Ruddick Corporation (NYSE: RDK) (the “Company”) today reported
results for the 52 weeks ended October 2, 2011. As previously
disclosed, the Company reported on October 27, 2011 that it entered
into a definitive agreement with two newly formed affiliates of KPS
Capital Partners, LP (“KPS”) to sell all of its ownership interest
in its wholly-owned subsidiary, American & Efird, Inc.
(“A&E). As such, the results related to A&E are reported as
discontinued operations and A&E’s assets have been reclassified
as assets held for sale.
Sales for the 52 weeks of fiscal 2011 increased by 4.5% to $4.29
billion from $4.10 billion in the 53 weeks of fiscal 2010. Sales
for the 13-week fiscal fourth quarter ended October 2, 2011
decreased slightly to $1.10 billion from $1.11 billion in the
14-week fourth quarter of fiscal 2010. On a comparable week basis
(reducing fiscal 2010 sales for the first week of the annual or
quarterly period), sales increased by 6.40% for the year and 7.77%
for the quarter over the respective periods. The increase in sales
was attributable to new store activity and comparable store sales
increases. Comparable store sales increased by 3.27% for the year
and 5.00% for the fourth quarter of fiscal 2011.
During fiscal 2011, Harris Teeter opened seven new stores (one
of which replaced an existing store) and closed two stores, for a
net addition of five stores. Harris Teeter operated 204 stores at
the end of fiscal 2011. Retail square footage increased by 3.2% in
fiscal 2011, as compared to an increase of 6.4% in fiscal 2010.
The Company reported fiscal 2011 consolidated net income of
$91.2 million, comprised of earnings from continuing operations of
$111.5 million, earnings from discontinued operations of $16.2
million and impairment charges of $36.5 million (net of tax
benefits of $12.3 million). For the fiscal fourth quarter ended
October 2, 2011, the Company reported a net loss of $8.9 million,
comprised of earnings from continuing operations of $24.6 million,
earnings on discontinued operations of $3.0 million and net
impairment charges of $36.5 million. Fiscal 2011 earnings from
continuing operations amounted to $111.5 million, or $2.28 per
diluted share, as compared to $98.4 million, or $2.02 per diluted
share in fiscal 2010. Earnings from continuing operations for the
13-weeks ended October 2, 2011 amounted to $24.6 million, or $0.50
per diluted share, as compared to $27.6 million, or $0.57 per
diluted share, for the 14-week period ended October 3, 2010.
Earnings from continuing operations for fiscal 2011 included 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.
Earnings from continuing operations for fiscal 2010 included
pre-tax gains totaling $3.9 million ($2.4 million after tax, or
$0.05 per diluted share) recorded in connection with the exchange
of the Company’s corporate aircraft, of which $1.8 million ($1.1
million after tax, or $0.02 per diluted share) was realized in the
fourth quarter of fiscal 2010.
Operating profit for fiscal 2011 increased to $180.7 million
from $176.9 million in fiscal 2010, while operating profit for the
13-week period ended October 3, 2011 declined to $43.1 million from
$49.0 million in the prior year period. The decline in operating
profit for the fourth quarter of fiscal 2011 was primarily driven
by the extra week of operations included in fiscal 2010 and the
pre-tax gains recorded in fiscal 2010 as discussed above.
Operating profit at Harris Teeter for fiscal 2011 increased 5.2%
to $191.1 million (4.46% of sales) from $181.6 million (4.43% of
sales) in fiscal 2010. Operating profit for the 13 weeks ended
October 2, 2011 decreased to $45.0 million (4.09% of sales) from
$49.1 million (4.43% of sales) for the 14 weeks ended October 3,
2010. The decline in operating profit for the quarter was mostly
attributable to the fourteen-week quarter last year versus the
normal thirteen-week quarter in fiscal 2011. Our goal for the
quarter and the year was to drive units and transactions.
Therefore, we invested in additional promotional activities which
included two promotional coupon events that were well received by
our customers and were redeemed at higher than historical trends.
The cost of these programs were mitigated by a higher level of
sales and greater vendor participation but resulted in a decline in
gross margin of 59 basis points for the quarter and 30 basis points
for the year. The LIFO adjustment in fiscal 2011 amounted to $11.1
million (0.26% of sales), as compared to a credit of $1.6 million
(0.04% of sales) in fiscal 2010. The LIFO adjustment for the 13
weeks ended October 2, 2011 amounted to a credit of $0.2 million
(0.02% of sales), as compared to a credit of $1.6 million (0.14% of
sales) for the 14 weeks ended October 3, 2010.
Operating profit at Harris Teeter for both the fourth quarter
and fiscal year of 2011 benefited from reductions in Selling,
General and Administrative Expenses as a percentage of sales of 25
basis points and 34 basis points, respectively. Harris Teeter has
successfully mitigated the impact of pressures on gross profit
margins through continued emphasis on cost controls.
Operating profit was impacted by new store pre-opening costs of
$7.0 million (0.16% of sales) and $8.4 million (0.20% of sales) in
fiscal 2011 and 2010, respectively. Pre-opening costs for the
fiscal fourth quarter of 2011 and 2010 were $1.7 million (0.15% of
sales) and $1.8 million (0.16% of sales), respectively. New store
pre-opening costs fluctuate between reporting periods depending on
the new store opening schedule and market location.
Thomas W. Dickson, Chairman of the Board, President and Chief
Executive Officer of Ruddick Corporation stated, “We are very
pleased with our results for the quarter and the year. When viewed
on a comparable week basis, we experienced positive comparable
store sales as well as an increase in transactions, basket size and
households in the quarter and for the year. We believe these
positive results are the product of our continuing investment in
price and promotion while, at the same time, offering outstanding
customer service, thereby delivering superior value to our
customers. We are also pleased that our customers recognize the
value and quality of our store brands resulting in a higher growth
rate in sales for these items than our growth rate in total sales
for the quarter.
We are also pleased to have reached an agreement with KPS
regarding their acquisition of A&E. This transaction allows the
management team and their associates at A&E to continue to
pursue their strategic plan of transforming A&E into a more
Asian-centric enterprise, which has been years in the making. As
A&E’s business has grown substantially in Asia it has become
less of a domestic company and more of a complex international
manufacturing company and its strategic fit with Harris Teeter has
become less evident to our shareholders. This transaction enhances
the strategic plan for Ruddick and Harris Teeter as the cash
proceeds from the sale can be utilized for numerous purposes,
including the acceleration of new store growth and the repayment of
debt.”
Capital expenditures during fiscal 2011 totaled $153.9 million
and depreciation and amortization totaled $140.7 million. Harris
Teeter accounted for $147.9 million of the total fiscal 2011
capital expenditures. During 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 $19.4
million and received an additional $19.8 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. Capital
expenditures for fiscal 2012 are planned to total approximately
$215 million. During fiscal 2012, Harris Teeter plans to open seven
new stores (one of which will replace an existing store) and
complete major remodels on twelve stores (six of which will be
expanded in size). The fiscal 2012 new store openings are currently
scheduled for three in the first quarter, three in the third
quarter and one in the fourth quarter. The anticipated increase in
Harris Teeter’s capital expenditures from fiscal 2011 to fiscal
2012 is caused by increased remodeling costs in fiscal 2012 for
additional expansions and a plan that calls for fiscal 2013 new
stores to open earlier in the fiscal year. The new store
development program for fiscal 2012 is expected to result in a 3.7%
increase in retail square footage, as compared to a 3.2% increase
in fiscal 2011. The Company routinely evaluates its existing store
operations in regards to its overall business strategy and from
time to time will close or divest underperforming stores.
Harris Teeter’s capital expenditure plans entail 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
would impact the expected capital expenditures, sales and operating
results.
In connection with the sale of A&E, the Company expects to
incur additional expenses, primarily related to the settlement of
the pension liability and other employee benefit plans that will be
determined at closing and are expected to be recorded in the first
quarter of fiscal 2012. The amount of these losses will include
adjustments for the recognition of a pro-rata share of the pension
plan’s accumulated unrecognized net actuarial losses currently
included in Accumulated Other Comprehensive Income and the impact
from allocating existing plan assets under pension regulations.
These non-cash charges are currently estimated to be approximately
$66 million before tax and $40 million after tax, or $0.81 per
diluted share. Additionally, adjustments for changes in the plan’s
funded status from the Company’s fiscal year end until closing will
be made and cannot presently be estimated.
The Company’s management remains cautious in its expectations
for fiscal 2012 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. The retail grocery market remains intensely
competitive. Any operating improvement will be dependent on the
Company’s ability to increase Harris Teeter’s market share 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; 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 long-lived assets; the
cost and availability of energy and raw materials; 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 successful execution of
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 (as previously
announced, the Company has agreed to sell A&E).
Selected information regarding Ruddick Corporation and its
subsidiaries follows. For more information on Ruddick Corporation,
visit our web site at: www.ruddickcorp.com.
Ruddick Corporation Consolidated Condensed
Statements of Earnings (in thousands, except per share data)
(unaudited) 13 Weeks 14 Weeks 52 Weeks
53 Weeks October 2, October 3, October 2, October 3, 2011 2010 2011
2010
Sales $ 1,101,488 $ 1,107,249 $ 4,285,565 $
4,099,353
Cost of Sales 780,997 778,453
3,015,517 2,871,907
Gross
Profit 320,491 328,796
1,270,048 1,227,446
Selling, General
and Administrative Expenses: Harris Teeter 275,448 279,728
1,078,978 1,045,860 Corporate 1,991 81
10,364 4,730 Total 277,439
279,809 1,089,342
1,050,590
Operating Profit 43,052
48,987 180,706 176,856
Other Expense (Income): Interest expense 4,754
5,004 19,116 19,708 Interest income (47 ) (71 ) (133 ) (187 ) Net
investment gain - - (19,392 )
(310 ) Total 4,707 4,933
(409 ) 19,211
Earnings From Continuing
Operations Before Taxes 38,345 44,054 181,115 157,645
Income
Tax Expense 13,716 16,467
69,633 59,287
Earnings from Continuing
Operations 24,629 27,587
111,482 98,358
Earnings from
Discontinued Operations 5,903 6,616 26,078 19,693
Income Tax
Expense 2,949 2,242 9,840 6,010
Impairment Charges, Net of
$12,277 of Tax Benefits (36,473 ) -
(36,473 ) -
Earnings (Loss) from Discontinued
Operations (33,519 ) 4,374 (20,235
) 13,683
Net Earnings (Loss) $ (8,890 )
$ 31,961 $ 91,247 $ 112,041
Net
Earnings (Loss) Per Share - Basic: Continuing Operations $ 0.51
$ 0.57 $ 2.30 $ 2.04 Discontinued Operations $ (0.69 ) $ 0.09 $
(0.42 ) $ 0.28
Net Earnings (Loss) Per Share -
Diluted: Continuing Operations $ 0.50 $ 0.57 $ 2.28 $ 2.02
Discontinued Operations $ (0.69 ) $ 0.09 $ (0.41 ) $ 0.28
Weighted Average Number of Shares of Common Stock
Outstanding: Basic 48,496 48,314 48,469 48,215 Diluted 48,916
48,703 48,852 48,600
Dividends Declared Per Common
Share $ 0.13 $ 0.12 $ 0.52 $ 0.48
Ruddick
Corporation Consolidated Condensed Balance
Sheets (in thousands) (unaudited) October 2, October 3,
2011 2010
Assets
Current Assets: Cash and Cash Equivalents $ 164,479 $ 60,107
Accounts Receivable, Net 47,088 47,873 Refundable Income Taxes
15,055 14,421 Inventories 287,137 272,025 Deferred Income Taxes
1,321 2,395 Prepaid Expenses and Other Current Assets 24,576 28,215
Current Assets Held For Sale 119,762 121,238
Total Current Assets 659,418 546,274 Property, Net
1,019,468 997,556 Investments 112,557 116,615 Intangible Assets
13,608 13,945 Other Long-Term Assets 79,118 72,466 Long-Term Assets
Held For Sale 98,749 142,383
Total Assets $
1,982,918 $ 1,889,239
Liabilities and
Equity
Current Liabilities: Current Portion of Long-Term Debt and Capital
Lease Obligations $ 3,902 $ 10,776 Accounts Payable 252,859 210,875
Accrued Compensation 63,236 56,750 Other Current Liabilities 87,805
83,652 Current Liabilities Held For Sale 36,021
39,836 Total Current Liabilities 443,823 401,889
Long-Term Debt and Capital Lease Obligations 283,428 295,321
Deferred Income Taxes 19,674 3,580 Pension Liabilities 113,617
160,147 Other Long-Term Liabilities 113,249 103,663 Long-Term
Liabilities Held For Sale 20,804 13,746 Equity: Common Stock
104,211 98,285 Retained Earnings 984,535 918,843 Accumulated Other
Comprehensive Loss (100,423 ) (106,235 ) Total Equity
988,323 910,893
Total Liabilities and Equity $
1,982,918 $ 1,889,239 RUDDICK
CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in
thousands) (unaudited) 52 Weeks 53 Weeks October 2, October 3, 2011
2010 CASH FLOW FROM OPERATING ACTIVITIES Net Income $ 91,247 $
112,041 Non-Cash Items Included in Net Income Depreciation and
Amortization 140,717 135,338 Deferred Income Taxes 18,939 44,971
Net Gain on Sale of Property (20,712 ) (5,802 ) Impairment Losses
36,473 - Share-Based Compensation 8,072 6,104 Other, Net (7,219 )
(5,912 ) Changes in Operating Accounts Providing (Utilizing) Cash
Accounts Receivable (852 ) (19,015 ) Inventories (19,971 ) (10,194
) Prepaid Expenses and Other Current Assets 6,311 (1,408 ) Accounts
Payable 37,688 (456 ) Other Current Liabilities 19,219 (6,222 )
Other Long-Term Operating Accounts (39,097 ) (7,301 ) Dividends
Received 1,431 1,553 NET CASH PROVIDED
BY OPERATING ACTIVITIES 272,246 243,697
INVESTING ACTIVITIES Capital Expenditures (153,916 )
(132,130 ) Purchase of Other Investments (19,435 ) (21,298 )
Proceeds from Sale of Property 67,760 25,580 Return of Partnership
Investments - 3,364 Investments in COLI, net of Proceeds from Death
Benefits (1,073 ) 158 Other, Net (2,306 ) (488 ) NET
CASH USED IN INVESTING ACTIVITIES (108,970 ) (124,814
) FINANCING ACTIVITIES Net Proceeds from (Payments on)
Short-Term Debt Borrowings (2,427 ) 941 Net (Payments on) Proceeds
from Revolver Borrowings - (52,900 ) Proceeds from Long-Term Debt
Borrowings - 5,319 Payments on Long-Term Debt and Capital Lease
Obligations (32,195 ) (9,450 ) Dividends Paid (25,554 ) (29,259 )
Proceeds from Stock Issued 622 3,954 Share-Based Compensation Tax
Benefits 1,156 1,366 Shares Effectively Purchased and Retired for
Withholding Taxes (2,485 ) (1,375 ) Purchase and Retirement of
Common Stock - (1,491 ) Other, Net (1,096 ) 53
NET CASH USED IN FINANCING ACTIVITIES (61,979 )
(82,842 ) INCREASE IN CASH AND CASH EQUIVALENTS 101,297
36,041 EFFECT OF FOREIGN CURRENCY FLUCTUATIONS ON CASH (107 ) 261
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 73,612 37,310
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 174,802 $
73,612 Cash and Cash Equivalents of Continuing
Operations $ 164,479 $ 60,107 Cash and Cash Equivalents of
Discontinued Operations $ 10,323 $ 13,505 SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION Cash Paid During the Year for:
Interest, Net of Amounts Capitalized $ 19,416 $ 19,422 Income Taxes
44,470 28,214 Non-Cash Activity: Assets Acquired Under Capital
Leases 12,144 28
Ruddick Corporation Other
Statistics October 2, 2011 (dollars
in millions) Consolidated Harris Discontinued Ruddick Teeter
Operations Corporate Corporation
Depreciation and Amortization: 4th Fiscal Quarter $ 32.5 $ 2.9 $
0.2 $ 35.6 Fiscal Year to Date 127.6 12.0 1.1 140.7 Capital
Expenditures: 4th Fiscal Quarter $ 49.3 $ 2.0 $ 0.1 $ 51.4 Fiscal
Year to Date 147.9 5.9 0.1 153.9 Purchase of Other
Investment Assets: 4th Fiscal Quarter $ 0.6 $ - $ - $ 0.6 Fiscal
Year to Date 19.4 - - 19.4 Harris Teeter Store
Count: Quarter Year to Date Beginning number of stores 204
199 Opened during the period 1 7 Closed during the period (1
) (2 ) Stores in operation at end of period 204
204 Quarter Year to Date
Harris Teeter Comparable Store Sales 5.00 % 3.27 %
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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