-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NIyWdCqNfXGw8XqQhDHjch0efjbdgqhiZTHUvELG8strQY8SUni8bVhm5vBvANZq Gl8KVTyBw0Sg6E8fN0iN/Q== 0000950144-97-013495.txt : 19971219 0000950144-97-013495.hdr.sgml : 19971219 ACCESSION NUMBER: 0000950144-97-013495 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19970928 FILED AS OF DATE: 19971218 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: SEC FILE NUMBER: 001-06905 FILM NUMBER: 97740710 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 RUDDICK CORPORATION 10-K 9-28-1997 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 For the Fiscal Year Ended: September 28, 1997 [ ] 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 CAROLINA 28282 - -------------------------------------------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (704) 372-5404 -------------- SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: TITLE OF EACH CLASS: NAME OF EXCHANGE ON WHICH REGISTERED: - -------------------------------------------------------------------------------- COMMON STOCK NEW YORK STOCK EXCHANGE, INC. RIGHTS TO PURCHASE SERIES A JUNIOR PARTICIPATING ADDITIONAL PREFERRED STOCK NEW YORK STOCK EXCHANGE, INC. SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. The aggregate market value of the voting stock held by nonaffiliates of the Registrant as of December 5, 1997, was $550,123,789. As of December 5, 1997, the Registrant had outstanding 46,676,296 shares of Common Stock. DOCUMENTS INCORPORATED BY REFERENCE Parts I and II: Certain portions of the Annual Report to Shareholders for the fiscal year ended September 28, 1997 (with the exception of those portions which are specifically incorporated by reference in this Form 10-K and included as Exhibit 13 hereto, the Annual Report to Shareholders for the fiscal year ended September 28, 1997, is not deemed to be filed or incorporated by reference as part of this report). Part III: Definitive Proxy Statement dated December 18, 1997, as filed pursuant to Section 14 of the Securities Exchange Act of 1934 in connection with the 1998 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.) 2 RUDDICK CORPORATION AND CONSOLIDATED SUBSIDIARIES Form 10-K for the Fiscal Year ended September 28, 1997 TABLE OF CONTENTS PAGE ---- PART I Item 1. Business .................................................. 1 Item 2. Properties ................................................ 3 Item 3. Legal Proceedings ......................................... 5 Item 4. Submission of Matters to a Vote of Security Holders ....... 5 Item 4A. Executive Officers of the Registrant ...................... 5 PART II Item 5. Market for Registrant's Common Equity and Related Shareholder Matters ....................................... 6 Item 6. Selected Financial Data ................................... 6 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations ....................... 6 Item 7A. Quantitative and Qualitative Discussion about Market Risk ............................................... 6 Item 8. Financial Statements and Supplementary Data ............... 6 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ....................... 7 PART III Item 10. Directors and Executive Officers of the Registrant ........ 7 Item 11. Executive Compensation .................................... 7 Item 12. Security Ownership of Certain Beneficial Owners and Management ................................................ 7 Item 13. Certain Relationships and Related Transactions ............ 7 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K ............................................... 8 3 PART I ITEM 1. BUSINESS Ruddick Corporation (the "Registrant") is a holding company which, through its wholly-owned subsidiaries, is engaged in two primary businesses: Harris Teeter, Inc. ("Harris Teeter") operates a regional chain of supermarkets in five southeastern states and American & Efird, Inc. ("A&E") manufactures and distributes primarily industrial thread, but also manufactures and distributes consumer sewing thread. At September 28, 1997, the Registrant and its subsidiaries had total consolidated assets of $885,243,000 and had approximately 19,700 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 Company. In 1969, the Registrant acquired Harris Teeter. Also in 1969, the Registrant acquired the predecessor of Jordan Graphics, Inc. ("Jordan Graphics"), the assets of which were sold to The Reynolds and Reynolds Company in January, 1996. In addition, as of the beginning of fiscal year 1996, Ruddick Investment Company redefined its business and emphasis is now on the development of selected sites for Harris Teeter stores. Venture capital investment holdings will continue to be managed but future equity investment will be limited. Due to continued growth of the Harris Teeter and A&E businesses, Ruddick Investment's relative size to the consolidated Company has declined and it is no longer considered an operating company. For certain other information regarding the Company's venture capital and real estate holdings, see the Note entitled "Investments" of the Notes to Consolidated Financial Statements of Ruddick Corporation and Subsidiaries in the Registrant's 1997 Annual Report to Shareholders (the "1997 Annual Report"), which information is incorporated herein by reference. The two businesses in which the Registrant engages through its operating subsidiaries, together with certain financial information and competitive aspects of such businesses, are discussed separately below. For certain other information regarding industry segments, see the Note entitled "Industry Segment Information" of the Notes to Consolidated Financial Statements of Ruddick Corporation and Subsidiaries in the 1997 Annual Report. The only foreign operations conducted by the Registrant are through A&E. Neither of the two businesses engaged in by the Registrant would be characterized as seasonal. The Registrant employs twenty-two people, including four executives who formulate and implement overall corporate objectives and policies. The Registrant's employees perform functions in a number of areas including finance, accounting, audit, insurance, reporting, employee benefits and public and shareholder relations. The Registrant assists its subsidiaries in developing long-range goals, in strengthening management personnel and skills and in financing operations. Management of each subsidiary is responsible for implementing operating policies and reports to management of the Registrant. 1 4 HARRIS TEETER Harris Teeter operates supermarkets in North Carolina (93), South Carolina (22), Virginia (14), Georgia (7), and Tennessee (2) for sales of groceries, produce, meat and seafood, delicatessen items, bakery items, wines and non-food items such as health and beauty care, floral and other products normally offered for sale in supermarkets. Harris Teeter has a program in place whereby each retail store will undergo a remodel every eight years. Harris Teeter remodeled twelve stores during fiscal 1997 and expects to remodel twenty-three stores in fiscal 1998. In addition, thirteen new stores were opened and nine older, less profitable, stores were sold or closed in fiscal 1997. As of fiscal year end, Harris Teeter had 138 stores in operation. Its principal offices and cold storage perishable distribution facilities are located near Charlotte, North Carolina, and its dry grocery and frozen storage distribution facilities are located in Greensboro, North Carolina. Both distribution facilities are currently undergoing major expansion and are expected to function as full-service facilities in early 1998. Harris Teeter produces some dairy products, but buys most of the products it sells, including its private label brands. Harris Teeter's sales constituted 84% of the Registrant's consolidated sales in fiscal 1997 (86% in 1996 and 85% in 1995). 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 8,600 persons full-time and 7,500 part-time. Warehouse employees and drivers at Harris Teeter's warehouse near Charlotte, North Carolina are represented by a union, but Harris Teeter is not party to a collective bargaining agreement covering such employees. Harris Teeter considers its employee relations to be good. A & E A&E is a leading manufacturer and distributor of sewing thread, produced from natural and synthetic fibers, for worldwide industrial and consumer markets. Manufacturers of apparel and other products rely on A&E industrial sewing thread to manufacture their products. The apparel market is made up of many categories servicing both genders and diverse age groups, including jeanswear, underwear, menswear, womenswear, outerwear, intimate apparel, workwear and childrenswear. A&E also manufactures thread for a wide variety of nonapparel products, including home furnishings, automotive, footwear, upholstered furniture, sporting goods, caps and hats, gloves, leather products, medical products and tea bag strings. The company's sales are primarily industrial sewing thread products, which are sold to manufacturers through A&E's employed sales representatives, commissioned agents and distributors. In addition, A&E produces the SIGNATURE line of consumer sewing thread, which is sold through independent retail outlets. A&E also distributes sewing supplies manufactured by other companies. A&E's sales constituted 16% of the Registrant's consolidated sales in fiscal 1997 (14% in 1996 and 15% in 1995). Headquartered in Mt. Holly, North Carolina, the company operates 13 modern manufacturing facilities in North Carolina. These facilities have been designed for flexibility and efficiency to accommodate changing customer product demands. In addition to the six dyeing and finishing and seven spinning plants in North Carolina, A&E operates 19 distribution centers in the U.S. and one in Puerto Rico. 2 5 A&E also has wholly-owned operations in Belgium, Canada, Costa Rica, England, Guatemala, Hong Kong, Ireland, Korea, Mexico and Malaysia, a majority-owned joint venture in China and minority interests in joint ventures in the Dominican Republic and Honduras. These facilities include eight dyeing and finishing operations, one spinning operation and 12 additional distribution centers. The value of total assets in consolidated operations at the end of fiscal 1997 was approximately $75 million. Management expects to continue to expand foreign production and distribution operations, primarily through additional joint ventures. The domestic order backlog, believed to be firm, as of the end of the 1997 fiscal year was approximately $13,941,000 versus $14,390,000 at the end of the preceding fiscal year. The majority of the order backlog is expected to be filled within three weeks of fiscal year end. The international order backlog is not material. A&E has approximately 8,600 domestic and 4,700 international customer accounts which are active. In fiscal 1997, no single customer accounted for more than 7% of total net sales and the ten largest accounted for approximately 20% of total net sales. A&E purchases cotton from 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 approximately $328,000 and $304,000 in fiscal 1997 and fiscal 1996, respectively, none of which were sponsored by customers. Three employees are engaged in this activity on a full-time basis. The industrial sewing thread industry is highly competitive. A&E is believed to be the largest producer in the domestic industrial thread market. Principal competitors include Coats American, Inc., Barbour Threads, Inc. and imported products sold primarily through distributors. Principal competitive factors include quality, service and price. A&E employed approximately 3,600 persons worldwide as of the end of fiscal 1997. A&E considers its employee relations to be good. ITEM 2. PROPERTIES The executive offices of the Registrant are located in approximately 8,100 square feet of leased space in a downtown office tower at 2000 Two First Union Center, Charlotte, North Carolina 28282. Harris Teeter owns its principal offices, which consist of 116,000 square feet of space located on a 10 acre tract of land near Charlotte, North Carolina. Harris Teeter also owns a 104 acre tract east of Charlotte where 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 an 18,050 square foot milk processing plant located on 8.3 acres of land in Charlotte, North Carolina and an 81,900 square foot milk processing and ice cream manufacturing facility located on 4.7 acres of land in High Point, North Carolina. Harris Teeter operates its retail stores primarily from leased properties. The base annual rentals on leased store and warehouse properties as of September 28, 1997 aggregated approximately $46,388,000 net of sublease rentals of approximately $896,000. In addition to the base rentals, the majority of the 3 6 lease agreements provide for additional annual rentals based on 1% of the amount by which annual store sales exceed a predetermined amount. During the fiscal year ended September 28, 1997, the additional rental amounted to approximately $941,000. Harris Teeter's supermarkets range in size from approximately 15,000 square feet to 66,000 square feet, with an average size of approximately 38,000 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
1995 1996 1997 ---------- ---------- ---------- Stores Open at End of Period 139 134 138 Average Weekly Net Sales Per Store* $ 234,656 $ 259,160 $ 272,924 Average Square Footage Per Store 33,678 36,273 38,076 Average Square Footage Per New Store 47,348 57,610 50,191 Opened During Period Total Square Footage at End 4,681,204 4,860,546 5,254,457 of Period
* Computed on the basis of aggregate sales of stores open for a full year. A&E's principal offices and thirteen domestic manufacturing plants are all owned by A&E and are all located in North Carolina. Manufacturing plants and related warehouse facilities have an aggregate of 2,225,093 square feet of floor space and an insured value of $526,872,000. A&E has the capacity to produce annually approximately 42,750,000 pounds of industrial sewing thread and has a dyeing capacity of approximately 46,900,000 pounds per year. Capacities are based on 168 hours of operations per week. A&E owns one distribution center and leases another eighteen scattered throughout its domestic markets at an approximate annual rent of $1,559,000. Through subsidiaries, A&E also owns five international manufacturing and/or distribution facilities with an aggregate of 312,972 square feet of floor space and an insured value of $21,312,326. A&E leases another 15 international facilities with an aggregate of 263,253 square feet of floor space and an approximate annual rent of $1,061,000. The subsidiaries which are engaged in manufacturing have a sewing thread dyeing capacity of approximately 12,400,000 pounds per year. Capacities are based on 168 hours of operations per week. In addition to its subsidiaries, A&E also has minority interests in two joint ventures. 4 7 ITEM 3. LEGAL PROCEEDINGS The Registrant has entered into an Administrative Order on Consent with Region IV of the United States Environmental Protection Agency, together with 14 other parties who have been designated potentially responsible parties, to perform a remedial investigation/feasibility study at the Leonard Chemical Company Superfund site in Rock Hill, South Carolina. The Registrant's potential liability is based on the alleged disposal of waste material at this Superfund site by Pargo, Inc. Pargo, Inc. was a wholly owned subsidiary of the Registrant from 1969 to 1972. The Registrant has agreed to participate in the remedial investigation/feasibility study on the condition that its share of the costs does not exceed 1.8% of the total plus an additional payment of $4,680 for costs previously incurred by other parties. The Registrant estimates that, based on current information, the total cost of the remedial investigation/feasibility study should be approximately $1,500,000. Under the interim allocation of costs agreed to by the parties to the Administrative Order on Consent, the Registrant's share is 1.155% of the total cost. The Registrant does not believe that this proceeding will have a material effect on its business or financial condition. The Registrant and its subsidiaries are involved in various 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 68, 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 66, has been Chairman of the Board since February 1994. Prior to that time he had been President of the Registrant since its formation in October 1968. Thomas W. Dickson, age 42, has been President of the Registrant since February 1997. Prior to that time, and beginning in February 1996, he served as Executive Vice President of the Registrant. He also served as A&E's President from February 1994 to August 1996 and Executive Vice President from 1991 to 1994. Richard N. Brigden, age 58, has been Vice President-Finance of the Registrant since December 1983. Fred J. Morganthall, II, age 46, was elected President of Harris Teeter on October 30, 1997. Prior to that time, and beginning in October 1996, he served as Executive Vice President of Harris Teeter. He was also Harris Teeter's Senior Vice President of Operations from 5 8 October 1995 to October 1996, Vice President of Operations from April 1994 to October 1995 and Vice President of Sales and Distribution from October 1992 to April 1994. Fred A. Jackson, age 47, has been President of A&E since August 1996. Prior to that time, for more than five years, he served as its Senior Vice President-Industrial Thread Sales. The executive officers of the Registrant and its subsidiaries are elected annually by their respective Boards of Directors. R. Stuart Dickson and Alan T. Dickson are brothers. Thomas W. Dickson is the son of R. Stuart Dickson and the nephew of Alan T. Dickson. No other executive officer has a family relationship with any other executive officer or director or nominee for director as close as first cousin. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS The information required for this item is incorporated herein by reference to the following sections of the Registrant's 1997 Annual Report: information regarding the principal market for Common Stock, number of shareholders of record, market price information per share of Common Stock and dividends declared per share of Common Stock for each quarterly period in the 1997 and 1996 fiscal years is incorporated by reference to the Note headed "Quarterly Information (Unaudited)" to the Notes to Consolidated Financial Statements; and information regarding restrictions on the ability of the Registrant to pay cash dividends is incorporated by reference to "Management's Discussion and Analysis of Financial Condition and Results of Operations-Capital Resources and Liquidity" and the Note headed "Long-Term Debt" to the Notes to Consolidated Financial Statements. ITEM 6. SELECTED FINANCIAL DATA The information required for this item, for each of the last five fiscal years, is incorporated herein by reference to the section headed "Eleven-Year Financial and Operating Summary" in the Registrant's 1997 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 1997 Annual Report. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCUSSION ABOUT MARKET RISK Not applicable. 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 1997 Annual Report. 6 9 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 1997 Annual Report. The financial statement schedules required to be filed herewith, and the Report of Independent Public Accountants thereon, are listed under Item 14(a) of this Report and filed herewith pursuant to Item 14(d) of this Report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by this item with respect to executive officers is set forth above in Part I, Item 4A. The other information required by this item is incorporated herein by reference to the sections entitled "Election of Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance" in the Registrant's Proxy Statement dated December 18, 1997, filed with the Securities and Exchange Commission with respect to the Registrant's 1998 Annual Meeting of Shareholders (the "1998 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 1998 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 1998 Proxy Statement. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this item is incorporated herein by reference to the section entitled "Certain Transactions" in the Registrant's 1998 Proxy Statement. 7 10 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) Documents filed as part of this report: (1) Financial Statements: The following report and financial statements are incorporated herein by reference to the Registrant's 1997 Annual Report: Consolidated Balance Sheets, September 28, 1997 and September 29, 1996 Statements of Consolidated Income and Retained Earnings for the fiscal years ended September 28, 1997, September 29, 1996 and October 1, 1995 Statements of Consolidated Cash Flows for the fiscal years ended September 28, 1997, September 29, 1996 and October 1, 1995 Notes to Consolidated Financial Statements Report of Independent Public Accountants (2) Financial Statement Schedules: The following report and financial statement schedules are filed herewith: Report of Independent Public Accountants for each of the fiscal years in the three year period ended September 28, 1997 Page S-1 Schedule II - Valuation and Qualifying Accounts and Reserves Page S-2 All other schedules are omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes thereto. (3) Index to Exhibits: The following exhibits are filed with this report or, as noted, incorporated by reference herein. 8 11
Sequentially Exhibit Numbered Number Description of Exhibit Page ------ ---------------------- ---- 3.1 Restated Articles of Incorporation of the Registrant, incorporated * herein by reference to Exhibit 3.1 of the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended March 29, 1992 (Commission File No. 1-6905). 3.2 Amended and Restated Bylaws of the Registrant, incorporated * herein by reference to Exhibit 3.2 of the Registrant's Annual Report on Form 10-K for the fiscal year ended September 27, 1992 (Commission File No. 1-6905). 4.1 Revolving Credit Agreements for an aggregate of $100,000,000, * entered into as of February 15, 1995, by and between the Registrant and each of First Union National Bank of North Carolina, NationsBank, National Association (formerly NationsBank, National Association (Carolinas)) and Wachovia Bank of North Carolina, N.A., incorporated herein by reference to Exhibits 4.1, 4.2 and 4.3 of the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended April 2, 1995 (Commission File No. 1-6905). 4.2 $50,000,000 6.48% Series A Senior Notes due March 1, 2011 and * $50,000,000 Private Shelf Facility dated March 1, 1996 between Ruddick Corporation and The Prudential Insurance Company of America, incorporated herein by reference to Exhibit 4.1 of the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1996 (Commission File No. 1-6905). 4.3 $50,000,000 7.55% Senior Series B Notes due July 15, 2017 + (filed herewith) and $50,000,000 7.72% Series B Senior Notes due April 15, 2017 under the Note Purchase and Private Shelf Agreement dated April 15, 1997 between Ruddick Corporation and The Prudential Insurance Company of America, incorporated herein by reference to Exhibit 4.1 of the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 29, 1997 (Commission File No. 1-6905). The Registrant has certain other long-term debt, but has not filed the instruments evidencing such debt as part of Exhibit 4 as none of such instruments authorize the issuance of debt exceeding 10 percent of the total consolidated assets of the Registrant. The Registrant agrees to furnish a copy of each such agreement to the Commission upon request. 10.1 Description of Incentive Compensation Plans, incorporated * herein by reference to Exhibit 10.1 of the Registrant's Annual Report on Form 10-K for the fiscal year ended September 29, 1996 (Commission No. 1-6905).**
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Sequentially Exhibit Numbered Number Description of Exhibit Page ------ ---------------------- ---- 10.2 Supplemental Executive Retirement Plan of Ruddick * Corporation, as amended and restated, incorporated herein by reference to Exhibit 10.3 of the Registrant's Annual Report on Form 10-K for the fiscal year ended September 30, 1990 (Commission File No. 1-6905).** 10.3 Resolutions adopted by the Board of Directors of the Registrant * and the Plan's Administrative Committee with respect to benefits payable under the Registrant's Supplemental Executive Retirement Plan to Alan T. Dickson and R. Stuart Dickson, incorporated herein by reference to Exhibit 10.3 of the Registrant's Annual Report on Form 10-K for the fiscal year ended September 29, 1991 (Commission File No. 1-6905).** 10.4 Deferred Compensation Plan for Key Employees of Ruddick * Corporation and subsidiaries, as amended and restated, incorporated herein by reference to Exhibit 10.5 of the Registrant's Annual Report on Form 10-K for the fiscal year ended September 30, 1990 (Commission File No. 1-6905).** 10.5 1982 Incentive Stock Option Plan, as amended and restated, * incorporated herein by reference to Exhibit 10.5 of the Registrant's Annual Report on Form 10-K for the fiscal year ended October 2, 1994 (Commission File No. 1-6905).** 10.6 1988 Incentive Stock Option Plan, incorporated herein by reference * to Exhibit 10.6 of the Registrant's Annual Report on Form 10-K for the fiscal year ended October 2, 1994 (Commission File No. 1-6905).** 10.7 1993 Incentive Stock Option and Stock Appreciation Rights Plan, * incorporated herein by reference to Exhibit 10.7 of the Registrant's Annual Report on Form 10-K for the fiscal year ended October 3, 1993 (Commission File No. 1-6905).** 10.8 Ruddick Corporation Incentive Stock Option Agreement between * the Registrant and Thomas W. Dickson dated November 12, 1992, 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, 1996 (Commission No. 1-6905).** 10.9 Ruddick Corporation Incentive Stock Option Agreement between * the Registrant and Fred A. Jackson dated November 12, 1992, incorporated herein by reference to Exhibit 10.8 of the Registrant's Annual Report on Form 10-K for the fiscal year ended September 29, 1996 (Commission No. 1-6905).**
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Sequentially Exhibit Numbered Number Description of Exhibit Page ------ ---------------------- ---- 10.10 Ruddick Corporation Incentive Stock Option Agreement between * the Registrant and John W. Copeland dated November 12, 1992, incorporated herein by reference to Exhibit 10.9 of the Registrant's Annual Report on Form 10-K for the fiscal year ended September 29, 1996 (Commission No. 1-6905).** 10.11 Ruddick Corporation Incentive Stock Option Agreement between * the Registrant and Thomas W. Dickson dated November 18, 1993, incorporated herein by reference to Exhibit 10.11 of the Registrant's Annual Report on Form 10-K for the fiscal year ended September 29, 1996 (Commission No. 1-6905).** 10.12 Ruddick Corporation Incentive Stock Option Agreement between * the Registrant and Thomas W. Dickson dated November 15, 1995, incorporated herein by reference to Exhibit 10.12 of the Registrant's Annual Report on Form 10-K for the fiscal year ended September 29, 1996 (Commission No. 1-6905).** 10.13 Ruddick Corporation Incentive Stock Option Agreement between * the Registrant and Fred A. Jackson dated November 18, 1993, incorporated herein by reference to Exhibit 10.13 of the Registrant's Annual Report on Form 10-K for the fiscal year ended September 29, 1996 (Commission No. 1-6905).** 10.14 Ruddick Corporation Incentive Stock Option Agreement between * the Registrant and Fred A. Jackson dated November 15, 1995, incorporated herein by reference to Exhibit 10.14 of the Registrant's Annual Report on Form 10-K for the fiscal year ended September 29, 1996 (Commission No. 1-6905).** 10.15 Ruddick Corporation Incentive Stock Option Agreement between * the Registrant and R. N. Brigden dated November 15, 1995, incorporated herein by reference to Exhibit 10.16 of the Registrant's Annual Report on Form 10-K for the fiscal year ended September 29, 1996 (Commission No. 1-6905).** 10.16 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).** 10.17 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).**
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Sequentially Exhibit Numbered Number Description of Exhibit Page ------ ---------------------- ---- 10.18 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). 10.19 Ruddick Corporation Senior Officers Insurance Program Plan * Document and Summary Plan Description, incorporated herein by reference to Exhibit 10.10 of the Registrant's Annual Report on Form 10-K for the fiscal year ended September 27, 1992 (Commission File No. 1-6905).** 10.20 Ruddick Corporation Nonstatutory Stock Option Agreement * Between the Registrant and John R. Belk, incorporated herein by reference to Exhibit 10.1 of the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 29, 1997 (Commission File No. 1-6905).** 10.21 Ruddick Corporation Nonstatutory Stock Option Agreement * Between the Registrant and Edwin B. Borden, Jr., incorporated herein by reference to Exhibit 10.2 of the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended December 29, 1996 (Commission File No. 1-6905).** 10.22 Ruddick Corporation Nonstatutory Stock Option Agreement * Between the Registrant and Beverly F. Dolan, incorporated herein by reference to Exhibit 10.3 of the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended December 29, 1996 (Commission File No. 1-6905).** 10.23 Ruddick Corporation Nonstatutory Stock Option Agreement * Between the Registrant and Roddey Dowd, Sr., incorporated herein by reference to Exhibit 10.4 of the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended December 29, 1996 (Commission File No. 1-6905).** 10.24 Ruddick Corporation Nonstatutory Stock Option Agreement * Between the Registrant and James E.S. Hynes, incorporated herein by reference to Exhibit 10.5 of the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended December 29, 1996 (Commission File No. 1-6905).** 10.25 Ruddick Corporation Nonstatutory Stock Option Agreement * Between the Registrant and Hugh L. McColl, Jr., incorporated herein by reference to Exhibit 10.6 of the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended December 29, 1996 (Commission File No. 1-6905).**
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Sequentially Exhibit Numbered Number Description of Exhibit Page ------ ---------------------- ---- 10.26 Ruddick Corporation 1995 Comprehensive Stock Option Plan, * incorporated herein by reference to Exhibit 10.1 of the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1996 (Commission File No. 1-6905).** 10.27 Ruddick Corporation Nonstatutory Stock Option Agreement Between * the Registrant and Edwin B. Borden, Jr., incorporated herein by reference to Exhibit 10.3 of the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1996 (Commission File No. 1-6905).** 10.28 Ruddick Corporation Nonstatutory Stock Option Agreement Between * the Registrant and Beverly F. Dolan, incorporated herein by reference to to Exhibit 10.4 of the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1996 (Commission File No. 1-6905).** 10.29 Ruddick Corporation Nonstatutory Stock Option Agreement Between * the Registrant and Roddey Dowd, Sr., incorporated herein by reference to Exhibit 10.5 of the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1996 (Commission File No. 1-6905).** 10.30 Ruddick Corporation Nonstatutory Stock Option Agreement Between * the Registrant and James E.S. Hynes, incorporated herein by reference to Exhibit 10.6 of the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1996 (Commission File No. 1-6905).** 10.31 Ruddick Corporation Nonstatutory Stock Option Agreement Between * the Registrant and Hugh L. McColl, Jr., incorporated herein by reference to Exhibit 10.7 of the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1996 (Commission File No. 1-6905).** 11 Statement Regarding the Computation of Per Share Earnings. + 13 Ruddick Corporation 1997 Annual Report to Shareholders: + Consolidated Financial Statements on pages 17 to 29 and sections headed "Management's Discussion and Analysis of Financial Condition and Results of Operations" (pages 13 to 16) and "Eleven-Year Financial and Operating Summary" (pages 30 to 31) only. 21 List of Subsidiaries of the Registrant. + 23 Consent of Independent Public Accountants. +
13 16
Sequentially Exhibit Numbered Number Description of Exhibit Page ------ ---------------------- ---- 27 Financial Data Schedule. +
- ------------------------ * Incorporated by reference. ** Indicates management contract or compensatory plan required to be filed as an Exhibit. + Indicates exhibits filed herewith and follow the signature pages. (b) Reports on Form 8-K. The Registrant did not file any reports on Form 8-K during the three months ended September 28, 1997. 14 17 SIGNATURES Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. RUDDICK CORPORATION (Registrant) By: /s/ Thomas W. Dickson ------------------------------- Thomas W. Dickson, President Dated: December 18, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated: Name Title Date ---- ----- ---- /s/ Thomas W. Dickson President and Director December 18, 1997 - ---------------------------- (Principal Executive Officer) Thomas W. Dickson /s/ Richard N. Brigden Vice President-Finance December 18, 1997 - ---------------------------- (Principal Financial Officer) Richard N. Brigden /s/ Douglas A. Stephenson Treasurer December 18, 1997 - ---------------------------- (Principal Accounting Officer) Douglas A. Stephenson /s/ John R. Belk Director December 18, 1997 - ---------------------------- John R. Belk /s/ Edwin B. Borden, Jr. Director December 18, 1997 - ---------------------------- Edwin B. Borden, Jr. /s/ John W. Copeland Director December 18, 1997 - ---------------------------- John W. Copeland /s/ Alan T. Dickson Chairman of the Board December 18, 1997 - ---------------------------- and Director Alan T. Dickson /s/ R. Stuart Dickson Chairman of the Executive December 18, 1997 - ---------------------------- Committee and Director R. Stuart Dickson 15 18 Name Title Date ---- ----- ---- /s/ Beverly F. Dolan Director December 18, 1997 - ---------------------------- Beverly F. Dolan /s/ Roddey Dowd, Sr. Director December 18, 1997 - ---------------------------- Roddey Dowd, Sr. /s/ James E. S. Hynes Director December 18, 1997 - ---------------------------- James E. S. Hynes /s/ Hugh L. McColl. Jr. Director December 18, 1997 - ---------------------------- Hugh L. McColl, Jr. 16 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 22, 1997. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed in Item 14(a)(2) is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. /s/ ARTHUR ANDERSEN LLP Charlotte, North Carolina, October 22, 1997. S-1 20 SCHEDULE II RUDDICK CORPORATION AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR THE FISCAL YEARS ENDED OCTOBER 1, 1995, SEPTEMBER 29, 1996 AND SEPTEMBER 28, 1997 (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 OCTOBER 1, 1995: RESERVES DEDUCTED FROM ASSETS TO WHICH THEY APPLY - ALLOWANCE FOR DOUBTFUL ACCOUNTS $1,862 $ 152 $ 287* $1,727 ====== ====== ====== ====== FISCAL YEAR ENDED SEPTEMBER 29, 1996: RESERVES DEDUCTED FROM ASSETS TO WHICH THEY APPLY - ALLOWANCE FOR DOUBTFUL ACCOUNTS $1,727 $ 428 $ 757* $1,398 ====== ====== ====== ====== FISCAL YEAR ENDED SEPTEMBER 28, 1997: RESERVES DEDUCTED FROM ASSETS TO WHICH THEY APPLY - ALLOWANCE FOR DOUBTFUL ACCOUNTS $1,398 $1,704 $1,097* $2,005 ====== ====== ====== ======
* Represents accounts receivable balances written off as uncollectible, less recoveries. S-2 EX-4.3 2 $50,000,000 7.55% SENIOR SERIES B NOTES 1 EXHIBIT 4.3 RUDDICK CORPORATION 7.55% SENIOR SERIES B NOTE DUE JULY 15, 2017 No. R-4 ORIGINAL PRINCIPAL AMOUNT: $5,000,000 ORIGINAL ISSUE DATE: July 15, 1997 INTEREST RATE: 7.55% INTEREST PAYMENT DATES: January 15, April 15, July 15, October 15 FINAL MATURITY DATE: July 15, 2017 PRINCIPAL PREPAYMENT DATE AND AMOUNTS: N/A FOR VALUE RECEIVED, the undersigned, RUDDICK CORPORATION (herein called the "Company"), a corporation organized and existing under the laws of the State of North Carolina, hereby promises to pay to THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, or registered assigns, the principal sum of FIVE MILLION DOLLARS ($5,000,000) on July 15, 2017 with interest (computed on the basis of a 360-day year--30-day month) (a) on the unpaid balance thereof at the Interest Rate per annum specified above, payable on each Interest Payment Date specified above and on the Final Maturity Date specified above, commencing with the Interest Payment Date next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) on any overdue payment (including any overdue prepayment) of principal, any overdue payment of Yield Maintenance Amount and any overdue payment of interest, payable on each Interest Payment Date as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the greater of (i) 2% over the Interest Rate specified above or (ii) 2% over the rate of interest publicly announced by Morgan Guaranty Trust Company of New York from time to time in New York City as its Prime Rate. Payments of principal, Yield-Maintenance Amount payable, if any, and interest are to be made at the main office of The Bank of New York in New York City or at such other place as the holder hereof shall designate to the Company in writing, in lawful money of the United States of America. This Note is one of a series of Senior Notes (herein called the "Notes") issued pursuant to a Note Purchase and Private Shelf Agreement, dated as of April 15, 1997 (herein called the "Agreement"), between the Company, on the one hand, and The Prudential Insurance Company of America and each Prudential Affiliate (as defined in the Agreement) which becomes party thereto, on the other hand, and is entitled to the benefits thereof. This Note is subject to optional prepayment, in whole or from time to time in part, on the terms specified in the Agreement. 2 This Note is a registered Note and, as provided in the Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder's attorney duly authorized in writing, a new Note for the then outstanding principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company shall not be affected by any notice to the contrary. In case an Event of Default shall occur and be continuing, the principal of this Note may be declared or otherwise become due and payable in the manner and with the effect provided in the Agreement. The Company and any and all endorsers, guarantors and sureties severally waive grace, demand, presentment for payment, notice of dishonor or default, notice of intent to accelerate, notice of acceleration (to the extent set forth in the Agreement), protest and diligence in collecting. Should any debt represented by this Note be collected at law or in equity, or in bankruptcy or other proceedings, or should this Note be placed in the hands of attorneys for collection, the Company agrees to pay, in addition to the principal, Yield-Maintenance Amount, if any, and interest due and payable hereon, all costs of collecting or attempting to collect this Note, including reasonable attorneys' fees and expenses (including those incurred in connection with any appeal). Capitalized terms used and not otherwise defined herein shall have the meanings (if any) provided in the Agreement. This Note is intended to be performed in the State of New York and shall be construed and enforced in accordance with the internal law of such State. AS PROVIDED IN PARAGRAPH 11N OF THE AGREEMENT, THE COMPANY SUBMITS TO THE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY, NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN ANY ACTION OR PROCEEDING RELATING TO THIS NOTE. RUDDICK CORPORATION By: /s/ Douglas A. Stephenson ----------------------------- Title: Treasurer 3 RUDDICK CORPORATION 7.55% SENIOR SERIES B NOTE DUE JULY 15, 2017 No. R-3 ORIGINAL PRINCIPAL AMOUNT: $45,000,000 ORIGINAL ISSUE DATE: July 15, 1997 INTEREST RATE: 7.55% INTEREST PAYMENT DATES: January 15, April 15, July 15, October 15 FINAL MATURITY DATE: July 15, 2017 PRINCIPAL PREPAYMENT DATE AND AMOUNTS: N/A FOR VALUE RECEIVED, the undersigned, RUDDICK CORPORATION (herein called the "Company"), a corporation organized and existing under the laws of the State of North Carolina, hereby promises to pay to THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, or registered assigns, the principal sum of FORTY-FIVE MILLION DOLLARS ($45,000,000.00) on July 15, 2017 with interest (computed on the basis of a 360-day year--30-day month) (a) on the unpaid balance thereof at the Interest Rate per annum specified above, payable on each Interest Payment Date specified above and on the Final Maturity Date specified above, commencing with the Interest Payment Date next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) on any overdue payment (including any overdue prepayment) of principal, any overdue payment of Yield Maintenance Amount and any overdue payment of interest, payable on each Interest Payment Date as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the greater of (i) 2% over the Interest Rate specified above or (ii) 2% over the rate of interest publicly announced by Morgan Guaranty Trust Company of New York from time to time in New York City as its Prime Rate. Payments of principal, Yield-Maintenance Amount payable, if any, and interest are to be made at the main office of The Bank of New York in New York City or at such other place as the holder hereof shall designate to the Company in writing, in lawful money of the United States of America. This Note is one of a series of Senior Notes (herein called the "Notes") issued pursuant to a Note Purchase and Private Shelf Agreement, dated as of April 15, 1997 (herein called the "Agreement"), between the Company, on the one hand, and The Prudential Insurance Company of America and each Prudential Affiliate (as defined in the Agreement) which becomes party thereto, on the other hand, and is entitled to the benefits thereof. This Note is subject to optional prepayment, in whole or from time to time in part, on the terms specified in the Agreement. 4 This Note is a registered Note and, as provided in the Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder's attorney duly authorized in writing, a new Note for the then outstanding principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company shall not be affected by any notice to the contrary. In case an Event of Default shall occur and be continuing, the principal of this Note may be declared or otherwise become due and payable in the manner and with the effect provided in the Agreement. The Company and any and all endorsers, guarantors and sureties severally waive grace, demand, presentment for payment, notice of dishonor or default, notice of intent to accelerate, notice of acceleration (to the extent set forth in the Agreement), protest and diligence in collecting. Should any debt represented by this Note be collected at law or in equity, or in bankruptcy or other proceedings, or should this Note be placed in the hands of attorneys for collection, the Company agrees to pay, in addition to the principal, Yield-Maintenance Amount, if any, and interest due and payable hereon, all costs of collecting or attempting to collect this Note, including reasonable attorneys' fees and expenses (including those incurred in connection with any appeal). Capitalized terms used and not otherwise defined herein shall have the meanings (if any) provided in the Agreement. This Note is intended to be performed in the State of New York and shall be construed and enforced in accordance with the internal law of such State. AS PROVIDED IN PARAGRAPH 11N OF THE AGREEMENT, THE COMPANY SUBMITS TO THE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY, NEW YORK AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN ANY ACTION OR PROCEEDING RELATING TO THIS NOTE. RUDDICK CORPORATION By: /s/ Douglas A. Stephenson ----------------------------- Title: Treasurer EX-11 3 STATEMENT RE: COMPUTATION PER SHARE EARNINGS 1 EXHIBIT 11 RUDDICK CORPORATION STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
FISCAL YEAR ENDED ------------------------------------ SEPTEMBER 28, SEPTEMBER 29, 1997 1996 ----------- ----------- NET INCOME PER SHARE COMPUTED AS FOLLOWS: PRIMARY: 1. NET INCOME $47,730,519 $42,802,071 =========== =========== 2. WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 46,548,800 46,420,098 3. INCREMENTAL SHARES UNDER STOCK OPTIONS COMPUTED UNDER THE TREASURY STOCK METHOD USING THE AVERAGE MARKET PRICE OF ISSUER'S STOCK DURING THE PERIODS 283,609 198,852 ----------- ----------- 4. WEIGHTED AVERAGE COMMON SHARES AND COMMON EQUIVALENT SHARES OUTSTANDING 46,832,409 46,618,950 =========== =========== 5. NET INCOME PER SHARE (ITEM 1 DIVIDED BY ITEM 4) $ 1.02 $ .92 =========== =========== FULLY DILUTED: 1. NET INCOME $47,730,519 $42,802,071 =========== =========== 2. WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 46,548,800 46,420,098 3. 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 323,985 232,338 ----------- ----------- 4. WEIGHTED AVERAGE COMMON SHARES AND COMMON EQUIVALENT SHARES OUTSTANDING 46,872,785 46,652,436 =========== =========== 5. NET INCOME PER SHARE (ITEM 1 DIVIDED BY ITEM 4) $ 1.02 $ .92 =========== ===========
EX-13 4 RUDDICK CORPORATION 1997 ANNUAL REPORT 1 EXHIBIT 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - FISCAL 1997 COMPARED TO FISCAL 1996 For fiscal year 1997, consolidated sales of $2.3 billion increased 7.4% over the $2.14 billion reported in fiscal 1996. Consolidated net income of $47.7 million was up 11.5% from the $42.8 million reported last year. On a per share basis, earnings were $1.02 for fiscal 1997, an increase of 10.9% when compared to $.92 reported in fiscal 1996. Fiscal 1997 consolidated operating profit increased 14.1% due to record profitability at American & Efird. In fiscal 1997, the 11.5% increase in net income was achieved despite a rise in the Company's effective income tax rate to 33% (31% in 1996), driven by a combination of reduced tax benefits from Company owned life insurance ("COLI") and higher relative pre-tax income from operations. The favorable tax attributes of COLI will continue to diminish as a result of 1996 federal tax legislation which will phase out policy interest deductions by 1999. HARRIS TEETER, INC. Sales advanced by 5% in fiscal 1997. In the supermarket industry environment, where intense competition shows no signs of abating, Harris Teeter sales for stores in operation in both periods were marginally ahead by 0.1% in fiscal 1997, compared to 3.9% in fiscal 1996. Sales increases were primarily due to an 8% expansion in store square footage over the course of the year, increased advertising and promotion and the successful system-wide rollout of the new customer loyalty card (the VIC Card) introduced in 1996. Grocery sales grew by 4% and accounted for 36% of the sales increase. Dairy, meat, produce and frozen products had sales increases ranging from 4% to 10% and accounted for 44% of the sales increase. Operating profit fell by 6% to $45.7 million in fiscal 1997, primarily as a result of expenses related to the opening of a record number of new stores, as well as several major store remodels during the year and higher fixed costs associated with those stores. These costs were partially offset by greater sales volume and a favorable product mix of higher margin items. At the end of fiscal 1997, 138 stores were in operation, compared to 134 a year ago. During the year, thirteen new stores were opened, five of which were replacements, and four additional, less profitable stores were sold or closed. During fiscal 1997, charges to a $5.3 million reserve established in 1993 for the closing of specified stores to be replaced, which stores have been closed, totaled $1.3 million, for a cumulative total of $4.4 million for all periods to date. AMERICAN & EFIRD, INC. Sales increased 19% over fiscal 1996. This sales growth was primarily due to the inclusion of a full year's sales from the June 1996 acquisition of certain assets of Threads USA, moderate additions to business with existing U.S. customers and an increase in foreign sales. Further, sales growth was driven by good market conditions in most major industries served by A&E, while during the prior year relative weakness in thread sales was primarily related to weak apparel sales at retail. Sales increases were primarily in industrial sewing thread, and consumer thread and notions sales declined modestly. A&E believes that its ability to meet the increasing demands of its customers for top-quality, high-performance industrial thread in both the apparel and home furnishings markets provides an opportunity for future growth. Operating profit advanced by 42% to $49.1 million in fiscal 1997 compared to $34.7 million in the prior year. Operating profit was positively impacted by additional sales volume and the successful integration of the Threads USA business into existing facilities, which resulted in improved operating efficiency, by the renovation and upgrading of a Threads USA manufacturing facility and by the improved performance in a number of foreign operations. The integration of Threads USA is near completion, including the consolidation of manufacturing and administrative operations, customer conversion and sales force reorganization. A new customer support center is also planned, and construction is expected to begin by early 1998. Sales by foreign operations made up 20% of A&E's total sales and 14% of its operating profit. While foreign sales and profits were not material to the Company's consolidated results of operations, they continued to build significantly. NAFTA and the Caribbean Basin Initiative continued to drive strong performances in Mexico and the Caribbean, due to the growth of apparel manufacturing in Central and South America. The A&E majority-owned joint venture in China also evidenced strong growth, and export sales continued to expand. Slightly offsetting such improvements were weak financial results in the Korean and Malaysian operations, due to poor economic conditions and currency devaluation. Lastly, A&E has begun the process of establishing operations in India. RESULTS OF OPERATIONS - FISCAL 1996 COMPARED TO FISCAL 1995 For fiscal year 1996, consolidated sales of $2.14 billion increased 6.6% over the $2.01 billion reported in fiscal 1995. 13 2 Consolidated net income of $42.8 million was up 9% from the $39.3 million reported in fiscal 1995. On a per share basis, earnings from continuing operations were $.92 for fiscal 1996, an increase of 9.5% when compared to $.84 reported in fiscal 1995. The discontinued operations of the printing business segment, the assets of which were sold in January 1996, generated no significant earnings or loss during either fiscal year. Fiscal 1996 consolidated operating profit increased 8.4%, led by gains at Harris Teeter. On June 3, 1996, American & Efird completed the acquisition of certain assets of Threads USA. The assets included the plants and equipment at four manufacturing facilities in Gastonia, N.C. and the equipment at one manufacturing facility in Puerto Rico. HARRIS TEETER, INC. Sales in fiscal 1996 increased 7% over fiscal 1995. Sales for stores in operation in both periods were ahead 3.9% compared to 6.5% in 1995. Sales increases were attributable to customer acceptance of larger, new-format stores, strong feature plans, merchandising and advertising, strong holiday sales and a 4% increase in store square footage during fiscal 1996. Grocery sales were up 6%, which accounted for 43% of the sales increase. Dairy, meat, produce and frozen products had sales increases ranging from 4% to 10% and accounted for 38% of the sales increase. Operating profit showed an improvement of 15% over 1995, derived mainly from higher sales volume, a favorable product mix of higher gross margin items and continued control of ongoing operating expenses. Pre-opening expenses associated with aggressive new store openings and major remodels served to increase operating expenses in the year. Several store prototypes of varying sizes were developed in 1996 in an effort to enable efficient store sizing to specific markets, amenities to customers and standardized, reduced construction costs. At the end of fiscal 1996, 134 stores were in operation, compared to 139 in 1995. During fiscal 1996, seven smaller stores in less urban markets were sold at no significant gain or loss. Nine new larger stores were opened during the year, four of which were replacement stores, and three additional smaller stores were closed. Four of the stores closed in fiscal 1996 were closed under a previously announced marketing strategy and related plan to replace a finite number of smaller, less competitive stores in specified markets with larger stores. A reserve of $5.3 million was established in fiscal 1993 for the direct costs of these future store closings. Charges incurred in fiscal 1996 were $1.5 million and cumulatively, $3.1 million. The closings were substantially completed by 1996 year end, except for the payment of future rents. Management anticipates that the remaining charges to be incurred, primarily closed store rents, will not materially effect the Company's operating results or its financial position. AMERICAN & EFIRD, INC. Sales increased 4% over fiscal 1995. This increase was achieved during a period of poor demand for thread due to weak retail sales of apparel and home furnishings. Gradual improvement in U.S. market conditions was evidenced toward the 1996 fiscal year end. The purchase of the assets of Threads USA in the June quarter, by which A&E became the largest U.S. industrial sewing thread company, contributed $24.8 million to the sales increase although only four months of sales from this acquisition were reflected in fiscal 1996. The sales increase was primarily due to industrial sewing thread sales as consumer thread and notions sales recorded a modest decline for the year. Operating profit of $34.7 million was slightly ahead of 1995. Utilizing sales from the Threads USA acquisition resulted in improved operating schedules, which had a positive impact on operating profit for the year. A&E responded to the weak domestic demand for thread by exercising tight control of inventories and operating costs while improving quality and customer service. Significant progress was achieved towards integrating Threads USA into A&E and reducing costs in the Threads USA facilities. As of the 1996 fiscal year end, A&E was continuing the process of integrating the Threads USA operations into its own. The nature and location of product lines and facilities of the two companies were enabling A&E to combine and streamline manufacturing, reduce duplicative general and administrative expenses and integrate the qualified, skilled workforce of Threads USA. Sales by foreign operations comprised 18% of A&E's total sales and 7% of its operating profit. While not material to the Company's consolidated financial results, foreign sales and operating profits increased over the 1995 fiscal year, with all foreign subsidiaries except Canada and Costa Rica reporting improved earnings. NAFTA had stimulated growth of apparel manufacturing in Central and South America. As a result, A&E subsidiaries in Mexico, Costa Rica and the Dominican Republic displayed growth, and A&E's U.S. production benefited from export growth. Additionally, A&E announced commitments to establish future operations in China and India to enhance its position in Asia. 14 3 OTHER EFFECTS ON RESULTS OF OPERATIONS During the second fiscal 1996 quarter, the Company elected to begin paying directly to its ESOP employee-shareholders the cash dividends on ESOP shares. Favorable tax treatment of the ESOP dividend pass-through under the applicable income tax statutes along with favorable tax attributes of COLI reduced the effective income tax rate of the Company. The favorable tax attributes of COLI, however, were significantly diminished as of January 1, 1996 as a result of federal legislation which will phase out interest deductions on policy loans by January 1, 1999. On January 23, 1996, certain assets of Jordan Graphics, Inc., a subsidiary of the Company, were sold to The Reynolds and Reynolds Company. The revenues of the discontinued operations for the fiscal year prior to the sale were $17.3 million. The operating results for fiscal years 1996 and 1995 were not significant. Substantially all the value of assets of Jordan was realized during fiscal year 1996 by collection or sale. The disposition had no significant impact on the consolidated earnings or the financial condition of the Company. The business forms segment was reported as discontinued operations. In fiscal 1996, Ruddick Investment Company, a subsidiary of the Company, redefined its business, with major emphasis on the development of selected sites for Harris Teeter stores. Venture capital investment holdings continue to be managed but future equity investment will be limited. Due to continued growth of the American & Efird and Harris Teeter businesses, Ruddick Investment's relative size to the consolidated Company had declined. As a result, Ruddick Investment is no longer considered an operating company. Effective with the beginning of fiscal year 1996, and for all comparable periods, the Harris Teeter retail site activities of Ruddick Investment are assigned to the retail business segment for financial reporting; and other activities, to the Parent Company as "other administrative expense." CAPITAL RESOURCES AND LIQUIDITY Ruddick Corporation is a holding company which, through its wholly-owned subsidiaries, American & Efird, Inc. and Harris Teeter, Inc., is engaged in the primary businesses of industrial sewing thread manufacture and distribution, and regional supermarket operations, respectively. Ruddick has no material independent operations, nor material assets, other than the investments in its operating subsidiaries. Ruddick provides a variety of services to its subsidiaries and is dependent upon income and upstream dividends from its subsidiaries. There exist no material restrictions on such dividends, which are determined as a percentage of net income of each subsidiary. The Company strives to achieve a goal of earning a 15% return on beginning shareholders' equity. In fiscal 1997, the return on beginning equity was 13.8%, compared to 13.5% in the prior year. At the same time, the Company seeks to limit long-term debt such that it constitutes no more than 40% of capital employed, which includes long-term debt and shareholders' equity. As of the end of fiscal 1997, this percentage was 33.1%, a slight increase from last year's 32.2%. The Company's principal source of liquidity has been revenue from operations. The Company also has the ability to borrow up to an aggregate of $100 million under established revolving lines of credit with three banks. The maximum amount outstanding under these credit facilities during fiscal 1997 was $100 million, and $33.9 million was outstanding at year end. The majority of the borrowings under Ruddick's revolving credit facilities were used for capital expenditures. Borrowings and repayments under these revolving credit facilities are of the same nature as short-term credit lines; however, due to the nature and terms of the agreements allowing up to five years for repayment, all borrowings under these facilities are classified as long-term debt. On April 15, 1997, the Company executed unsecured 7.72% Senior Notes in the amount of $50 million, due April 15, 2017, and an additional uncommitted $50 million Private Shelf Facility with a major insurance company. Subsequently, on July 15, 1997, the Company executed unsecured 7.55% Senior Notes in the amount of $50 million due July 15, 2017, under the Private Shelf Facility. Proceeds from these notes were used to repay an 8.57% Term Note and reduce the amount borrowed under the revolving lines of credit, which borrowings and term debt had been primarily undertaken for capital expenditures. Under a separate Private Shelf Facility with the same major insurance company dated March 1, 1996, the Company has uncommitted capacity to borrow an additional $50 million. Working capital as of the fiscal years ended 1997, 1996 and 1995 was $88.9 million, $65.1 million and $73.7 million, respectively. The increase of $23.8 million in fiscal 1997 was primarily due to higher inventories and accounts 15 4 receivable related to the expansion of A&E's domestic and international sales and due to higher pre-paid assets at Harris Teeter. The current ratio was 1.4 at September 28, 1997 and 1.3 at September 29, 1996. Covenants in certain of the Company's long-term debt agreements limit the total indebtedness that the Company may incur. The Company remains well within such covenants. Management believes that the limit on indebtedness does not significantly restrict the Company's liquidity and that such liquidity is adequate to meet foreseeable requirements. In fiscal 1997, capital expenditures were $115.3 million. In fiscal 1998, capital expenditures are expected to be not more than $132 million. In order to complete the integration of Threads USA and for further modernization and expansion, American & Efird expects to spend $39 million. In the very competitive southeastern U.S. grocery market, Harris Teeter has capital expenditure plans totaling $93 million. The Harris Teeter estimates include the fiscal 1998 opening of 12 new stores, one of which is a replacement, and three additional stores are expected to be closed. New store locations include three in Virginia, two in Atlanta, Georgia, one in Nashville, Tennessee, five in North Carolina and one in Jacksonville, Florida, a new market for Harris Teeter and its sixth state. The expansion that began in 1997 of Harris Teeter's two distribution centers is expected to be completed in 1998. The total cost of the project is still estimated at $40 to $45 million and Harris Teeter anticipates spending approximately $25 million in fiscal 1998. Management expects that internally generated funds, supplemented by available borrowing capacity, will be adequate to finance such expenditures. OTHER MATTERS The Company has several initiatives underway for the improvement of information systems, including the modification or conversion of Company computer systems to provide for proper functioning beyond calendar year 1999. It is anticipated that substantially all of these Year 2000 costs will be incurred during fiscal 1998 and 1999. The Company expects to complete its Year 2000 cost estimates by mid-1998. Maintenance or modification costs will be expensed as incurred, while the costs of new software will be capitalized and amortized over the software's useful life. Management believes that resources are available to complete the modification and conversion and that its costs will not materially effect the Company's operating results or financial condition. Management believes that the Year 2000 compliance will be completed well before the end of fiscal year 1999. It must be recognized, however, that failure to do so could have a material adverse effect on the Company's future results of operations. During fiscal year 1996, the Company announced to its shareholders the adoption of a Dividend Reinvestment and Stock Purchase Plan available to all shareholders of record. The foregoing discussion contains some forward-looking statements about the Company's financial condition and results of operations, which are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's judgment only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events and circumstances that arise after the date hereof. Factors that might cause the Company's actual results to differ materially from those anticipated in forward-looking statements include the following: - - generally adverse economic and industry conditions, including a decline in consumer demand for apparel products or significant changes in consumer food preferences or eating habits, - - changes in the competitive environment, including increased competition in the Company's primary geographic markets, the entry of new competitors and consolidation in the supermarket industry, - - economic or political changes in the countries in which the Company operates or adverse trade regulations, - - the passage of future tax legislation, if any, that could have an adverse impact on the tax benefits of the ESOP dividends and COLI, - - management's ability to accurately predict the adequacy of the Company's present liquidity to meet future requirements, - - changes in the Company's capital expenditures, new store openings and store closings, and - - non-availability of resources for the Company, or its suppliers and customers, to complete their respective Year 2000 compliance effectively. 16 5 CONSOLIDATED BALANCE SHEETS
September 28 September 29 (Dollars in thousands 1997 1996 - --------------------------------------------------------------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash and Cash Equivalents $ 17,150 $ 21,033 Accounts Receivable, Less Allowance For Doubtful Accounts: 1997 - $2,005; 1996 - $1,398 77,852 70,809 Inventories 196,049 183,649 Other Current Assets 32,249 22,569 Net Assets of Discontinued Operations -- 413 - --------------------------------------------------------------------------------------------------------------------------- Total Current Assets 323,300 298,473 - --------------------------------------------------------------------------------------------------------------------------- PROPERTY Land and Buildings 127,600 109,999 Machinery and Equipment 522,627 462,102 Leasehold Improvements 130,078 113,850 Assets Under Capital Leases 1,920 1,920 - --------------------------------------------------------------------------------------------------------------------------- Total, at Cost 782,225 687,871 Accumulated Depreciation and Amortization 315,666 277,304 - --------------------------------------------------------------------------------------------------------------------------- Property, Net 466,559 410,567 - --------------------------------------------------------------------------------------------------------------------------- INVESTMENTS AND OTHER ASSETS Investments 27,529 29,841 Other Assets 67,855 62,821 - --------------------------------------------------------------------------------------------------------------------------- Total Assets $ 885,243 $ 801,702 =========================================================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Notes Payable $ 8,100 $ 7,118 Current Portion of Long-term Debt 575 5,247 Dividends Payable 3,727 3,252 Accounts Payable 139,085 134,780 Federal and State Income Taxes 5,758 1,945 Accrued Compensation 28,349 34,677 Accrued Interest 21,217 20,530 Other Accrued Liabilities 27,596 25,790 - --------------------------------------------------------------------------------------------------------------------------- Total Current Liabilities 234,407 233,339 - --------------------------------------------------------------------------------------------------------------------------- NON-CURRENT LIABILITIES Long-term Debt 189,919 159,188 Deferred Income Taxes 52,447 43,598 Other Liabilities 23,376 18,721 Minority Interest 4,587 -- - --------------------------------------------------------------------------------------------------------------------------- Commitments and Contingencies - --------------------------------------------------------------------------------------------------------------------------- Shareholders' Equity Common Stock - Shares Outstanding: 1997 - 46,599,301; 1996 - 46,461,290 56,779 55,599 Retained Earnings 326,488 293,654 Cumulative Translation Adjustments (2,760) (2,397) - --------------------------------------------------------------------------------------------------------------------------- Shareholders' Equity 380,507 346,856 - --------------------------------------------------------------------------------------------------------------------------- Total Liabilities and Shareholders' Equity $ 885,243 $ 801,702 ===========================================================================================================================
The accompanying notes to consolidated financial statements are an integral part of these balance sheets. 17 6 Statements of Consolidated Income and Retained Earnings
For the Fiscal Years Ended, ---------------------------------------------------------------- September 28 September 29 October 1 (Dollars in thousands, except per share data) 1997 1996 1995 - --------------------------------------------------------------------------------------------------------------------------- Net Sales $ 2,300,089 $ 2,142,501 $ 2,009,776 - --------------------------------------------------------------------------------------------------------------------------- Cost of Sales 1,667,858 1,561,098 1,483,859 Selling, General and Administrative Expenses 537,395 498,260 449,189 - --------------------------------------------------------------------------------------------------------------------------- Operating Profit 94,836 83,143 76,728 - --------------------------------------------------------------------------------------------------------------------------- Net Interest Expense 14,558 12,155 10,480 Other Administrative Expense, Net 8,976 8,979 6,991 - --------------------------------------------------------------------------------------------------------------------------- Income Before Taxes 71,302 62,009 59,257 Taxes 23,571 19,207 19,990 - --------------------------------------------------------------------------------------------------------------------------- Net Income 47,731 42,802 39,267 Retained Earnings at Beginning of Fiscal Year 293,654 262,921 235,219 Common Dividend: 1997 - $.32 a share; 1996 - $.26 a share; 1995 - $.25 a share 14,897 12,069 11,565 - --------------------------------------------------------------------------------------------------------------------------- Retained Earnings at End of Fiscal Year $ 326,488 $ 293,654 $ 262,921 =========================================================================================================================== Net Income Per Share $ 1.02 $ .92 $ .84 ===========================================================================================================================
The accompanying notes to consolidated financial statements are an integral part of these statements. 18 7 STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Fiscal Years Ended, -------------------------------------------------------- (Dollars in thousands) September 28 September 29 October 1 1997 1996 1995 - -------------------------------------------------------------------------------------------------------------------- CASH FLOW FROM OPERATING ACTIVITIES Net Income $ 47,731 $ 42,802 $ 39,267 Non-cash Items Included in Net Income Depreciation and Amortization 58,723 51,226 44,648 Deferred Taxes 6,133 6,863 (215) Restructuring Charge (1,298) (1,512) (1,480) Other, Net 4,459 (49) 2,526 Decrease (Increase) in Accounts Receivable (7,043) (12,903) (2,634) Decrease (Increase) in Inventories (12,400) (6,254) (2,881) Decrease (Increase) in Other Current Assets (6,965) 11,466 (13,903) Increase (Decrease) in Current Liabilities 5,742 11,874 37,860 - ------------------------------------------------------------------------------------------------------------------- Net Cash Provided by Operating Activities 95,082 103,513 103,188 - ------------------------------------------------------------------------------------------------------------------- Net Cash Provided by Discontinued Activities 413 12,650 2,538 - ------------------------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Capital Expenditures (115,299) (123,280) (98,205) Cash Proceeds from Sale of Property 1,038 4,127 126 COLI, Net (2,883) (9,098) (9,345) Other, Net 5,492 (10,668) 1,985 - ------------------------------------------------------------------------------------------------------------------- Net Cash Used in Investing Activities (111,652) (138,919) (105,439) - ------------------------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES Proceeds from Long-term Borrowings 87,650 44,950 25,777 Payments of Principal on Long-term Debt (61,493) (8,285) (5,408) Dividends Paid (14,897) (12,069) (11,565) Other, Net 1,014 234 (4,663) - ------------------------------------------------------------------------------------------------------------------- Net Cash Provided by Financing Activities 12,274 24,830 4,141 - ------------------------------------------------------------------------------------------------------------------- Increase (Decrease) in Cash and Cash Equivalents (3,883) 2,074 4,428 Cash and Cash Equivalents at Beginning of Year 21,033 18,959 14,531 - ------------------------------------------------------------------------------------------------------------------- Cash and Cash Equivalents at End of Year $ 17,150 $ 21,033 $ 18,959 =================================================================================================================== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION CASH PAID DURING THE YEAR FOR: Interest $ 13,937 $ 11,201 $ 11,357 Income Taxes $ 13,725 $ 11,056 $ 23,959 - -------------------------------------------------------------------------------------------------------------------
The accompanying notes to consolidated financial statements are an integral part of these statements. 19 8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial statements include the accounts of Ruddick Corporation and its wholly owned operating companies, American & Efird, Inc. and Harris Teeter, Inc., and in fiscal 1996 and 1995, Jordan Graphics, Inc. (disposed in 1996), collectively referred to herein as the Company. All material intercompany amounts have been eliminated. To the extent that non-affiliated parties held minority equity investments in joint ventures of the Company, such investments are classified as minority interest. CASH EQUIVALENTS For purposes of the statements of consolidated cash flows, the Company considers all highly liquid cash investments purchased with a maturity of three months or less to be cash equivalents. INVENTORIES Inventories are valued at the lower of cost or market with the cost of substantially all inventories being determined using the last-in, first-out (LIFO) method. The LIFO cost of such inventories was $20,949,000 and $19,047,000 less than the first-in, first-out (FIFO) cost method at September 28, 1997 and September 29, 1996, respectively. PROPERTY AND DEPRECIATION Property is at cost and is depreciated, using principally the straight-line method, over the following useful lives: - ------------------------------------------------------------------------------- Land improvements 10-40 years Buildings 10-50 years Machinery and equipment 3-15 years - ------------------------------------------------------------------------------- Leasehold improvements are depreciated over the lesser of the estimated useful life or the remaining term of the lease. Assets under capital leases are amortized on a straight-line basis over the lesser of 20 years or the lease term. Maintenance and repairs are charged against income when incurred. Expenditures for major renewals, replacements and betterments are added to property. The cost and the related accumulated depreciation of assets retired are eliminated from the accounts; gains or losses on disposal are added to or deducted from income. Property categories include $35,635,000 and $17,963,000 undepreciated construction in progress at September 28, 1997 and September 29, 1996, respectively. INVESTMENTS The Company holds a financial position in certain shopping centers in which Harris Teeter, Inc., is an anchor tenant. Additionally it makes loans to and equity investments in a number of emerging growth companies, as well as selected publicly traded companies. Real estate and financial investments are carried at the lower of cost or market. In management's opinion, the net aggregate carrying value of financial instruments of $8,435,000 and $7,335,000 held for investment approximated their aggregate fair values at September 28, 1997 and September 29, 1996, 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 $18,490,000 in 1997, $18,564,000 in 1996, and $12,845,000 in 1995, is included in other administrative expense in the statements of consolidated income and retained earnings. Acquisition costs allocated to other assets, including favorable lease rights and goodwill, are being amortized over 10-15 years. 20 9 FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts for certain of the Company's financial instruments, including cash and cash equivalents, accounts and notes receivable, accounts payable and other accrued liabilities approximate fair value because of their short maturities. The recorded amount of fixed rate obligations approximates their fair value based on borrowing rates currently available to the Company for loans with similar terms and maturities. ADVERTISING Costs incurred to produce media advertising are expensed in the period in which the advertising first takes place. All other advertising costs are also expensed when incurred. Cooperative advertising income from vendors is recorded in the period in which the related expense is incurred. Net advertising expenses of $15,555,000, $12,839,000, and $13,224,000 were included in the Company's results of operations for fiscal 1997, 1996 and 1995, respectively. INCOME TAXES Ruddick and its subsidiaries file a consolidated federal income tax return. Tax credits are recorded as a reduction of federal income taxes in the years in which they are utilized. Deferred tax liabilities or assets at the end of each period are determined using the tax rate expected to be in effect when taxes are actually paid or recovered. Accordingly, income tax expense will increase or decrease in the same period in which a change in tax rates is enacted. PER SHARE AMOUNTS Primary and fully diluted net income per share amounts were determined based on the weighted average number of shares of common stock and common stock equivalents (non-cumulative, voting $.56 convertible preference stock and stock options) outstanding. The weighted average primary shares outstanding were 46,832,409 in 1997, 46,618,950 in 1996, and 46,536,346 in 1995. Common stock equivalents had no material effect on the per share amounts in 1997, 1996 and 1995. DISCONTINUED OPERATIONS In fiscal 1996, the assets of Jordan Graphics, Inc., the business forms segment, were sold. The revenues of the discontinued operation were $17,293,000 (16 weeks), and $60,991,000, in fiscal 1996 and 1995, respectively. Operating profits were $123,000 and $336,000 for the same respective periods and applicable taxes were $47,000 and $151,000, respectively. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from those estimates. RECLASSIFICATIONS To conform with classifications adopted in the current year, the financial statements and related notes for prior years reflect certain reclassifications, which have no effect on net income. NEW ACCOUNTING STANDARDS LONG-LIVED ASSETS: Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," requires accounting adjustments and disclosures relative to impairments of tangible and intangible long-lived assets. At September 28, 1997, the carrying values of the Company's long-lived assets and intangibles were recoverable in all material respects and no adjustments or disclosures are required. 21 10 STOCK OPTIONS: Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," encourages, but does not require, companies to record compensation cost for stock option plans at fair value of the options. The Company has chosen to continue to account for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25. Accordingly, compensation cost of stock options is measured as the excess, if any, of the market price of the Company's stock at the date of the grant over the option exercise price and is charged to operations over the vesting period. Income tax benefits attributable to stock options exercised are credited to capital stock. EARNINGS PER SHARE: Statement of Financial Accounting Standards No. 128, "Earnings per Share" will be effective for the Company's 1998 fiscal year. This new standard requires dual presentation of basic and diluted net income per share on the face of the statement of consolidated income and requires a reconciliation of the numerators and denominators of the respective calculations. Management believes that basic and diluted net income per share will not differ materially from the current calculations of primary and fully diluted net income per share for the Company. LEASES The Company leases certain equipment under agreements expiring during the next five years. Harris Teeter leases most of its stores under leases that expire during the next 21 years. It is expected that such leases will be renewed by exercising options or replaced by leases of other properties. Most store leases provide for additional rentals based on sales, and certain store facilities are sublet under leases expiring during the next eight years. Rent expenses were as follows:
(In thousands) 1997 1996 1995 - ------------------------------------------------------------------------------- OPERATING LEASES: Minimum $52,327 $43,282 $36,111 Contingent 941 1,175 1,277 - ------------------------------------------------------------------------------- Total $53,268 $44,457 $37,388 - -------------------------------------------------------------------------------
Future minimum lease commitments at September 28, 1997 (excluding leases assigned or expected to be assigned - see below) were as follows:
(In thousands) Capital Leases Operating Leases - -------------------------------------------------------------------------------------------------------- 1998 $ 268 $ 57,398 1999 268 55,752 2000 268 53,709 2001 268 51,151 2002 268 49,602 Later years 209 517,184 - -------------------------------------------------------------------------------------------------------- Total minimum lease payments $ 1,549 $ 784,796 - -------------------------------------------------------------------------------------------------------- Less amount representing interest (Store premises, 6.75%-10.25%, store equipment, 8%-15%) 756 - -------------------------------------------------------------------------------------------------------- Present value of minimum lease obligations 793 Less current portion 113 - -------------------------------------------------------------------------------------------------------- Long-term capital lease obligations $ 680 - -------------------------------------------------------------------------------------------------------- Total minimum sublease rentals to be received under noncancelable subleases $ 2,753 - --------------------------------------------------------------------------------------------------------
22 11 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 12 years and the future minimum lease payments of $11,532,000 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 20 years and the future minimum lease payments related to these locations total $35,665,000 (approximating $3,222,000 per year for each of the next five years). LONG-TERM DEBT Long-term debt at September 28, 1997 and September 29, 1996 was as follows:
(In thousands) 1997 1996 - -------------------------------------------------------------------------------------------------------------------- 6.48% Senior Note due $7,143 annually March, 2005 through 2011 $ 50,000 $ 50,000 7.72% Senior Note due April, 2017 50,000 -- 7.55% Senior Note due July, 2017 50,000 -- Revolving line of credit, variable rate, due February 2002 33,900 48,600 8.57% Term Note - Repaid in 1997 -- 50,167 Industrial revenue bond, variable rate, due November 2000 2,500 2,500 Obligations under capital leases and other 4,094 13,168 - -------------------------------------------------------------------------------------------------------------------- Total 190,494 164,435 - -------------------------------------------------------------------------------------------------------------------- Less current portion 575 5,247 - -------------------------------------------------------------------------------------------------------------------- Total long-term debt $ 189,919 $ 159,188 - --------------------------------------------------------------------------------------------------------------------
Long-term debt maturities, excluding obligations under capital leases, in each of the next five fiscal years are as follows: 1998 - $462,000; 1999 - $484,000; 2000 - $367,000; 2001 - $2,746,000; 2002 - $126,000. Additionally in fiscal 2002, the revolving line of credit with three banks ($33,900,000 as of September 28, 1997) would mature; however, management expects to obtain the one year extension of term upon receipt of the mutual consent of lenders under the "evergreen" provisions of the loan agreement. In fiscal 1996, the Company executed an unsecured $50,000,000 6.48% Senior Promissory Note due March 1, 2011, and a non-committed $50,000,000 Private Shelf Facility with a major insurance company. As of September 28, 1997, no commitments had been initiated under the Private Shelf Facility. In fiscal 1997, the Company executed an unsecured $50,000,000 7.72% Senior Promissory Note due April 15, 2017 and an unsecured $50,000,000 7.55% Senior Promissory Note due July 15, 2017, with the same major insurance company. Proceeds from the Notes were used to repay the 8.57% Term Note and reduce the amount borrowed under the revolving line of credit. During 1997 and 1996, the maximum outstanding borrowing under the revolving line of credit for both years was $100,000,000 and the average for the 364 days outstanding was $70,942,000 and $70,562,000, respectively. The daily weighted average interest rate (a variable rate related to the current published CD rate) was 6.1% (5.9%) and a commitment fee of .15% (.125%) of the unused line was charged during 1997 (1996). Various loan agreements provide, among other things, for maintenance of minimum levels of consolidated shareholders' equity. At September 28, 1997, consolidated tangible net worth exceeded by $73,312,000 the balance which, under the most restrictive provisions, must be maintained through September 27, 1998. The requirement shall increase annually by 40% of consolidated net income for such year. Total interest expense on long-term debt was $14,615,000, $12,748,000, and $10,649,000 in 1997, 1996 and 1995, respectively. 23 12 CAPITAL STOCK The capital stock of the Company authorized at September 28, 1997 was 1,000,000 shares of Additional Preferred, 4,000,000 shares of Preference-noncumulative $.56 convertible, voting ($10 liquidation value), and 75,000,000 shares of Common. Changes in shares issued and outstanding and in shareholders' equity accounts other than retained earnings are summarized as follows:
Common (In thousands except share amounts) Shares Amount - ------------------------------------------------------------------------------------------------------------------- BALANCE AT OCTOBER 2, 1994 46,352,214 $ 57,620 - ------------------------------------------------------------------------------------------------------------------- Shares issued under exercised stock options 704,052 3,639 Shares purchased and retired (682,600) (6,952) Tax effect of disqualifying option stocks -- 471 Other -- 38 - ------------------------------------------------------------------------------------------------------------------- BALANCE AT OCTOBER 1, 1995 46,373,666 $ 54,816 - ------------------------------------------------------------------------------------------------------------------- Shares issued under exercised stock options 94,424 661 Tax effect of disqualifying option stocks -- 117 Other (6,800) 5 - ------------------------------------------------------------------------------------------------------------------- BALANCE AT SEPTEMBER 29, 1996 46,461,290 $ 55,599 - ------------------------------------------------------------------------------------------------------------------- Shares issued under exercised stock options 138,011 1,008 Tax effect of disqualifying option stocks -- 106 Other -- 66 - ------------------------------------------------------------------------------------------------------------------- BALANCE AT SEPTEMBER 28, 1997 46,599,301 $ 56,779 - -------------------------------------------------------------------------------------------------------------------
During fiscal 1995, the Company declared a two-for-one split of the common stock effected in the form of a 100% stock dividend. All common stock and per share data included in the consolidated financial statements and footnotes have been restated to reflect the stock split. One preferred share purchase right is attached to each outstanding share of common stock, which rights expire on November 15, 2000. Each right entitles the holder to purchase one four-hundredth of a share of a new Series A Junior Participating Additional Preferred Stock at $26.25. The rights will become exercisable only under certain circumstances related to a person or group acquiring or offering to acquire a substantial portion of the Company's common stock. If certain additional events then occur, each right would entitle the rightholder to acquire common stock of the Company, or in some cases of an acquiring entity, having a value equal to twice the exercise price. Under certain circumstances the Board of Directors may exchange all or part of the outstanding rights at an exchange ratio per right of one share of common stock, or one four-hundredth of a share of Series A Junior Participating Additional Preferred Stock, or may redeem each right at a price of $.0025. There are 200,000 shares of Series A Junior Participating Additional Preferred Stock reserved for issuance upon exercise of the rights. STOCK OPTIONS At September 28, 1997, the Company has 1982, 1988, 1993 and 1995 incentive stock option plans which authorized options for 4,000,000 shares of common stock. Under the plans, the Company has granted to officers and management personnel stock options which become exercisable in installments of 20% per year at each of the first through fifth anniversaries from 24 13 grant date and which expire seven years from grant date. Additionally under the 1995 plan, the Company grants a single, one-time option of 10,000 shares, generally vested immediately, to each of its outside directors. Under each of the plans the exercise price of each option shall be no less than the market price of the Company's stock on the date of grant and an option's maximum term is ten years. At the discretion of the Company, under certain plans a stock appreciation right may be granted and exercised in lieu of the exercise of the related option (which is then forfeited). Under the plans, as of September 28, 1997, the Company may grant additional options for the purchase of 859,600 shares. A summary of the status of the Company's stock option plans as of September 28, 1997, September 29, 1996 and October 1, 1995, changes during the years ending on those dates and related weighted average exercise price is presented below:
(Shares in thousands) 1997 1996 1995 - --------------------------------------------------------------------------------------------------------------------------- Shares Price Shares Price Shares Price ------------------------------------------------------------------- Outstanding at beginning of year 1,116 $ 10.40 696 $ 9.07 1,364 $ 7.11 Granted 120 13.45 573 11.50 124 9.72 Exercised (181) 9.05 (97) 7.21 (757) 5.59 Forfeited (44) 10.64 (56) 10.81 (35) 10.03 - --------------------------------------------------------------------------------------------------------------------------- Outstanding at end of year 1,011 10.99 1,116 10.40 696 9.07 - --------------------------------------------------------------------------------------------------------------------------- Options exercisable at year-end 422 $ 10.29 368 $ 9.14 404 $ 8.20 - ---------------------------------------------------------------------------------------------------------------------------
The following table summarizes options outstanding and options exercisable as of September 28, 1997, and the related weighted average remaining contractual life (years) and weighted average exercise price (shares in thousands):
Options Outstanding Options Exercisable ------------------------------------------------------------------------------------------- Shares Remaining Shares Option Price per Share Outstanding Life Price Exercisable Price - ----------------------- ------------------------------------------------------------------------------------------- $ 5.23 to $ 8.13 84 0.7 $ 6.99 84 $ 6.99 9.16 to 11.44 743 4.4 10.98 249 10.68 11.94 to 14.38 184 7.0 12.88 89 12.34 - ----------------------- ------------------------------------------------------------------------------------------ $ 5.23 to $ 14.38 1,011 4.6 $ 10.99 422 $ 10.29 - ----------------------- ------------------------------------------------------------------------------------------
The weighted average fair value at date of grant for options granted during fiscal 1997 and 1996 was $3.82 and $2.95 per option, respectively. The fair value of options at date of grant was estimated using the Black-Scholes model with the following weighted average assumptions:
1997 1996 - --------------------------------------------------------------------------------------------------------------------------- Expected life (years) 4.9 5.0 Risk-free interest rate 5.91% 5.74% Volatility 28.65% 26.01% Dividend yield 2.10% 2.40% - ---------------------------------------------------------------------------------------------------------------------------
The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation." Accordingly, no compensation cost has been recognized for the stock options granted in 1997 or 1996. Had compensation cost been determined based on the fair value at the grant date consistent with the provisions of this statement, the Company's pro forma net income and net income per share would have been as follows:
(In thousands, except per share data) 1997 1996 - --------------------------------------------------------------------------------------------------------------------------- Net income - as reported $ 47,731 $42,802 - pro forma 47,381 42,375 Net income per share - as reported $ 1.02 $ .92 - pro forma 1.01 .91
25 14 The pro forma effect on net income for 1997 and 1996 is not representative of the pro forma effect on net income in future years because it does not take into consideration pro forma compensation expense related to grants made prior to fiscal year 1996. INCOME TAXES The provision for income taxes consisted of the following:
(In thousands) 1997 1996 1995 - --------------------------------------------------------------------------------------------------------------------------- CURRENT Federal $ 12,803 $10,556 $ 15,995 State and other 4,687 2,486 3,983 - --------------------------------------------------------------------------------------------------------------------------- 17,490 13,042 19,978 - --------------------------------------------------------------------------------------------------------------------------- DEFERRED Federal 5,034 5,196 (151) State and other 1,047 969 163 - --------------------------------------------------------------------------------------------------------------------------- 6,081 6,165 12 - --------------------------------------------------------------------------------------------------------------------------- Provision for income taxes $ 23,571 $19,207 $ 19,990 - ---------------------------------------------------------------------------------------------------------------------------
Income from foreign operations before income taxes in fiscal 1997, 1996, and 1995 was $4,520,000, $1,390,000, and $560,000, respectively. Income tax expense differed from an amount computed by applying the statutory tax rates to pre-tax income as follows:
(In thousands) 1997 1996 1995 - --------------------------------------------------------------------------------------------------------------------------- Income tax on pre-tax income at the statutory federal rate of 35% $ 24,956 $ 21,703 $ 20,740 Increase (decrease) attributable to: State and other income taxes, net of federal income tax benefit 3,265 1,806 2,841 COLI (3,528) (4,261) (3,646) Other items, net (1,122) (41) 55 - --------------------------------------------------------------------------------------------------------------------------- Income tax expense $ 23,571 $ 19,207 $ 19,990 - ---------------------------------------------------------------------------------------------------------------------------
The tax effects of temporary differences giving rise to the Company's consolidated deferred tax liability at September 28, 1997 and September 29, 1996 are as follows:
(In thousands) 1997 1996 - --------------------------------------------------------------------------------------------------------------------------- DEFERRED TAX ASSETS Employee benefits $ 6,485 $ 6,215 Reserves not currently deductible 6,888 6,426 Other 3,256 1,836 - --------------------------------------------------------------------------------------------------------------------------- Total deferred tax assets $ 16,629 $ 14,477 - --------------------------------------------------------------------------------------------------------------------------- DEFERRED TAX LIABILITIES Property, plant and equipment $ (52,300) $ (46,996) Other capitalized costs (3,747) (3,094) Other (8,410) (6,134) - --------------------------------------------------------------------------------------------------------------------------- Total deferred tax liabilities $ (64,457) $ (56,224) - ---------------------------------------------------------------------------------------------------------------------------
26 15 INDUSTRY SEGMENT INFORMATION The Company operates primarily in two businesses: industrial thread (textile primarily) - American & Efird, and retail grocery (including the real estate and store development activities of the Company) - Harris Teeter. American & Efird manufactures sewing thread for the apparel and other markets. Harris Teeter operates a regional chain of supermarkets. Summarized information for fiscal 1997, 1996 and 1995 is as follows:
Industrial Retail (In millions) Thread Grocery (1) Corporate (2) Consolidated - --------------------------------------------------------------------------------------------------------------------------- 1997 Net Sales $368.9 $1,931.2 $2,300.1 - --------------------------------------------------------------------------------------------------------------------------- Gross Profit 106.8 525.4 632.2 - --------------------------------------------------------------------------------------------------------------------------- Operating Profit 49.1 45.7 94.8 - --------------------------------------------------------------------------------------------------------------------------- Assets Employed at Year End $299.7 $ 521.7 $ 63.8 $ 885.2 Depreciation and Amortization 15.4 42.5 0.8 58.7 Capital Expenditures 28.9 86.2 0.2 115.3 1996 Net Sales $309.5 $1,833.0 $2,142.5 - --------------------------------------------------------------------------------------------------------------------------- Gross Profit 89.0 492.4 581.4 - --------------------------------------------------------------------------------------------------------------------------- Operating Profit 34.7 48.4 83.1 - --------------------------------------------------------------------------------------------------------------------------- Assets Employed at Year End $263.5 $ 476.9 $ 61.3 $ 801.7 Depreciation and Amortization 12.3 37.6 1.3 51.2 Capital Expenditures 35.6(3) 83.2 4.5 123.3 1995 Net Sales $298.0 $1,711.8 $2,009.8 - --------------------------------------------------------------------------------------------------------------------------- Gross Profit 82.9 443.0 525.9 - --------------------------------------------------------------------------------------------------------------------------- Operating Profit 34.6 42.1 76.7 - --------------------------------------------------------------------------------------------------------------------------- Assets Employed at Year End $214.1 $ 437.2 $ 64.0 $ 715.3 Depreciation and Amortization 11.3 31.7 1.6 44.6 Capital Expenditures 16.4 81.4 0.4 98.2 - ---------------------------------------------------------------------------------------------------------------------------
(1) Retail Grocery Assets Employed include $18,714,000, $22,131,000 and $19,080,000 in 1997, 1996 and 1995, respectively, related to store investment activities of the Company for the development of retail sites. (2) Corporate Assets Employed include the net cash surrender value of Company owned life insurance and the net assets of discontinued operations. (3) Includes the purchase of certain assets of Threads USA. COMMITMENTS AND CONTINGENCIES Substantially all domestic full-time employees of the Company and its subsidiaries participate in non-contributory defined benefit pension plans. Employees in foreign subsidiaries participate to varying degrees in local pension plans, which, in the aggregate, are not significant. Employee retirement benefits are a function of both the years of service and compensation for a specified period of time before retirement. The Company's current funding policy is to contribute annually the minimum amount required by regulatory authorities. 27 16 The following table sets forth the defined benefit plans' funded status and amounts recognized in the Company's consolidated balance sheets at September 28, 1997 and September 29, 1996:
(In thousands) 1997 1996 - --------------------------------------------------------------------------------------------------------------------------- Actuarial present value of benefit obligations: Vested benefits $ 82,676 $ 71,585 Nonvested benefits 3,677 2,934 - --------------------------------------------------------------------------------------------------------------------------- Accumulated benefit obligations 86,353 74,519 Effect of projected future compensation levels 23,838 19,612 - --------------------------------------------------------------------------------------------------------------------------- Projected benefit obligations 110,191 94,131 Plans' assets at fair market value 92,611 72,642 - --------------------------------------------------------------------------------------------------------------------------- Projected benefit obligations in excess of plans' assets (17,580) (21,489) Unrecognized net asset at September 30, 1985, net of amortization, being amortized over 15-20 years 1,541 1,935 Unrecognized net loss due to past experience different from assumptions made (14,215) (12,412) - --------------------------------------------------------------------------------------------------------------------------- Unfunded accrued pension cost $ (4,906) $ (11,012) - ---------------------------------------------------------------------------------------------------------------------------
The plans' assets consist primarily of U. S. government securities, corporate bonds, cash equivalents and domestic equities, all managed by two banks. The contribution payable at September 28, 1997 and September 29, 1996, required to be paid by due date of the federal income tax return, was $1,462,000 and $6,986,000, respectively. In 1997 (1996), a 7.5% (8%) weighted average discount rate and 5% (5%) rate of increase in future payroll costs were used in determining the actuarial present value of the projected benefit obligations. The expected long-term rate of return on assets was 8% for both years. Pension expense for defined benefit plans for fiscal 1997, 1996, and 1995 included the following components:
(In thousands) 1997 1996 1995 - --------------------------------------------------------------------------------------------------------------------------- Benefits earned by employees $ 4,464 $ 4,033 $ 3,835 Interest on projected benefit obligations 7,789 7,135 6,608 Actual return on plan assets (11,560) (4,635) (7,134) Net amortization and deferral 5,356 (1,143) 1,873 - --------------------------------------------------------------------------------------------------------------------------- Net pension expense $ 6,049 $ 5,390 $ 5,182 - ---------------------------------------------------------------------------------------------------------------------------
The Company also has an Employee Stock Ownership Plan (ESOP), a profit-sharing plan and certain other plans. Expenses under these plans were as follows:
(In thousands) 1997 1996 1995 - --------------------------------------------------------------------------------------------------------------------------- ESOP $ 8,733 $ 7,866 $ 7,651 - --------------------------------------------------------------------------------------------------------------------------- Profit-sharing 3,098 1,699 1,652 - --------------------------------------------------------------------------------------------------------------------------- Other 2,517 2,266 2,061 - ---------------------------------------------------------------------------------------------------------------------------
The Company is involved in various lawsuits and environmental and patent matters arising in the normal course of business. Management believes that such matters will not have a material effect on the financial condition or results of operations of the Company. See "Leases" for additional commitments and contingencies. 28 17 QUARTERLY INFORMATION (UNAUDITED) The following table sets forth certain financial information, the high and low sales prices and dividends declared for the common stock for the periods indicated. The Company's common stock is listed and traded on the New York Stock Exchange. As of September 28, 1997, there were 1,599 holders of record of common stock.
First Second Third Fourth (In millions, except per share data) Quarter Quarter Quarter Quarter - --------------------------------------------------------------------------------------------------------------------------- 1997 OPERATING RESULTS Net Sales $ 574.1 $ 563.9 $ 579.8 $ 582.3 Net Income 11.6 11.2 13.0 11.9 Net Income Per Share .25 .24 .28 .25 Dividend Per Share .08 .08 .08 .08 Market Price Per Share High 13 7/8 17 3/4 16 3/4 16 5/8 Low 12 3/8 13 1/4 14 14 - --------------------------------------------------------------------------------------------------------------------------- 1996 OPERATING RESULTS Net Sales $ 529.7 $522.3 $532.6 $ 557.9 Net Income 8.1 9.5 13.6 11.6 Net Income Per Share .17 .21 .29 .25 Dividend Per Share .06 .06 .07 .07 Market Price Per Share High 14 1/8 13 1/4 15 1/4 14 Low 9 5/8 10 5/8 12 1/4 11 1/4
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS TO THE BOARD OF DIRECTORS OF RUDDICK CORPORATION: We have audited the accompanying consolidated balance sheets of Ruddick Corporation (a North Carolina corporation) and subsidiaries as of September 28, 1997, and September 29, 1996, and the related statements of consolidated income and retained earnings and consolidated cash flows for each of the three years in the period ended September 28, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Ruddick Corporation and subsidiaries as of September 28, 1997 and September 29, 1996, and the results of their operations and their cash flows for each of three years in the period ended September 28, 1997 in conformity with generally accepted accounting principles. Charlotte, North Carolina /s/ARTHUR ANDERSEN LLP October 22, 1997 29 18 ELEVEN-YEAR FINANCIAL AND OPERATING SUMMARY
1997 1996 1995 1994 ---- ---- ---- ---- Net Sales American & Efird $ 368,877 $ 309,459 $ 297,963 $ 277,016 Harris Teeter 1,931,212 1,833,042 1,711,813 1,578,880 - ---------------------------------------------------------------------------------------------------------------------- Total Net Sales $ 2,300,089 $2,142,501 $2,009,776 $1,855,896 - ---------------------------------------------------------------------------------------------------------------------- Operating Profit American & Efird $ 49,165 $ 34,684 $ 34,614 $ 26,916 Harris Teeter 45,671 48,459 42,114 37,032 - ---------------------------------------------------------------------------------------------------------------------- Total Operating Profit $ 94,836 $ 83,143 $ 76,728 $ 63,948 - ---------------------------------------------------------------------------------------------------------------------- Net Income $ 47,731 $ 42,802 $ 39,267 $ 31,811 Net Income Per Share 1.02 .92 .84 .67 Common Dividend .32 .26 .25 .22 - ---------------------------------------------------------------------------------------------------------------------- Earnings Before Interest, Taxes, Depreciation and Amortization $ 144,583 $ 125,390 $ 114,385 $ 99,166 - ---------------------------------------------------------------------------------------------------------------------- Shareholders' Equity $ 380,507 $ 346,856 $ 316,236 $ 291,209 Percent Return on Beginning Equity 13.8% 13.5% 13.5% 11.6% Book Value Per Share $ 8.17 $ 7.47 $ 6.82 $ 6.28 - ---------------------------------------------------------------------------------------------------------------------- Capital Expenditures American & Efird $ 28,878 $ 35,605(2) $ 16,359 $ 20,416 Harris Teeter 86,237 83,204 81,447 46,349 Corporate 184 4,471 399 35 - ---------------------------------------------------------------------------------------------------------------------- Total Capital Expenditures $ 115,299 $ 123,280 $ 98,205 $ 66,800 - ---------------------------------------------------------------------------------------------------------------------- Working Capital $ 88,893 $ 65,134 $ 73,741 $ 93,387 Total Assets $ 885,243 $ 801,702 $ 715,318 $ 634,599 Long-Term Debt - Including Current Portion $ 190,494 $ 164,435 $ 128,952 $ 109,567 Long-Term Debt as a Percent of Capital Employed 33.4% 32.2% 29.0% 27.3% Number of Employees 19,700 20,100 19,850 18,610 Number of Beneficial Shareholders Including Employee/Owners 19,100 16,700 14,500 14,100 Common Shares Outstanding 46,599,301 46,461,290 46,373,666 46,352,214 - ----------------------------------------------------------------------------------------------------------------------
(1) 53-week year (2) Includes purchase of assets of Threads USA 30 19
1993(1) - --------------------- $ 264,814 1,412,315 - --------------------- $ 1,677,129 - --------------------- $ 30,551 29,845 - --------------------- $ 60,396 - --------------------- $ 33,873 .71 .21 - --------------------- $ 97,490 - --------------------- $ 274,740 13.3% $ 5.87 - --------------------- $ 19,433 33,683 27 - --------------------- $ 53,143 - --------------------- $ 103,191 $ 580,807 $ 104,173 27.5% 17,120 14,600 46,036,146 - ---------------------
31 EX-21 5 LIST OF SUBSIDIARIES OF REGISTRANT 1 EXHIBIT 21 RUDDICK CORPORATION Affiliated Companies as of December 18, 1997 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) American & Efird Services, Inc.(1) A&E Export, Inc.(1) Harris Teeter, Inc. Harris-Teeter Services, Inc.(2) Ruddick of Delaware, Inc. R. S. Dickson & Company Ruddco Management, Inc.(3) ---------- (1) Owned by American & Efird, Inc. (2) Owned by Harris Teeter, Inc. (3) Owned by R. S. Dickson & Company Listed below are the foreign subsidiaries of the 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% American & Efird Canada, Inc. - 100% Hilos A&E de Costa Rica, S.A. - 100% American & Efird International (FE) Limited - 100% American & Efird de Mexico, S.A. de C.V. - 100%(1) American & Efird Mills (S) Pte. Ltd. - 100% American & Efird (Malaysia) SDN BHD - 100% Hengmei Spinning Company, Ltd. - Joint venture, 60% owned Hilos A&E Dominicana, Ltd. - Joint venture, 49% owned Hilos A&E de Honduras, S.A. de C.V. - Joint venture, 45% owned In addition, in the normal course of business, R. S. Dickson & Company from time to time makes investments in corporations and partnerships that may result in ownership of capital stock or other interests as an investment. (1) In order to comply with Mexican law, one share of such entity is owned of record by a person designated by American & Efird, Inc. EX-23 6 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, No. 33-56567, No. 333-19085 and No. 333-22659. It should be noted that we have not audited any financial statements of the Company subsequent to September 28, 1997 or performed any audit procedures subsequent to the date of our report. /s/ ARTHUR ANDERSEN LLP Charlotte, North Carolina, December 18, 1997. EX-27 7 FINANCIAL DATA SCHEDULE
5 YEAR SEP-28-1997 SEP-28-1997 17,150,000 0 79,857,000 2,005,000 196,049,000 323,300,000 782,225,000 315,666,000 885,243,000 234,407,000 189,919,000 0 0 56,779,000 323,728,000 885,243,000 2,300,089,000 2,300,089,000 1,667,858,000 2,205,253,000 8,976,000 0 14,558,000 71,302,000 23,571,000 47,731,000 0 0 0 47,731,000 1.02 1.02
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