Ruddick Corporation (NYSE:RDK) (the “Company”) today reported
that consolidated sales for the fiscal third quarter ended July 3,
2011 increased by 8.1% to $1.19 billion, from $1.10 billion in the
third quarter of fiscal 2010. For the 39 weeks ended July 3, 2011,
consolidated sales increased by 6.7% to $3.43 billion from $3.21
billion for the comparable period of fiscal 2010. The increase in
consolidated sales for the quarter and 39-week period was
attributable to sales increases at both of the Company’s operating
subsidiaries - Harris Teeter, the Company’s supermarket subsidiary,
and American & Efird (“A&E”), the Company’s sewing thread
and technical textiles subsidiary.
The Company reported that consolidated net earnings in the third
quarter of fiscal 2011 increased by 11.2% to $32.1 million, or
$0.66 per diluted share, from $28.9 million, or $0.59 per diluted
share in the prior year third quarter. For the 39 weeks ended July
3, 2011, consolidated net earnings increased by 25.0% to $100.1
million, or $2.05 per diluted share, from $80.1 million, or $1.65
per diluted share in the same period of fiscal 2010. The increase
in net earnings for the fiscal quarter was driven by operating
profit improvements at both Harris Teeter and A&E when compared
to the third quarter of fiscal 2010. The increase in net earnings
for the 39-week period was driven by operating profit improvements
at both operating subsidiaries and a pre-tax gain of $19.5 million
($10.3 million after tax or $0.21 per diluted share) from the sale
of the Company’s interest in a foreign investment that was recorded
in the first quarter of fiscal 2011. As previously disclosed, third
quarter of fiscal 2010 results included a pre-tax gain of $2.1
million ($1.3 million after tax, or $0.03 per diluted share) on the
exchange of one of the Company’s corporate aircraft.
Harris Teeter sales increased by 8.1% to $1.10 billion in the
third quarter of fiscal 2011, compared to sales of $1.02 billion in
the third quarter of fiscal 2010. For the 39 weeks ended July 3,
2011, sales rose 6.4% to $3.18 billion from $2.99 billion in the
same period of fiscal 2010. The increase in sales for both the
quarter and 39-week period was attributable to an increase in
comparable store sales of 4.37% for the quarter and 2.68% for the
39-week period ended July 3, 2011, incremental new store sales and
a one week shift in the fiscal year which resulted in the reporting
of the July Fourth Holiday sales in the third fiscal quarter of
2011 as compared to the fourth quarter of fiscal 2010. For purposes
of computing comparable store sales, the July Fourth Holiday sales
were included in the third fiscal quarters for both fiscal 2011 and
2010, whereas the Easter Holiday sales were included in the third
fiscal quarter of 2011 and the second fiscal quarter of 2010.
Management estimated that the Easter Holiday shift positively
impacted the comparable stores sales calculation by approximately
79 basis points for the quarter ended July 3, 2011.
Since the third quarter of fiscal 2010, Harris Teeter has opened
six new stores (one of which replaced an existing store) and closed
one store, for a net addition of five stores. Harris Teeter
operated 204 stores at the end of the third quarter of fiscal
2011.
Harris Teeter’s operating profit for the third quarter of fiscal
2011 increased by 17.5% to $50.7 million (4.60% of sales) from
$43.1 million (4.23% of sales) in the third quarter of fiscal 2010.
For the 39 weeks ended July 3, 2011, operating profit increased by
10.2% to $146.0 million (4.59% of sales), from $132.5 million
(4.43% of sales) in the prior year period. Operating profit was
impacted by new store pre-opening costs of $1.5 million (0.14% of
sales) and $1.8 million (0.18% of sales) in the third quarters of
fiscal 2011 and fiscal 2010, respectively. Pre-opening costs for
the 39-week periods ended July 3, 2011 and June 27, 2010 were $5.4
million (0.17% of sales) and $6.6 million (0.22% of sales),
respectively. New store pre-opening costs fluctuate between
reporting periods depending on the new store opening schedule and
location.
The increase in Harris Teeter’s operating profit described above
resulted primarily from Harris Teeter’s increased sales and a
continued emphasis on operational efficiencies and cost controls.
The gross profit margin for Harris Teeter decreased year over year
primarily as a result of the LIFO charge. As a percent to sales,
the LIFO charge of $5.9 million (0.54% of sales) for the quarter
and $11.2 million (0.35% of sales) for the 39 week period of fiscal
2011, exceeded the decrease in the gross profit margin between the
respective periods, evidencing Harris Teeter’s ability to pass
along most of the cost inflation created by increased commodity
prices.
Thomas W. Dickson, Chairman of the Board, President and Chief
Executive Officer of Ruddick Corporation commented that, “Despite
an overall environment of slower economic growth, our customers
have responded positively to our promotional activity, as evidenced
by increases during the quarter in the number of units sold, number
of customer visits and average basket size, which resulted in a
4.37% comparable store sales increase. In addition, we continue to
see a number of our customers increase their purchases of
discretionary items such as premium meats and wines, specialty
breads and cheese and fresh produce, including organic items. Our
quarterly results benefited greatly from the operational
efficiencies gained in the past two years that have offset other
rising costs. Given the state of the overall economy, we remain
cautious in our expectations for the remainder of the year.”
A&E sales increased by 8.4% to $86.1 million in the third
quarter of fiscal 2011, from sales of $79.4 million for the third
quarter of fiscal 2010. For the 39 weeks ended July 3, 2011, sales
rose 10.7% to $241.9 million from sales of $218.4 million in the
prior year 39-week period. Foreign sales accounted for 56% of
A&E’s third quarter sales in fiscal 2011, as compared to 55% in
the third quarter of fiscal 2010. For the 39-week periods, foreign
sales accounted for 55% of A&E’s sales in fiscal 2011 and 54%
in fiscal 2010.
A&E’s operating profit for the third quarter of fiscal 2011
increased 35.2% to $7.9 million, from $5.8 million in the third
quarter of fiscal 2010. For the 39 weeks ended July 3, 2011,
A&E’s operating profit increased by 52.8% to $19.7 million,
from $12.9 million for the same period of fiscal 2010. Operating
profit improvements were realized in A&E’s U.S. operations and
the majority of its foreign operations. The increase in sales
contributed to improved operating schedules at most of A&E’s
manufacturing facilities throughout the world.
Mr. Dickson said, “We continue to be encouraged by A&E’s
operating results for fiscal 2011. A&E’s success in expanding
sales and manufacturing capacity in Asia while consolidating
manufacturing capacities and reducing operating and overhead costs
in the U.S. and Europe resulted in significant improvements in
operating profit during the current year. However, we remain
cautious for the remainder of this year due to the slower growth in
the economy that may lead to less spending by the consumer on
retail apparel. During the first three quarters of fiscal 2011,
A&E’s consolidated Asian operations reported sales increases of
17% over the prior year, while our unconsolidated subsidiaries
reported sales increases of 19% during this same period. In
addition, over 65% of the finished goods produced were manufactured
at A&E’s Asian facilities, including its joint ventures, during
the first three quarters of fiscal 2011. A&E will continue to
expand its manufacturing capacity in Asia to support its growth in
sales and market share in this vibrant market. We will also
continue to enhance our other international operations and evaluate
A&E's structure to best position A&E to take advantage of
opportunities available through these operations.”
Consolidated capital expenditures for the Company during the
first three quarters of fiscal 2011 totaled $102.5 million and
depreciation and amortization totaled $105.1 million. Total capital
expenditures during the 39 weeks ended July 3, 2011 were comprised
of $98.6 million for Harris Teeter and $3.9 million for A&E.
During the first three quarters of fiscal 2011, Harris Teeter
received $22.6 million of cash in connection with the sale of its
ownership position in five investment properties along with one
owned property. In addition, Harris Teeter invested an additional
$18.8 million and received an additional $11.3 million in
connection with the development of certain of its new stores.
Harris Teeter’s operating performance and the Company’s strong
financial position provides the flexibility to continue with Harris
Teeter’s store development program for new and replacement stores
along with the remodeling and expansion of existing stores. Harris
Teeter plans to open one new store and complete the major
remodeling on four stores during the fourth quarter of fiscal 2011.
The new store development program for fiscal 2011 is expected to
include a total of seven new stores and result in a 3.4% increase
in retail square footage, as compared to a 6.4% increase in fiscal
2010. The decrease in the square footage growth between fiscal 2010
and fiscal 2011 reflects the Company’s efforts, as previously
initiated and disclosed, to delay new store openings during these
challenging economic times. Management will continue to evaluate
Harris Teeter’s new store program and may adjust its strategic plan
accordingly. In addition, Harris Teeter routinely evaluates its
existing store operations in regards to its overall business
strategy and from time to time will close or divest underperforming
stores.
Consolidated capital expenditures for the Company are planned to
total approximately $173 million for fiscal 2011 (consisting of
$165 million for Harris Teeter and $8 million for A&E) and $228
million for fiscal 2012 (consisting of $215 million for Harris
Teeter and $13 million for A&E). During fiscal 2012, Harris
Teeter plans to open seven new stores (one of which will replace an
existing store) and complete major remodels on thirteen stores (six
of which will be expanded in size). The fiscal 2012 new store
openings are currently scheduled for three in the first quarter,
none in the second quarter, two in the third quarter and two in the
fourth quarter. The anticipated increase in Harris Teeter’s capital
expenditures from fiscal 2011 to fiscal 2012 is caused by increased
remodel costs in fiscal 2012 for additional expansions and a plan
that calls for fiscal 2013 new stores to open earlier in the fiscal
year.
Harris Teeter’s capital expenditure plans include the continued
expansion of its existing markets, including the Washington, D.C.
metro market area which incorporates northern Virginia, the
District of Columbia, southern Maryland and coastal Delaware. Real
estate development by its nature is both unpredictable and subject
to external factors including weather, construction schedules and
costs. Any change in the amount and timing of new store development
can impact the expected capital expenditures, sales and operating
results.
Future capital expenditures are expected to be financed by
internally generated funds, liquid assets or borrowings under the
Company’s revolving line of credit. Management believes that the
Company’s revolving line of credit provides sufficient liquidity
for what management expects the Company will require through the
expiration of the line of credit in December 2012.
The Company’s management remains cautious in its expectations
for the remainder of fiscal 2011 due to the current economic
environment and its impact on the Company’s customers. Harris
Teeter will continue to refine its merchandising strategies to
respond to the changing shopping demands and to maintain or
increase its customer base. The retail grocery market remains
intensely competitive and there is no assurance that the
improvements in the textile and apparel industries will continue.
Any operating improvement will be dependent on the Company’s
ability to increase Harris Teeter’s market share, to continue the
improvement in A&E’s sales and resulting operating schedules,
and to effectively execute the Company’s strategic expansion
plans.
This news release may contain forward-looking statements that
involve uncertainties. A discussion of various important factors
that could cause results to differ materially from those expressed
in such forward-looking statements is shown in reports filed by the
Company with the Securities and Exchange Commission and include:
generally adverse economic and industry conditions; changes in the
competitive environment; economic or political changes in countries
where the Company operates; changes in federal, state or local
regulations affecting the Company; the passage of future tax
legislation, or any negative regulatory or judicial position which
prevails; management's ability to predict the adequacy of the
Company's liquidity to meet future requirements; volatility of
financial and credit markets which would affect access to capital
for the Company; changes in the Company's expansion plans and their
effect on store openings, closings and other investments; the
ability to predict the required contributions to the Company's
pension and other retirement plans; the Company’s requirement to
impair recorded goodwill or long-lived assets; the cost and
availability of energy and raw materials; the Company’s ability to
pass along product cost increases through increased sales prices;
the continued solvency of third parties on leases that the Company
guarantees; the Company’s ability to recruit, train and retain
effective employees; changes in labor and employer benefits costs,
such as increased health care and other insurance costs; the
Company’s ability to successfully integrate the operations of
acquired businesses; the extent and speed of successfully executing
strategic initiatives; and, unexpected outcomes of any legal
proceedings arising in the normal course of business. Other factors
not identified above could cause actual results to differ
materially from those included, contemplated or implied by the
forward-looking statements made in this news release.
Ruddick Corporation is a holding company with two primary
operating subsidiaries: Harris Teeter, Inc., a leading regional
supermarket chain with operations in eight states primarily in the
southeastern and mid-Atlantic United States, and the District of
Columbia; and American & Efird, Inc., one of the world’s
largest global manufacturers and distributors of industrial sewing
thread, embroidery thread and technical textiles.
Selected information regarding Ruddick Corporation and its
subsidiaries is attached. For more information on Ruddick
Corporation, visit our web site at: www.ruddickcorp.com.
Ruddick Corporation Consolidated Condensed Statements of
Operations (in thousands, except per share data) (unaudited)
13 Weeks Ended 39 Weeks Ended July 3,
June 27, July 3, June 27, 2011 2010
2011 2010
Net Sales: Harris
Teeter $ 1,101,650 $ 1,019,138 $ 3,184,077 $ 2,992,104 American
& Efird 86,077 79,434
241,894 218,418 Total 1,187,727
1,098,572 3,425,971 3,210,522
Cost of Sales: Harris Teeter 775,592 714,581
2,234,520 2,093,454 American & Efird 63,844
60,258 181,647 166,548
Total 839,436 774,839 2,416,167
2,260,002
Gross Profit: Harris
Teeter 326,058 304,557 949,557 898,650 American & Efird
22,233 19,176 60,247
51,870 Total 348,291 323,733
1,009,804 950,520
Selling,
General and Administrative Expenses: Harris Teeter 275,400
261,439 803,530 766,132 American & Efird 14,357 13,351 40,519
38,955 Corporate 1,985 (795 ) 7,070
3,436 Total 291,742
273,995 851,119 808,523
Operating Profit (Loss): Harris Teeter 50,658 43,118 146,027
132,518 American & Efird 7,876 5,825 19,728 12,915 Corporate
(1,985 ) 795 (7,070 ) (3,436 )
Total 56,549 49,738 158,685
141,997
Other Expense (Income):
Interest expense 4,945 5,016 14,677 15,030 Interest income (85 )
(19 ) (200 ) (158 ) Net investment loss (gain) -
(309 ) (19,392 ) (310 ) Total 4,860
4,688 (4,915 ) 14,562
Earnings Before Taxes 51,689 45,050 163,600 127,435
Income Tax Expense 19,379 15,857
62,808 46,588
Net Earnings
32,310 29,193 100,792 80,847
Less: Net Earnings Attributable to
the Noncontrolling Interest 212 323
655 767
Net Earnings
Attributable to Ruddick Corporation $ 32,098 $ 28,870
$ 100,137 $ 80,080
Earnings Per
Share Attributable to Ruddick Corporation: Basic $ 0.66
$ 0.60 $ 2.07 $ 1.66 Diluted $ 0.66 $ 0.59 $ 2.05 $ 1.65
Weighted Average Number of Shares of Common Stock
Outstanding: Basic 48,489 48,252 48,460 48,180 Diluted 48,874
48,628 48,830 48,558
Dividends Declared Per Common
Share $ 0.13 $ 0.12 $ 0.39 $ 0.36
Effective Income
Tax Rate 37.5 % 35.2 % 38.4 % 36.6 %
Ruddick Corporation
Consolidated Condensed Balance Sheets (in thousands)
(unaudited) July 3, October 3, June 27,
2011 2010 2010
Assets
Current Assets: Cash and Cash Equivalents $ 124,208 $ 73,612 $
31,062 Accounts Receivable, Net 112,979 99,407 100,098 Refundable
Income Taxes 9,287 16,767 9,906 Inventories 327,029 320,506 315,604
Deferred Income Taxes 1,509 2,236 3,038 Prepaid Expenses and Other
Current Assets 32,348 32,443
27,400 Total Current Assets 607,360 544,971 487,108
Property, Net 1,069,334 1,067,807 1,046,683 Investments 179,424
174,733 165,600 Deferred Income Taxes 992 977 10,503 Goodwill 515
515 515 Intangible Assets 20,041 21,434 21,948 Other Long-Term
Assets 85,015 79,449 88,700
Total Assets $ 1,962,681 $ 1,889,886
$ 1,821,057
Liabilities and
Equity
Current Liabilities: Notes Payable $ 7,021 $ 6,785 $ 6,012 Current
Portion of Long-Term Debt and Capital Lease Obligations 4,664
12,035 10,624 Accounts Payable 251,484 228,748 212,302 Dividends
Payable - - 5,862 Deferred Income Taxes 17 159 85 Accrued
Compensation 59,792 64,102 53,120 Other Current Liabilities
87,141 90,218 85,506 Total
Current Liabilities 410,119 402,047 373,511 Long-Term Debt
and Capital Lease Obligations 285,648 296,131 304,014 Deferred
Income Taxes 19,321 1,721 548 Pension Liabilities 146,441 185,445
156,507 Other Long-Term Liabilities 116,503 105,619 102,819
Equity: Common Stock 102,017 98,285 95,584 Retained Earnings
999,815 918,843 892,750 Accumulated Other Comprehensive Loss
(123,177 ) (124,679 ) (110,765 ) Total Equity of
Ruddick Corporation 978,655 892,449 877,569 Noncontrolling Interest
5,994 6,474 6,089 Total
Equity 984,649 898,923 883,658
Total
Liabilities and Equity $ 1,962,681 $ 1,889,886 $
1,821,057
Ruddick Corporation Consolidated
Condensed Statements of Cash Flows (in thousands) (unaudited)
39 Weeks Ended July 3, June 27, 2011
2010
Cash Flow From Operating Activities: Net
Earnings $ 100,137 $ 80,080 Non-Cash Items Included in Net Income
Depreciation and Amortization 105,066 100,357 Deferred Income Taxes
16,631 23,584 Net Gain on Sale of Property and Investments (20,023
) (3,452 ) Share-Based Compensation 6,014 4,419 Other, Net (6,682 )
(4,097 ) Changes in Operating Accounts Providing (Utilizing) Cash:
Accounts Receivable (13,697 ) (20,650 ) Inventories (7,164 ) (6,575
) Prepaid Expenses and Other Current Assets (831 ) 784 Accounts
Payable 23,031 (16,085 ) Other Current Liabilities 2,236 (11,964 )
Other Long-Term Operating Accounts (39,019 ) (12,008 ) Dividends
Received 1,431 100
Net Cash Provided
by Operating Activities 167,130 134,493
Investing Activities: Capital Expenditures
(102,531 ) (72,398 ) Purchase of Other Investments (18,834 )
(10,153 ) Proceeds from Sale of Property and Investments 58,277
7,508 Return of Partnership Investments - 3,364 Investments in
COLI, Net of Proceeds from Death Benefits (1,073 ) (246 ) Other,
Net (1,721 ) (2,316 )
Net Cash Used in Investing
Activities
(65,882 ) (74,241 )
Financing
Activities: Net Proceeds from Short-Term Debt Borrowings 603
501 Net Payments on Revolver Borrowings - (42,600 ) Proceeds from
Long-Term Debt Borrowings - 1,037 Payments on Long-Term Debt and
Capital Lease Obligations (30,066 ) (9,292 ) Dividends Paid (19,165
) (17,529 ) Proceeds from Stock Issued 559 3,230 Share-Based
Compensation Tax Benefits 1,085 1,068 Shares Effectively Purchased
and Retired for Withholding Taxes (2,485 ) (1,375 ) Purchase and
Retirement of Common Stock - (1,491 ) Other, Net (1,238 )
(64 )
Net Cash Used in Financing Activities
(50,707 ) (66,515 )
Increase (Decrease) in Cash
and Cash Equivalents 50,541 (6,263 )
Effect of Foreign
Currency Fluctuations on Cash 55 15
Cash and Cash
Equivalents at Beginning of Period 73,612
37,310
Cash and Cash Equivalents at End of
Period $ 124,208 $ 31,062
Supplemental
Disclosures of Cash Flow Information: Cash Paid During the
Period for: Interest $ 14,701 $ 14,309 Income Taxes 33,802 25,219
Non-Cash Activity: Assets Acquired Under Capital Leases 12,144 -
Note Received in Connection with Sale of Investments 2,855 -
Ruddick Corporation Other Statistics July 3, 2011
(dollars in millions) Consolidated
Harris American Ruddick Teeter & Efird Corporate
Corporation Depreciation and Amortization: 3rd Fiscal
Quarter $ 32.0 $ 3.2 $ 0.3 $ 35.5 Fiscal Year to Date 95.1 9.1 0.9
105.1 Capital Expenditures: 3rd Fiscal Quarter $ 27.0 $ 1.4
$ - $ 28.4 Fiscal Year to Date 98.6 3.9 - 102.5 Purchase of
Other Investment Assets: 3rd Fiscal Quarter $ 4.4 $ - $ - $ 4.4
Fiscal Year to Date 18.8 - - 18.8 Harris
Teeter Store Count: Quarter Year to Date Beginning number of
stores 202 199 Opened during the period 2 6 Closed during the
period - (1 ) Stores in operation at end of
period 204 204 Quarter
Year to Date Harris Teeter Comparable Store Sales 4.37 %
2.68 %
Definition of Comparable Store
Sales:
Comparable store sales are computed using corresponding calendar
weeks to account for the occasional extra week included in a fiscal
year. A new store must be in operation for 14 months before it
enters into the calculation of comparable store sales. A closed
store is removed from the calculation in the month in which its
closure is announced. A new store opening within an approximate
two-mile radius of an existing store that is to be closed upon the
new store opening is included as a replacement store in the
comparable store sales measure as if it were the same store. Sales
increases resulting from existing comparable stores that are
expanded in size are included in the calculations of comparable
store sales, if the store remains open during the construction
period.
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