995, management expects that internally generated funds, supplemented by available borrowing capacity, will be adequate to finance such expenditures. 8 Consolidated Balance Sheets Ruddick Corporation and Subsidiaries October 2, 1994 and October 3, 1993
=================================================================================================================== (Dollars in thousands) 1994 1993 - ------------------------------------------------------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash and Cash Equivalents $ 14,531 $ 12,392 Accounts Receivable, Less Allowance for Doubtful Accounts: 1994, $2,031; 1993, $1,979 62,302 58,757 Inventories 180,784 171,142 Other Current Assets 19,030 15,327 - ------------------------------------------------------------------------------------------------------------------- Total Current Assets 276,647 257,618 - ------------------------------------------------------------------------------------------------------------------- PROPERTY Land and Buildings 97,438 93,200 Machinery and Equipment 372,795 339,611 Leasehold Improvements 73,850 58,439 Assets Under Capital Leases 2,548 2,548 - ------------------------------------------------------------------------------------------------------------------- Total, at Cost 546,631 493,798 Accumulated Depreciation and Amortization 246,971 220,115 - ------------------------------------------------------------------------------------------------------------------- Property, Net 299,660 273,683 - ------------------------------------------------------------------------------------------------------------------- INVESTMENTS AND OTHER ASSETS Investments 25,130 22,549 Other Assets 39,355 32,965 - ------------------------------------------------------------------------------------------------------------------- Total Assets $640,792 $ 586,815 =================================================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Notes Payable $ 5,596 $ 2,918 Current Portion of Long-term Debt 5,415 5,989 Dividends Payable 5,131 - Accounts Payable 120,636 104,518 Federal and State Income Taxes 3,162 3,740 Accrued Compensation 25,831 25,289 Other Accrued Liabilities 24,633 19,868 - ------------------------------------------------------------------------------------------------------------------- Total Current Liabilities 190,404 162,322 - ------------------------------------------------------------------------------------------------------------------- NON-CURRENT LIABILITIES Long-term Debt 104,152 98,184 Deferred Income Taxes 35,459 32,605 Other Liabilities 19,568 18,386 - ------------------------------------------------------------------------------------------------------------------- MINORITY INTEREST -- 578 COMMITMENTS AND CONTINGENCIES - ------------------------------------------------------------------------------------------------------------------- SHAREHOLDERS' EQUITY $.56 Convertible Preference Stock -- 486 Common Stock - Shares Outstanding: 1994 - 23,176,107; 1993 - 23,018,073 57,620 62,523 Retained Earnings 235,543 213,713 Cumulative Translation Adjustments (1,954) (1,982) - ------------------------------------------------------------------------------------------------------------------- Shareholders' Equity 291,209 274,740 - ------------------------------------------------------------------------------------------------------------------- Total Liabilities and Shareholders' Equity $640,792 $586,815 ===================================================================================================================
The accompanying notes to consolidated financial statements are an integral part of these balance sheets. 9 Statements of Consolidated Income and Retained Earnings Ruddick Corporation and Subsidiaries For the Fiscal Years Ended October 2, 1994, October 3, 1993, and September 27, 1992
============================================================================================================================= (Dollars in thousands, except per share data) 1994 1993(1) 1992 - ----------------------------------------------------------------------------------------------------------------------------- Net Sales $1,908,437 $1,732,530 $1,569,155 - ----------------------------------------------------------------------------------------------------------------------------- Cost of Sales 1,436,070 1,308,601 1,194,160 Selling, General and Administrative Expenses 408,356 360,802 311,080 - ----------------------------------------------------------------------------------------------------------------------------- Operating Profit 64,011 63,127 63,915 - ----------------------------------------------------------------------------------------------------------------------------- Net Interest Expense 8,329 8,312 9,130 Other Administrative Expense 5,666 5,331 4,341 Minority Interest (52) 20 283 - ----------------------------------------------------------------------------------------------------------------------------- Income Before Taxes and Cumulative Effect of Accounting Change 50,068 49,464 50,161 Taxes 18,257 19,460 19,372 - ----------------------------------------------------------------------------------------------------------------------------- Income Before Cumulative Effect of Accounting Change 31,811 30,004 30,789 Cumulative Effect of Accounting Change - 3,869 - - ----------------------------------------------------------------------------------------------------------------------------- Net Income 31,811 33,873 30,789 Retained Earnings at Beginning of Fiscal Year 213,713 189,807 168,068 - ----------------------------------------------------------------------------------------------------------------------------- Total 245,524 223,680 198,857 - ----------------------------------------------------------------------------------------------------------------------------- Dividends: Preference - 1994: $.38 a share; 1993 and 1992: $.56 a share 27 56 61 Common - 1994: $.43 a share; 1993: $.43 a share; 1992: $.39 a share 9,954 9,911 8,989 - ----------------------------------------------------------------------------------------------------------------------------- Total Dividends 9,981 9,967 9,050 - ----------------------------------------------------------------------------------------------------------------------------- Retained Earnings at End of Fiscal Year $ 235,543 $ 213,713 $ 189,807 ============================================================================================================================= Net Income Per Share: Income Before Cumulative Effect of Accounting Change $ 1.35 $ 1.26 $ 1.30 Cumulative Effect of Accounting Change - .16 - - ----------------------------------------------------------------------------------------------------------------------------- Net Income Per Share $ 1.35 $ 1.42 $ 1.30 =============================================================================================================================
(1) 53-week year. The accompanying notes to consolidated financial statements are an integral part of these statements. 10 Statements of Consolidated Cash Flows Ruddick Corporation and Subsidiaries For the Fiscal Years Ended October 2, 1994, October 3, 1993, and September 27, 1992
============================================================================================================================= (Dollars in thousands) 1994 1993(1) 1992 - ----------------------------------------------------------------------------------------------------------------------------- CASH FLOW FROM OPERATING ACTIVITIES Net Income $ 31,811 $ 33,873 $ 30,789 Non-cash Items Included in Net Income Depreciation 39,954 36,965 34,278 Deferred Taxes 2,174 (8,231) 641 Restructuring Charge (82) 5,264 - Other, Net 3,662 1,569 1,074 Decrease (Increase) in Accounts Receivable (3,545) (2,703) (4,209) Decrease (Increase) in Inventories (9,642) (19,824) (11,504) Decrease (Increase) in Other Current Assets (3,703) (822) (1,342) Increase (Decrease) in Current Liabilities 29,428 20,690 8,931 - ----------------------------------------------------------------------------------------------------------------------------- Net Cash Provided by Operating Activities 90,057 66,781 58,658 - ----------------------------------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Capital Expenditures (68,200) (55,752) (48,568) Cash Proceeds from Sale of Property 1,292 2,547 1,519 COLI, Net (8,265) (11,636) 1,270 Other, Net (2,699) (4,908) (7,789) - ----------------------------------------------------------------------------------------------------------------------------- Net Cash Used in Investing Activities (77,872) (69,749) (53,568) - ----------------------------------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from Long-term Borrowings 11,400 18,000 60,400 Payments of Principal on Long-term Debt (5,624) (10,100) (47,793) Dividends Paid (9,981) (9,967) (9,050) Other, Net (5,841) (3,000) 1,026 - ----------------------------------------------------------------------------------------------------------------------------- Net Cash Provided by (Used in) Financing Activities (10,046) (5,067) 4,583 - ----------------------------------------------------------------------------------------------------------------------------- Increase (Decrease) in Cash and Cash Equivalents 2,139 (8,035) 9,673 Cash and Cash Equivalents at Beginning of Year 12,392 20,427 10,754 - ----------------------------------------------------------------------------------------------------------------------------- Cash and Cash Equivalents at End of Year $ 14,531 $ 12,392 $ 20,427 ============================================================================================================================= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash Paid During the Year for: Interest $ 8,455 $ 8,901 $ 9,786 Income Taxes $ 16,295 $ 22,028 $ 20,906 - -----------------------------------------------------------------------------------------------------------------------------
(1) 53-week year. The accompanying notes to consolidated financial statements are an integral part of these statements. 11 Notes to Consolidated Financial Statements Ruddick Corporation and Subsidiaries SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements include the accounts of Ruddick Corporation and its wholly owned subsidiaries, American & Efird, Inc., Harris Teeter, Inc., Jordan Graphics, Inc. and Ruddick Investment Company, collectively referred to herein as the Company. All material intercompany amounts have been eliminated. CASH EQUIVALENTS For purposes of the statements of consolidated cash flows, the Company considers all highly liquid cash investments purchased with a maturity of three months or less to be cash equivalents. INVENTORIES Inventories are valued at the lower of cost or market with the cost of substantially all inventories being determined using the last-in, first-out (LIFO) method. The LIFO cost of such inventories was $20,113,000 ($18,909,000) less than the first-in, first-out (FIFO) cost method at October 2, 1994 (October 3, 1993). PROPERTY AND DEPRECIATION Property is at cost and is depreciated, using principally the straight-line method, over the following useful lives: - ---------------------------------------------------------------------------- Land improvements 10-25 years Buildings 10-50 years Machinery and equipment 3-20 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 10 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. INVESTMENTS Ruddick Investment Company makes loans to and equity investments in a number of emerging growth companies, as well as selected publicly traded companies. Additionally it holds a financial position in certain shopping centers in which Harris Teeter, Inc. is an anchor tenant. Financial investments are carried at the lower of cost or market. In management's opinion, the net aggregate carrying value of financial instruments of $7,152,000 and $6,127,000 held for investment approximated their aggregate fair values at October 2, 1994 and October 3, 1993, 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 $5,761,000 in 1994, none in 1993 and 1992, 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, are being amortized over 10 years. 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. The Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109) in fiscal 1993. The change has been reflected in the accompanying financial statements as the cumulative effect of a change in accounting principle. 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. 12 Notes to Consolidated Financial Statements (continued) Ruddick Corporation and Subsidiaries PER SHARE AMOUNTS Primary and fully diluted net income per share amounts were determined based on the average number of shares of common stock and common stock equivalents (non-cumulative, voting $.56 convertible preference stock and stock options) outstanding. The average primary shares outstanding were 23,596,561 in 1994, 23,809,899 in 1993, and 23,764,556 in 1992. Fully diluted average shares outstanding were 23,600,105 in 1994, 23,827,336 in 1993, and 23,766,138 in 1992. Common stock equivalents had no material effect on the per share amounts in 1994, 1993 and 1992. LEASES The Company leases certain equipment under agreements expiring during the next nine 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 seven years. Rent expenses were as follows (in thousands):
1994 1993 1992 - ----------------------------------------------------------------------------------- Operating Leases: Minimum $34,639 $33,676 $29,753 Contingent 971 812 903 - ----------------------------------------------------------------------------------- Total $35,610 $34,488 $30,656 - -----------------------------------------------------------------------------------
Future minimum lease commitments at October 2, 1994 (excluding leases assigned or expected to be assigned - see below) were as follows (in thousands):
Capital Operating Leases Leases - ----------------------------------------------------------------------------------------------------- 1995 $ 384 $ 33,824 1996 384 31,619 1997 384 30,216 1998 336 29,132 1999 268 27,975 Later years 1,012 269,897 - ----------------------------------------------------------------------------------------------------- Total minimum lease payments $ 2,768 $422,663 - ----------------------------------------------------------------------------------------------------- Less amount representing interest (Store premises, 6.75%-10.25%, store equipment, 8-15%) 1,515 - ----------------------------------------------------------------------------------------------------- Present value of minimum lease obligations 1,253 Less current portion 131 - ----------------------------------------------------------------------------------------------------- Long-term capital lease obligations $ 1,122 - ----------------------------------------------------------------------------------------------------- Total minimum sublease rentals to be received under noncancelable subleases $ 4,151 - -----------------------------------------------------------------------------------------------------
In connection with the closing of certain store locations, Harris Teeter has assigned leases to other merchants with recourse. These leases expire over the next 11 years and the future minimum lease payments of $13,491,000 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 14 years and the future minimum lease payments related to these locations total $11,160,000 (approximating $1,429,000 per year for each of the next five years). 13 LONG-TERM DEBT Long-term debt at October 2, 1994 and October 3, 1993 was as follows (in thousands):
1994 1993 - ----------------------------------------------------------------------------------------------------- 8.57% Term Note due $4,667 annually through May 2007 $ 59,500 $ 64,167 Variable Rate Revolver Loan convertible to 7-year term loan in 1997 37,800 26,400 Industrial revenue bonds, variable 63% of prime, due quarterly in various amounts through 2000 3,352 3,663 5.7% Term Note due April 1996 2,666 3,166 Obligations under capital leases and other 6,249 6,777 - ----------------------------------------------------------------------------------------------------- Total 109,567 104,173 - ----------------------------------------------------------------------------------------------------- Less current portion 5,415 5,989 - ----------------------------------------------------------------------------------------------------- Total long-term debt $104,152 $ 98,184 - -----------------------------------------------------------------------------------------------------
Long-term debt maturities, excluding obligations under capital leases, in each of the next five fiscal years are as follows (in thousands): 1995 - $5,284; 1996 - $7,955; 1997 - $8,305; 1998 - $4,835; 1999 - $4,835. During fiscal 1994, the Company increased its revolving line of credit with three banks to $60,000,000 ($45,000,000 in fiscal 1993). During 1994 (1993) the maximum outstanding borrowing under the revolving line of credit was $45,600,000 ($26,400,000) and the average for the 364 (371) days outstanding was $39,417,000 ($7,345,000). The daily weighted average interest rate (a variable rate related to the current published CD rate) was 4.8% (4.1%) and a commitment fee of 1/4% of the unused line is charged. In management's opinion, the recorded amounts of the fixed rate obligations of the Company approximated their fair value at October 2, 1994, and October 3, 1993, based on borrowing rates then available to the Company for loans with similar terms and maturities. Various loan agreements provide, among other things, for maintenance of minimum levels of consolidated shareholders' equity. At October 2, 1994, consolidated tangible net worth exceeded by $40,061,000 the balance which, under the most restrictive provisions, must be maintained through October 1, 1995. The requirement shall increase annually by 40% of consolidated net income for such year. Total interest expense was $8,563,000, $8,529,000, and $9,516,000 in 1994, 1993 and 1992, respectively. CAPITAL STOCK The capital stock of the Company authorized at October 2, 1994 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. 14 Notes to Consolidated Financial Statements (continued) Ruddick Corporation and Subsidiaries Changes in shares issued and outstanding and in shareholders' equity accounts other than retained earnings are summarized as follows (in thousands except share amounts):
Preference-noncumulative $.56 convertible (1) Common --------------------------------------------------------- Shares Amount Shares Amount - -------------------------------------------------------------------------------------------------------- Balance at September 29, 1991 117,949 $ 590 23,001,354 $65,329 Preference conversion (13,256) (66) 53,024 66 Shares issued under exercised stock options - - 8,021 91 - -------------------------------------------------------------------------------------------------------- Balance at September 27, 1992 104,693 $ 524 23,062,399 $65,486 - -------------------------------------------------------------------------------------------------------- Preference conversion (7,407) (38) 29,628 38 Shares issued under exercised stock options - - 198,420 2,153 Shares purchased and retired - - (272,374) (5,661) Tax effect of disqualifying option stocks - - - 507 - -------------------------------------------------------------------------------------------------------- Balance at October 3, 1993 97,286 $ 486 23,018,073 $62,523 - -------------------------------------------------------------------------------------------------------- Preference conversion (95,170) (476) 380,680 476 Shares issued under exercised stock options - - 149,665 1,684 Shares purchased and retired (2,116)(1) (10) (372,311) (7,370) Tax effect of disqualifying option stocks - - - 307 - -------------------------------------------------------------------------------------------------------- Balance at October 2, 1994 0 $ 0 23,176,107 $57,620 - --------------------------------------------------------------------------------------------------------
(1) As of May 23, 1994, the remaining 2,116 shares of $.56 Preference stock were called for redemption. The redemption price was $10.10 per share inclusive of the pro rate dividend of $.10 per share. The 1982, 1988, and 1993 incentive stock option plans authorized options for 1,700,000 shares of common stock. The plans provide that options may be granted at 100% of the fair market value of the shares on the date of grant. At the discretion of the Company, 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 2, 1994, the Company may grant additional options for the purchase of 473,000 shares. A summary of the option transactions for the years ended October 2, 1994, October 3, 1993, and September 27, 1992, follows:
1994 1993 1992 - ------------------------------------------------------------------------------------------------------------------ Options outstanding, beginning of year 723,496 876,500 882,400 Options granted 120,000 62,000 75,000 Options exercised 149,665 201,404 8,021 Options canceled or forfeited 13,000 13,600 72,879 Options outstanding, end of year 680,831 723,496 876,500 Options exercisable, end of year 513,631 582,096 586,900 Exercise price $10 15/32 - $22 11/16 $10 15/32 - $18 5/16 $10 15/32 - $16 1/4 - ------------------------------------------------------------------------------------------------------------------
On November 15, 1990, the Company declared a dividend of one preferred share purchase right for each outstanding share of common stock, which rights expire on November 15, 2000. As a result of the July 1, 1991, 100% stock dividend, the number of rights outstanding doubled. Each right entitles the holder to purchase one two-hundredth of a share (as adjusted for the 100% stock dividend) of a new Series A Junior Participating Additional Preferred Stock at $52.50, subject to further adjustment. The rights are not exercisable until 10 days after a party has acquired or commences to acquire a beneficial interest of at least 20% of the Company's outstanding common stock. In addition, each right would entitle the rightholder to exercise the right and receive shares of common stock of the acquiring company upon merger or other business combination having a market value of twice the exercise price of the right. Under certain circumstances after the rights become exercisable, the Board of Directors may exchange all or part of the outstanding rights at an exchange ratio of one share of common stock, or one two-hundredth of a share of Series A Junior Participating Additional Preferred Stock, per right, subject to adjustment. The rights have no voting privileges and may be redeemed by the Board of Directors at a price of $.005 per right at any time prior to the acquisition of a beneficial ownership of 20% of the outstanding common shares. There are 200,000 shares of Series A Junior Participating Additional Preferred Stock reserved for issuance upon exercise of the rights. 15 INCOME TAXES Effective September 28, 1992, the Company adopted SFAS 109, "Accounting for Income Taxes." The cumulative effect on prior years of this change in accounting principle increased 1993 net income by $3,869,000 or $.16 per share. Financial statements for prior years have not been restated. The provision for income taxes consisted of the following (in thousands):
1994 1993 1992 - ---------------------------------------------------------------------------------------------------- CURRENTLY PAYABLE Federal $12,253 $17,782 $15,989 State and other 3,329 4,044 3,524 Foreign 501 98 534 - ---------------------------------------------------------------------------------------------------- Total Current 16,083 21,924 20,047 - ---------------------------------------------------------------------------------------------------- DEFERRED FEDERAL AND STATE TAXES (CREDITS) Reserves not currently deductible 182 (5,294) (1,845) Accelerated tax depreciation 3,673 3,423 2,042 Property dispositions (446) (1,073) (494) Other items, net (1,235) 480 (378) - ---------------------------------------------------------------------------------------------------- Total Deferred 2,174 (2,464) (675) - ---------------------------------------------------------------------------------------------------- Income tax expense $18,257 $19,460 $19,372 - ----------------------------------------------------------------------------------------------------
Income from foreign operations before income taxes in fiscal 1994, 1993, and 1992 was $1,020,000, $1,727,000, and $561,000, respectively. Income tax expense differed from an amount computed by applying the statutory tax rates to pre-tax income as follows (in thousands):
1994 1993 1992 - ---------------------------------------------------------------------------------------------------- Income tax on pre-tax income at the statutory federal rate of 35% for 1994, 34.75% for 1993, and 34% for 1992 $17,524 $17,189 $17,055 Increase (decrease) attributable to: State and other income taxes, net of federal income tax benefit 1,883 2,549 2,097 Company owned life insurance (2,020) - - Other items, net 870 (278) 220 - ---------------------------------------------------------------------------------------------------- Income tax expense $18,257 $19,460 $19,372 - ----------------------------------------------------------------------------------------------------
On August 10, 1993, the statutory federal tax rate was increased to 35% effective January 1, 1993. The effect of the higher rate on temporary differences that existed as of the first day of fiscal 1993 was approximately $800,000. 16 Notes to Consolidated Financial Statements (continued) Ruddick Corporation and Subsidiaries The tax effects of temporary differences giving rise to the Company's consolidated deferred tax liability at October 2, 1994 and October 3, 1993 are as follows (in thousands):
1994 1993 - ------------------------------------------------------------------------------------------------------ DEFERRED TAX ASSETS Employee benefits $ 5,959 $ 5,797 Reserves not currently deductible 6,808 6,990 Other 1,651 1,735 - ------------------------------------------------------------------------------------------------------ Total deferred tax assets $ 14,418 $14,522 - ------------------------------------------------------------------------------------------------------ DEFERRED TAX LIABILITIES Property, plant and equipment ($ 41,266) ($38,039) VEBA trust contribution (2,098) (2,360) Other capitalized costs (4,527) (5,556) Other (2,656) (2,522) - ------------------------------------------------------------------------------------------------------ Total deferred tax liabilities ($ 50,547) ($48,477) - ------------------------------------------------------------------------------------------------------
INDUSTRY SEGMENT INFORMATION The Company operates primarily in four businesses: textiles - American & Efird, retail grocery (including the real estate and store development activities of Ruddco, a division of Ruddick Investment Company) - Harris Teeter, business forms - Jordan Graphics, and venture capital - Ruddick Investment. Textiles - manufactures sewing thread for the apparel and other markets. Retail grocery - operates a regional chain of supermarkets. Business forms - produces and distributes a line of business forms, labels, commercial printing, and laser-printed graphics. Venture capital - investment manager and venture capital investor. Summarized information for fiscal 1994, 1993, and 1992 is as follows (in millions):
Net Sales Operating Profit (Loss) 1994 1993 1992 1994 1993 1992 - -------------------------------------------------------------------------------------------------------- BUSINESS SEGMENTS Textiles $ 277.0 $ 264.8 $ 243.3 $26.9 $30.6 $28.5 Retail Grocery (1) 1,578.9 1,412.3 1,270.5 38.8 30.5 31.3 Business Forms 52.5 55.4 55.4 (1.4) 2.0 3.6 Venture Capital (.3) - .5 - -------------------------------------------------------------------------------------------------------- Total $1,908.4 $ 1,732.5 $1,569.2 $64.0 $63.1 $63.9 - -------------------------------------------------------------------------------------------------------- Net Interest Expense 8.3 8.3 9.1 Other Administrative Expense 5.6 5.3 4.3 Minority Interest - - .3 - -------------------------------------------------------------------------------------------------------- Income Before Taxes $50.1 $49.5 $50.2 - --------------------------------------------------------------------------------------------------------
Identifiable Capital Assets at Year-end Expenditures Depreciation 1994 1993 1992 1994 1993 1992 1994 1993 1992 - ------------------------------------------------------------------------------------------------------ BUSINESS SEGMENTS Textiles $206.5 $185.2 $170.4 $20.4 $19.4 $16.4 $10.0 $ 8.7 $ 8.0 Retail Grocery(2) 365.6 343.1 320.3 46.4 33.7 26.0 26.6 24.6 23.1 Business Forms 28.3 27.8 27.7 1.4 2.6 2.2 2.1 2.2 2.0 Venture Capital 7.6 6.3 11.5 - - - - - - Corporate 32.8 24.4 12.2 - - 4.0 1.3 1.5 1.2 - ------------------------------------------------------------------------------------------------------ Total $640.8 $586.8 $542.1 $68.2 $55.7 $48.6 $40.0 $37.0 $34.3 - ------------------------------------------------------------------------------------------------------
(1) In fiscal 1993, operating profit was reduced by a one-time before-tax charge of $5,264,000 for the costs associated with a marketing strategy of replacing, over the next few years, a number of smaller, less competitive Harris Teeter stores. In addition, operating profit includes $1,777,000, $726,000 and $159,000 in 1994, 1993 and 1992, respectively, related to real estate and store investment activities of Ruddco. (2) Identifiable Assets include $28,471,000, $19,248,000 and $14,429,000 in 1994, 1993 and 1992, respectively, for investment activities of Ruddco for the development of retail sites. 17 QUARTERLY INFORMATION (UNAUDITED) The following table sets forth certain financial information, the high and low sales prices for the common stock and dividends declared with respect to the common and $.56 convertible preference stock (called for redemption May 23, 1994) for the periods indicated. The Company's common stock is listed and traded on the New York Stock Exchange. As of October 31, 1994, there are 1,864 holders of record of common stock.
First Second Third Fourth (in millions, except per share data) Quarter Quarter Quarter Quarter - -------------------------------------------------------------------------------------------------------- 1994 - -------------------------------------------------------------------------------------------------------- Operating Results Net sales $464.5 $465.9 $486.6 $491.4 Net income 6.3 7.4 9.3 8.8 - -------------------------------------------------------------------------------------------------------- Net Income Per Share .26 .32 .39 .38 - -------------------------------------------------------------------------------------------------------- Dividend Per Share Common .07 .07 .07 .22(3) Preference .14 .14 .10 - - -------------------------------------------------------------------------------------------------------- Market Price Per Common Share High 23 7/8 23 19 3/8 20 5/8 Low 20 5/8 18 5/8 15 3/4 15 5/8 - -------------------------------------------------------------------------------------------------------- 1993 - -------------------------------------------------------------------------------------------------------- Operating Results Net sales $422.4 $417.7 $424.4 $468.0 Income before cumulative effect of change in accounting principle 8.0 8.0 8.8 5.2(2) Cumulative effect of change in accounting principle (1) 3.9 -- -- -- Net income 11.9 8.0 8.8 5.2 - -------------------------------------------------------------------------------------------------------- Net Income Per Share Before cumulative effect of change in accounting principle .34 .33 .37 .22(2) Cumulative effect of change in accounting principle (1) .16 - - - Net Income Per Share Restated .50 .33 .37 .22 - -------------------------------------------------------------------------------------------------------- Dividend Per Share Common .06 .06 .07 .24(4) Preference .14 .14 .14 .14 - -------------------------------------------------------------------------------------------------------- Market Price Per Common Share High 20 3/8 22 5/8 21 3/4 21 1/2 Low 16 19 7/8 18 5/8 19 3/8 - --------------------------------------------------------------------------------------------------------
(1) Fiscal 1993 was restated to reflect adoption of SFAS 109, "Accounting for Income Taxes," effective September 28, 1992. (2) After effect of before-tax restructuring charge of $5.3 million. (3) Includes $.15 extra dividend in fiscal 1994. (4) Includes $.17 extra dividend in fiscal 1993. COMMITMENTS AND CONTINGENCIES Substantially all domestic employees of the Company and its subsidiaries participate in noncontributory 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. 18 Notes to Consolidated Financial Statements (continued) Ruddick Corporation and Subsidiaries The following table sets forth the defined benefit plans' funded status and amounts recognized in the Company's consolidated balance sheets at October 2, 1994 and October 3, 1993 (in thousands):
1994 1993 - ---------------------------------------------------------------------------------------------------- Actuarial present value of benefit obligations: Vested benefits $ 62,323 $ 52,536 Nonvested benefits 2,780 2,533 - ---------------------------------------------------------------------------------------------------- Accumulated benefit obligations 65,103 55,069 Effect of projected future compensation levels 18,559 18,967 - ---------------------------------------------------------------------------------------------------- Projected benefit obligations 83,662 74,036 Plans' assets at fair market value 60,521 61,374 - ---------------------------------------------------------------------------------------------------- Projected benefit obligations in excess of plans' assets (23,141) (12,662) Unrecognized net asset at September 30, 1985, net of amortization, being amortized over 15-20 years 2,724 3,119 Unrecognized net loss due to past experience different from assumptions made (17,758) (8,484) - ---------------------------------------------------------------------------------------------------- Unfunded accrued pension cost ($ 8,107) ($ 7,297) - ----------------------------------------------------------------------------------------------------
The plans' assets consist primarily of U.S. government securities, fixed income funds and cash equivalents, all managed by two banks. In 1994 (1993), a 7.5% (8%) weighted average discount rate and a 4.75% (5.5%) rate of increase in future payroll costs were used in determining the actuarial present value of the projected benefit obligations. The expected long-term rate of return on assets was 7.5% (8%). Pension expense for defined benefit plans for fiscal 1994, 1993, and 1992 included the following components (in thousands):
1994 1993 1992 - ----------------------------------------------------------------------------------------------------- Benefits earned by employees $3,822 $3,444 $3,159 Interest on projected benefit obligations 5,934 5,578 5,086 Actual loss (return) on plan assets 2,546 (4,473) (4,857) Net amortization and deferral (7,045) 194 1,231 - ---------------------------------------------------------------------------------------------------- Net pension expense $5,257 $4,743 $4,619 - ----------------------------------------------------------------------------------------------------
The Company also has an Employee Stock Ownership Plan (ESOP) and a profit-sharing plan. Expenses under these plans were as follows (in thousands):
1994 1993 1992 - ---------------------------------------------------------------------------------------------------- ESOP $5,205 $6,480 $5,721 Profit-sharing 866 2,124 1,958 - ----------------------------------------------------------------------------------------------------
The Company in the normal course of business guarantees loans relative to real estate and other investment activities of Ruddick Investment Company. At October 2, 1994, October 3, 1993, and September 27, 1992, the amount guaranteed totaled $3,066,000, $4,696,000 and $4,309,000, respectively. The Company is involved in various lawsuits, including patent infringement litigation, and environmental 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. See "Leases" for additional commitments and contingencies. 19 Report of Independent Public Accountants Ruddick Corporation and Subsidiaries 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 2, 1994, and October 3, 1993, 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 2, 1994. 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 2, 1994, and October 3, 1993, and the results of their operations and their cash flows for each of the three years in the period ended October 2, 1994, in conformity with generally accepted accounting principles. As discussed in the notes to consolidated financial statements, effective as of the beginning of the fiscal year 1993, the Company changed its method of accounting for income taxes. ARTHUR ANDERSEN LLP Charlotte, North Carolina, October 27, 1994. EX-21 7 AFFILIATE COMPANIES 1 EXHIBIT 21 RUDDICK CORPORATION Affiliated Companies as of December 20, 1994 Listed below are the domestic subsidiaries of the Corporation, all of which are wholly owned and are owned directly by the Corporation, unless otherwise indicated. American & Efird, Inc. The Kaim Company (1) A&E Services, Inc. (1) Harris Teeter, Inc. Harris-Teeter Services, Inc. (2) Jordan Graphics, Inc. R. S. Dickson & Company Ruddco Management, Inc. (3) Ruddick of Delaware, Inc. (1) Owned by American & Efird, Inc. (2) Owned by Harris Teeter, Inc. (3) Owned by R. S. Dickson & Company Listed below are the foreign subsidiaries of the Corporation, all of which are wholly owned through American & Efird, Inc., unless otherwise indicated. American & Efird (HK) Limited - 100% A&E Korea Ltd. - 100% American & Efird (GB) Limited - 100% Fils A Coudre Allied, Inc./Allied Threads, Inc. - 100% Hilos A&E de Costa Rica, S.A. - 100% American & Efird International (FE) Limited - 100% Hilos American & Efird de Mexico, S.A. de C.V. - 100% American & Efird Mills (S) Pte. Ltd. - Joint venture, 49% owned Hilos Magic (H.M.) de Venezuela - Joint venture, 33% owned Hilos A&E Dominicana, Ltd. - Joint venture, 49% 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. EX-23 8 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS 1 EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our reports included in this Form 10-K, into Ruddick Corporation's previously filed Registration Statements on Form S-8, Registration No. 33-26302 and No. 33-56567. ARTHUR ANDERSEN LLP Charlotte, North Carolina, December 20, 1994. EX-27 9 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF RUDDICK CORPORATION FOR THE FISCAL YEAR ENDED 10/2/94, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. YEAR OCT-2-1994 OCT-2-1994 14,531 0 64,333 2,031 180,784 276,647 546,631 246,971 640,792 190,404 104,152 57,620 0 0 233,589 640,792 1,908,437 1,908,437 1,436,070 1,844,426 5,666 0 8,329 50,068 18,257 31,811 0 0 0 31,811 1.35 1.35
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