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8-K - CURRENT REPORT - HARRIS TEETER SUPERMARKETS, INC. | ruddick_8k.htm |
Exhibit
99.1
FOR IMMEDIATE
RELEASE
|
April 29, 2010 |
Contact: |
John B. Woodlief |
Vice President – Finance |
and Chief Financial Officer |
704-372-5404 |
Ruddick Corporation Reports Fiscal Second
Quarter 2010 Results
CHARLOTTE, N.C.—April
29, 2010--Ruddick Corporation (NYSE:RDK) (the “Company”) today reported that
consolidated sales for the fiscal second quarter ended March 28, 2010 increased
by 6.1% to $1.07 billion from $1.01 billion in the second quarter of fiscal
2009. For the 26 weeks ended March 28, 2010, consolidated sales increased by
5.3% to $2.11 billion from $2.00 billion for the comparable period of fiscal
2009. The increase in consolidated sales for the quarter and 26-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 income in the second quarter of fiscal 2010 increased by
19.8% to $27.5 million, or $0.57 per diluted share, from the $22.9 million, or
$0.48 per diluted share reported in the prior year second quarter. For the 26
weeks ended March 28, 2010, consolidated net income increased by 11.8% to $51.2
million, or $1.06 per diluted share, from the $45.8 million, or $0.95 per
diluted share reported in the same period of fiscal 2009. The increase in net
earnings for both the fiscal quarter and 26-week period was driven by operating
profit improvements at both Harris Teeter and A&E when compared to the prior
year periods.
Harris Teeter sales
increased by 5.4% to $1.0 billion in the second quarter of fiscal 2010, from
sales of $949 million in the second quarter of fiscal 2009. For the 26 weeks
ended March 28, 2010, sales rose 5.0% to $1.97 billion from $1.88 billion in the
same period of fiscal 2009. The increase in sales for the quarter and 26-week
period was attributable to incremental new store sales that were partially
offset by comparable store sales declines during the respective periods.
Comparable store sales declined 1.33% for the second quarter of fiscal 2010 and
declined 1.85% for the 26-week period ended March 28, 2010. Comparable store
sales for the quarter and 26-week period were negatively impacted by retail
price deflation driven by increased promotional activity and changes in consumer
purchasing habits, reflective of the
current economic environment. In addition, harsh weather conditions in some of
Harris Teeter’s markets had a positive impact on comparable store sales for the
second quarter of fiscal 2010.
During the first half of
fiscal 2010, Harris Teeter opened 9 new stores and closed 3 existing stores, 2
of which were replaced by new stores. Since the second quarter of fiscal 2009,
Harris Teeter has opened 20 new stores and closed 4 stores, for a net addition
of 16 stores. Harris Teeter operated 195 stores at the end of the second quarter
of fiscal 2010.
Harris Teeter’s
operating profit for the second quarter of fiscal 2010, increased 4.6% to $47.1
million (4.71% of sales) from the $45.0 million (4.74% of sales) reported in the
second quarter of fiscal 2009. For the 26 weeks ended March 28, 2010, operating
profit was $89.4 million (4.53% of sales), as compared to $89.4 million (4.76%
of sales) in the prior year period. Operating profit was impacted by new store
pre-opening costs of $2.2 million (0.22% of sales) and $3.4 million (0.36% of
sales) in the second quarter of fiscal 2010 and fiscal 2009, respectively.
Pre-opening costs for the 26-week periods ended March 28, 2010 and March 29,
2009 were $4.8 million (0.24% of sales) and $7.4 million (0.39% of sales),
respectively. New store pre-opening costs fluctuate between reporting periods
depending on the new store opening schedule.
The increase in Harris
Teeter’s operating profit in the second quarter of fiscal 2010 resulted
primarily from sales increases that provided leverage against fixed costs and a
continued emphasis on operational efficiencies and cost controls. The increase
was offset, in part, by the continued promotional retail price investments made
to enhance the overall value provided to Harris Teeter customers, increased
occupancy costs and increased pension expense.
Thomas W. Dickson,
Chairman of the Board, President and Chief Executive Officer of Ruddick
Corporation commented that, “We have continued to drive customer shopping visits
and loyalty through the investments we have made in our in-store promotional
activity and lower everyday prices. While our store-brand business remains
strong we are starting to see the national brands offer additional vendor
funding for promotional activities. During the first half of fiscal 2010, we
realized a greater number of items sold and increased customer shopping visits
in our comparable stores. Additionally, our customer loyalty data indicates that
the number of active households increased by 1.29% per comparable store. We have
been successful in offsetting a significant portion of our investment in prices
through operational efficiencies and cost saving initiatives throughout the
organization. As a result, selling, general and administrative costs as a
percent of sales decreased to 25.63% for the second quarter of fiscal 2010, as
compared to 26.33% in the prior year. Our customers continue to respond
positively to our pricing and promotional investments; however, they also demand
the quality, value, variety and service we have always provided and we will
continue to provide. In addition, we are well positioned to provide our
customers with the more discretionary items like seafood and floral where we are
beginning to see more customer activity.”
A&E sales
increased by 16.9% to $70.8 million in the second quarter of fiscal 2010, from
sales of $60.6 million in the second quarter of fiscal 2009. For the 26
weeks ended March 28, 2010, sales rose 9.8% to $139.0 million from sales of
$126.6 million in the prior year 26-week period. Foreign sales accounted for
approximately 53% of A&E’s second quarter sales in both fiscal 2010 and
fiscal 2009. For the 26-week periods, foreign sales accounted for approximately
54% of A&E’s sales in fiscal 2010, as compared to 55% in fiscal 2009.
A&E recorded
operating profit of $3.1 million for the second quarter of fiscal 2010, as
compared to an operating loss of $4.6 million in the second quarter of fiscal
2009. For the 26 weeks ended March 28, 2010, A&E’s operating profit was $7.1
million, as compared to an operating loss of $5.7 million for the same period of
fiscal 2009. Operating profit improvements were realized in A&E’s U.S.
operations and the majority of its foreign operations. The increase in sales,
along with inventories being in line with sales volumes, contributed to improved
operating schedules at most of A&E’s manufacturing facilities. Improved
operating results were also realized through the cost reduction measures taken
in fiscal 2009.
Mr. Dickson
said, “We are very pleased with A&E’s results
for the first half of fiscal 2010. The improvements in retail sales of apparel
and automobiles have had a positive impact on A&E’s sales throughout its
global network. A&E’s previous efforts to consolidate manufacturing
capacities and reduce operating and overhead costs have contributed
significantly to the improvement in profitability as sales and production
volumes have risen. In addition, improved operating results have also been
realized through the sizeable Asian operations in which A&E holds a
noncontrolling interest. Today, A&E has over 60% of its total finishing
production capacity located in Asia, including its joint ventures. We will
continue to enhance our international operations and evaluate A&E's
structure to best position A&E to take advantage of opportunities available
through these operations.”
For the first half of
fiscal 2010, depreciation and amortization for the consolidated Company totaled
$66.4 million and capital expenditures totaled $49.0 million. Total capital
expenditures during the 26 weeks ended March 28, 2010 were comprised of $47.5
million for Harris Teeter and $1.5 million for A&E. During the first half of
fiscal 2010, Harris Teeter made an additional net investment of $1.8 million
($9.4 million additional investments less $7.6 million received from property
investment sales and partnership returns) in connection with the development of
certain new stores. Additionally, A&E spent $0.3 million to acquire the
noncontrolling interest in its joint ventures in South Africa and now has a 100%
ownership interest.
Harris Teeter’s strong
operating performance and financial position provides the flexibility to
continue with its store development program for new and replacement stores along
with the remodeling and expansion of existing stores. Harris Teeter plans to
open an additional 4 new stores and complete major remodeling of one additional
store (which will be expanded in size) during the remainder of fiscal 2010. The
new store development program for fiscal 2010 is expected to result in a 6.4%
increase in retail square footage, as compared to an 8.7% increase in fiscal
2009. 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.
The Company’s planned
consolidated capital expenditures for fiscal 2010 are approximately $130
million, consisting of $125 million for Harris Teeter and $5 million for
A&E. Such capital investment is expected to be financed by internally
generated funds, liquid assets and borrowings under the Company’s revolving line
of credit. The Company’s revolving line of credit provides substantially more
liquidity than 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 2010 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 recent 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 to rationalize A&E’s
operations, to offset increased operating costs with additional operating
efficiencies, 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 continued solvency of third parties on leases 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, including 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)
Consolidated Condensed Statements of Operations
(in thousands, except per share data)
(unaudited)
13 Weeks Ended | 26 Weeks Ended | |||||||||||||||
March 28, | March 29, | March 28, | March 29, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net Sales: | ||||||||||||||||
Harris Teeter | $ | 1,000,651 | $ | 949,427 | $ | 1,972,966 | $ | 1,878,354 | ||||||||
American & Efird | 70,787 | 60,577 | 138,984 | 126,635 | ||||||||||||
Total | 1,071,438 | 1,010,004 | 2,111,950 | 2,004,989 | ||||||||||||
Cost of Sales: | ||||||||||||||||
Harris Teeter | 697,079 | 654,421 | 1,378,873 | 1,294,999 | ||||||||||||
American & Efird | 54,116 | 50,705 | 106,290 | 104,269 | ||||||||||||
Total | 751,195 | 705,126 | 1,485,163 | 1,399,268 | ||||||||||||
Gross Profit: | ||||||||||||||||
Harris Teeter | 303,572 | 295,006 | 594,093 | 583,355 | ||||||||||||
American & Efird | 16,671 | 9,872 | 32,694 | 22,366 | ||||||||||||
Total | 320,243 | 304,878 | 626,787 | 605,721 | ||||||||||||
Selling, General and Administrative Expenses: | ||||||||||||||||
Harris Teeter | 256,451 | 249,962 | 504,693 | 494,004 | ||||||||||||
American & Efird | 13,531 | 14,442 | 25,604 | 28,037 | ||||||||||||
Corporate | 1,429 | 1,452 | 4,231 | 2,858 | ||||||||||||
Total | 271,411 | 265,856 | 534,528 | 524,899 | ||||||||||||
Operating Profit (Loss): | ||||||||||||||||
Harris Teeter | 47,121 | 45,044 | 89,400 | 89,351 | ||||||||||||
American & Efird | 3,140 | (4,570 | ) | 7,090 | (5,671 | ) | ||||||||||
Corporate | (1,429 | ) | (1,452 | ) | (4,231 | ) | (2,858 | ) | ||||||||
Total | 48,832 | 39,022 | 92,259 | 80,822 | ||||||||||||
Other Expense (Income): | ||||||||||||||||
Interest expense | 4,981 | 4,135 | 10,014 | 9,024 | ||||||||||||
Interest income | (122 | ) | (43 | ) | (139 | ) | (120 | ) | ||||||||
Net investment gain | - | (35 | ) | (1 | ) | (35 | ) | |||||||||
Total | 4,859 | 4,057 | 9,874 | 8,869 | ||||||||||||
Income Before Taxes | 43,973 | 34,965 | 82,385 | 71,953 | ||||||||||||
Income Tax Expense | 16,336 | 11,955 | 30,731 | 25,953 | ||||||||||||
Net Income | 27,637 | 23,010 | 51,654 | 46,000 | ||||||||||||
Less: Net Income Attributable to the | ||||||||||||||||
Noncontrolling Interest | 158 | 68 | 444 | 176 | ||||||||||||
Net Income Attributable to Ruddick Corporation | $ | 27,479 | $ | 22,942 | $ | 51,210 | $ | 45,824 | ||||||||
Net Income Attributable to Ruddick Corporation | ||||||||||||||||
Per Share: | ||||||||||||||||
Basic | $0.57 | $0.48 | $1.06 | $0.96 | ||||||||||||
Diluted | $0.57 | $0.48 | $1.06 | $0.95 | ||||||||||||
Weighted Average Number of Shares of | ||||||||||||||||
Common Stock Outstanding: | ||||||||||||||||
Basic | 48,193 | 47,972 | 48,144 | 47,932 | ||||||||||||
Diluted | 48,538 | 48,287 | 48,516 | 48,288 | ||||||||||||
Dividends Declared Per Common Share | $0.12 | $0.12 | $0.24 | $0.24 |
Ruddick Corporation
Consolidated Condensed Balance Sheets
(in thousands)
(unaudited)
Consolidated Condensed Balance Sheets
(in thousands)
(unaudited)
March 28, | September 27, | March 29, | ||||||||||
2010 | 2009 | 2009 | ||||||||||
Assets | ||||||||||||
Current Assets: | ||||||||||||
Cash and Cash Equivalents | $ | 36,785 | $ | 37,310 | $ | 30,142 | ||||||
Accounts Receivable, Net | 93,529 | 80,146 | 84,288 | |||||||||
Refundable Income Taxes | 2,876 | 9,707 | 7,346 | |||||||||
Inventories | 319,366 | 310,271 | 302,959 | |||||||||
Deferred Income Taxes | 6,962 | 6,502 | 6,944 | |||||||||
Prepaid Expenses and Other Current Assets | 24,700 | 30,350 | 23,226 | |||||||||
Total Current Assets | 484,218 | 474,286 | 454,905 | |||||||||
Property, Net | 1,062,451 | 1,080,326 | 1,024,542 | |||||||||
Investments | 165,339 | 156,434 | 154,991 | |||||||||
Deferred Income Taxes | 28,847 | 30,285 | 864 | |||||||||
Goodwill | 515 | 515 | 8,169 | |||||||||
Intangible Assets | 22,548 | 23,754 | 25,030 | |||||||||
Other Long-Term Assets | 81,551 | 78,721 | 73,183 | |||||||||
Total Assets | $ | 1,845,469 | $ | 1,844,321 | $ | 1,741,684 | ||||||
Liabilities and Equity | ||||||||||||
Current Liabilities: | ||||||||||||
Notes Payable | $ | 6,631 | $ | 7,056 | $ | 7,558 | ||||||
Current Portion of Long-Term Debt and Capital Lease Obligations | 10,283 | 9,526 | 10,380 | |||||||||
Accounts Payable | 212,154 | 227,901 | 213,422 | |||||||||
Dividends Payable | 5,853 | 5,825 | 5,822 | |||||||||
Deferred Income Taxes | 27 | 68 | 52 | |||||||||
Accrued Compensation | 56,331 | 65,295 | 55,372 | |||||||||
Other Current Liabilities | 91,602 | 87,194 | 98,503 | |||||||||
Total Current Liabilities | 382,881 | 402,865 | 391,109 | |||||||||
Long-Term Debt and Capital Lease Obligations | 325,913 | 355,561 | 335,909 | |||||||||
Deferred Income Taxes | 574 | 580 | 15,483 | |||||||||
Pension Liabilities | 175,394 | 168,060 | 44,866 | |||||||||
Other Long-Term Liabilities | 102,559 | 98,892 | 90,805 | |||||||||
Equity: | ||||||||||||
Common Stock | 92,363 | 89,878 | 86,346 | |||||||||
Retained Earnings | 869,742 | 830,236 | 801,744 | |||||||||
Accumulated Other Comprehensive Loss | (109,710 | ) | (108,524 | ) | (31,337 | ) | ||||||
Total Equity of Ruddick Corporation | 852,395 | 811,590 | 856,753 | |||||||||
Noncontrolling Interest | 5,753 | 6,773 | 6,759 | |||||||||
Total Equity | 858,148 | 818,363 | 863,512 | |||||||||
Total Liabilities and Equity | $ | 1,845,469 | $ | 1,844,321 | $ | 1,741,684 |
Ruddick Corporation
Consolidated Condensed Statements of Cash Flows
(in thousands)
(unaudited)
Consolidated Condensed Statements of Cash Flows
(in thousands)
(unaudited)
26 Weeks Ended | |||||||
March 28, | March 29, | ||||||
2010 | 2009 | ||||||
Cash Flow From Operating Activities: | |||||||
Net Income | $ | 51,210 | $ | 45,824 | |||
Non-Cash Items Included in Net Income | |||||||
Depreciation and Amortization | 66,387 | 61,341 | |||||
Deferred Income Taxes | 1,305 | 3,865 | |||||
Net Gain on Sale of Property | (900 | ) | (369 | ) | |||
Share-Based Compensation | 2,856 | 2,877 | |||||
Other, Net | (3,490 | ) | 323 | ||||
Changes in Operating Accounts Providing (Utilizing) Cash: | |||||||
Accounts Receivable | (12,963 | ) | 6,826 | ||||
Inventories | (9,452 | ) | 7,778 | ||||
Prepaid Expenses and Other Current Assets | 3,817 | 4,749 | |||||
Accounts Payable | (16,229 | ) | (23,831 | ) | |||
Other Current Liabilities | 3,626 | 2,317 | |||||
Other Long-Term Operating Accounts | 6,855 | 900 | |||||
Dividends Received | 100 | - | |||||
Net Cash Provided by Operating Activities | 93,122 | 112,600 | |||||
Investing Activities: | |||||||
Capital Expenditures | (49,000 | ) | (109,964 | ) | |||
Purchase of Other Investments | (9,483 | ) | (12,750 | ) | |||
Proceeds from Sale of Property | 4,646 | 3,080 | |||||
Return of Partnership Investments | 3,364 | 596 | |||||
Investments in COLI, Net of Proceeds from Death Benefits | (85 | ) | (656 | ) | |||
Other, Net | (1,592 | ) | (174 | ) | |||
Net Cash Used in Investing Activities | (52,150 | ) | (119,868 | ) | |||
Financing Activities: | |||||||
Net Payments on Short-Term Debt Borrowings | (18 | ) | (2,687 | ) | |||
Net (Payments on) Proceeds from Revolver Borrowings | (20,700 | ) | 24,200 | ||||
Proceeds from Long-Term Debt Borrowings | - | 1,470 | |||||
Payments on Long-Term Debt and Capital Lease Obligations | (8,735 | ) | (8,950 | ) | |||
Dividends Paid | (11,676 | ) | (5,820 | ) | |||
Proceeds from Stock Issued | 2,092 | 1,094 | |||||
Share-Based Compensation Tax Benefits | 559 | 287 | |||||
Purchase and Retirement of Common Stock | (1,491 | ) | - | ||||
Other, Net | (1,500 | ) | (1,165 | ) | |||
Net Cash (Used in) Provided by Financing Activities | (41,469 | ) | 8,429 | ||||
(Decrease) Increase in Cash and Cash Equivalents | (497 | ) | 1,161 | ||||
Effect of Foreign Currency Fluctuations on Cash | (28 | ) | (778 | ) | |||
Cash and Cash Equivalents at Beginning of Period | 37,310 | 29,759 | |||||
Cash and Cash Equivalents at End of Period | $ | 36,785 | $ | 30,142 | |||
Supplemental Disclosures of Cash Flow Information: | |||||||
Cash Paid During the Period for: | |||||||
Interest | $ | 9,351 | $ | 9,139 | |||
Income Taxes | 25,035 | 20,340 | |||||
Non-Cash Activity: | |||||||
Assets Acquired Under Capital Leases | - | 8,560 |
Ruddick Corporation
Other Statistics
March 28, 2010
(dollars in millions)
Other Statistics
March 28, 2010
(dollars in millions)
Consolidated | |||||||||||||
Harris | American | Ruddick | |||||||||||
Teeter | & Efird | Corporate | Corporation | ||||||||||
Depreciation and Amortization: | |||||||||||||
2nd Fiscal Quarter | $ | 30.0 | $ | 3.3 | $ | - | $ | 33.3 | |||||
Fiscal Year to Date | 59.6 | 6.8 | - | 66.4 | |||||||||
Capital Expenditures: | |||||||||||||
2nd Fiscal Quarter | $ | 22.6 | $ | 1.1 | $ | - | $ | 23.7 | |||||
Fiscal Year to Date | 47.5 | 1.5 | - | 49.0 | |||||||||
Purchase of Other Investment Assets: | |||||||||||||
2nd Fiscal Quarter | $ | 2.0 | $ | - | $ | - | $ | 2.0 | |||||
Fiscal Year to Date | 9.5 | - | - | 9.5 | |||||||||
Quarter | Year to Date | ||||||||||||
Harris Teeter Store Count: | |||||||||||||
Beginning number of stores | 194 | 189 | |||||||||||
Opened during the period | 3 | 9 | |||||||||||
Closed during the period | (2 | ) | (3 | ) | |||||||||
Stores in operation at end of period | 195 | 195 | |||||||||||
Quarter | Year to Date | ||||||||||||
Harris Teeter Comparable Store Sales | -1.33% | -1.85% |
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.