Ruddick Corporation (NYSE:RDK) (the “Company”) today reported
that sales at Harris Teeter for the first quarter of fiscal 2012
ended January 1, 2012 increased by 8.5% to $1.12 billion from $1.03
billion in the first quarter of fiscal 2011. The increase in sales
was driven by an increase in comparable store sales of 5.33% and
sales from new stores, partially offset by store closings. During
the first quarter of fiscal 2012, Harris Teeter opened three new
stores and closed one store. Since the end of the first quarter of
fiscal 2011, Harris Teeter has opened seven new stores, one
replacement store and closed three stores, for a net addition of
five stores. Harris Teeter operated 206 stores as of the end of the
first quarter of fiscal 2012.
As previously disclosed, the Company sold all of its ownership
interest in its wholly-owned industrial thread manufacturing
company American & Efird, Inc. (“A&E”) on November 7, 2011.
As such, A&E’s results of operations and financial position are
reported as discontinued operations.
The Company reported net earnings of $13.7 million for the first
quarter of fiscal 2012, compared to net earnings of $38.1 million
for the first quarter of fiscal 2011. Net earnings for the first
quarter of fiscal 2012 was comprised of earnings from continuing
operations of $25.8 million, or $0.53 per diluted share, and a loss
from discontinued operations of $12.1 million. Net earnings for the
first quarter of fiscal 2011 was comprised of earnings from
continuing operations of $34.4 million, or $0.71 per diluted share,
and earnings from discontinued operations of $3.7 million. As
previously disclosed, 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.
Operating profit in the first quarter of fiscal 2012 increased
by 10.7% to $46.3 million from $41.8 million in the first quarter
of fiscal 2011, driven primarily by improved operating profit at
Harris Teeter.
Operating profit for Harris Teeter increased by 8.8% to $48.8
million (4.36% of sales) in the first quarter of fiscal 2012 from
$44.9 million (4.35% of sales) in the first quarter of fiscal 2011.
Gross profit at Harris Teeter increased by 6.7% to $326.8 million
(29.19% of sales) in the first quarter of fiscal 2012 from $306.4
million (29.68% of sales) in the first quarter of fiscal 2011. The
49 basis point reduction on a percentage of sales basis was driven
by an increase in the LIFO charge and Harris Teeter’s investment in
price and promotional activity to drive unit sales and customer
visits. The LIFO charge for the first quarter of fiscal 2012 was
$3.6 million (0.32% of sales) as compared to $0.5 million (0.05% of
sales) in the first quarter of fiscal 2011. Harris Teeter’s
investment to drive sales was offset by a reduction in Selling,
General and Administrative Expenses as a percentage of sales of 50
basis points.
Operating profit at Harris Teeter was impacted by new store
pre-opening costs of $1.4 million (0.13% of sales) and $1.9 million
(0.18% of sales) in the first quarters of fiscal 2012 and fiscal
2011, respectively. New store pre-opening costs fluctuate between
reporting periods depending on the new store opening schedule.
The pre-tax loss from discontinued operations in the first
quarter of fiscal 2012 amounted to $34.9 million, ($12.1 million
after tax benefits or $0.25 per diluted share) and included $11.3
million of additional loss on the sale of A&E. As previously
disclosed, the Company expected to incur additional non-cash
charges for the settlement of pension liabilities and other
employee benefits in connection with the sale of A&E.
Accordingly, the Company recorded non-cash charges of $26.3 million
($12.9 million after tax) during the first quarter of fiscal 2012
that related to these anticipated costs. The majority of these
losses resulted from adjustments for the recognition of a pro-rata
share of the pension plan’s accumulated unrecognized net actuarial
losses that was previously included in Accumulated Other
Comprehensive Income and the impact from allocating existing plan
assets under pension regulations and was based upon preliminary
actuarial estimates. Final valuations will not be complete until
the Company’s second quarter of fiscal 2012 and could result in
additional adjustments.
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. Our pricing and
promotional strategies were effective in driving unit sales,
customer visits and increasing market share. Although these
strategies did put some downward pressure on gross margin, the
majority of the decline in the gross profit margin was due to the
LIFO charge. The leverage created through the additional sales and
our emphasis on cost controls has resulted in a reduction in our
selling, general and administrative expense margin that effectively
offset the decrease in the gross profit margin. We believe these
positive results are the product of our continuing commitment to
our customers to deliver outstanding values and excellent customer
service.”
The Company’s operating performance and strong 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. Capital expenditures
for fiscal 2012 are planned to total approximately $215 million.
During the remainder of fiscal 2012, the Company plans to open four
new stores and complete major remodels on ten stores (six of which
will be expanded in size). The remaining store openings for fiscal
2012 are expected to include three in the third quarter (one of
which is a replacement for a store closed in the first quarter) and
one in the fourth quarter. The new store development program for
fiscal 2012 is expected to result in a 3.8% 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.
The Company’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.
On January 30, 2012, the Company amended and restated its
existing credit agreement that provided financing under a $100
million term loan and $350 million revolving line of credit. The
existing agreement was due to expire in December, 2012 and the
Company had previously repaid $20 million of the term loan. The
amended credit facility contains a revolving line of credit that
provides for financing up to $350 million through its termination
date on January 30, 2017. In connection with the closing, the
Company repaid the remaining $80 million term loan utilizing $40
million cash and $40 million of borrowings under the new revolver.
In the normal course of business, the Company will continue to
evaluate other financing opportunities based on the Company’s needs
and market conditions.
The Company’s management remains cautious in its expectations
for the remainder of 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 for 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.
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 Ended January 1, January 2, 2012 2011
Sales $ 1,119,566 $ 1,032,281
Cost of Sales
792,746 725,858
Gross Profit
326,820 306,423
Selling,
General and Administrative Expenses: Harris Teeter 277,989
261,524 Corporate 2,569 3,100 Total
280,558 264,624
Operating
Profit 46,262 41,799
Other Expense (Income): Interest expense 4,738 4,460
Interest income (48 ) (23 ) Net investment gain -
(19,506 ) Total 4,690 (15,069 )
Earnings From Continuing Operations Before Taxes 41,572
56,868
Income Tax Expense 15,756 22,462
Earnings from Continuing Operations, Net
25,816 34,406
(Loss) Earnings from
Discontinued Operations, (Includes Loss on Sale of $11,277
and $0, respectively) (34,922 ) 5,590
Income Tax (Benefit)
Expense (22,765 ) 1,863
(Loss) Earnings
from Discontinued Operations, Net (12,157 ) 3,727
Net Earnings $ 13,659 $ 38,133
Net Earnings (Loss) Per Share - Basic: Continuing
Operations $ 0.53 $ 0.71 Discontinued Operations $ (0.25 ) $ 0.08
Total $ 0.28 $ 0.79
Net Earnings (Loss) Per Share -
Diluted: Continuing Operations $ 0.53 $ 0.71 Discontinued
Operations $ (0.25 ) $ 0.08 Total $ 0.28 $ 0.78
Weighted
Average Number of Shares of Common Stock Outstanding:
Basic 48,648 48,411 Diluted 48,999 48,792
Dividends
Declared Per Common Share $ 0.13 $ 0.13
Effective Tax
Rate on Continuing Operations 37.9 % 39.5 %
Ruddick Corporation Consolidated Condensed Balance
Sheets (in thousands) (unaudited) January 1, October 2,
January 2, 2012 2011 2011
Assets
Current Assets: Cash and Cash Equivalents $ 265,678 $ 164,479 $
39,058 Accounts Receivable, Net 54,160 47,088 44,220 Refundable
Income Taxes 16,788 15,055 - Inventories 293,557 287,137 281,788
Deferred Income Taxes 1,546 1,321 - Prepaid Expenses and Other
Current Assets 25,928 24,576 27,745 Current Assets Held For Sale
- 220,017 261,071 Total
Current Assets 657,657 759,673 653,882 Property, Net
1,024,344 1,019,468 1,001,206 Investments 112,722 112,556 111,629
Intangible Assets 13,341 13,609 13,828 Other Long-Term Assets
80,610 79,118 78,092
Total Assets $
1,888,674 $ 1,984,424 $ 1,858,637
Liabilities and
Equity
Current Liabilities: Current Portion of Long-Term Debt and Capital
Lease Obligations $ 84,081 $ 3,902 $ 11,178 Accounts Payable
226,398 252,859 202,934 Income Taxes Payable - - 4,234 Deferred
Income Taxes - - 79 Accrued Compensation 36,243 63,236 33,201 Other
Current Liabilities 90,205 87,805 82,140 Current Liabilities Held
For Sale - 71,571 62,560
Total Current Liabilities 436,927 479,373 396,326 Long-Term
Debt and Capital Lease Obligations 211,468 283,428 286,042 Deferred
Income Taxes 19,513 19,674 3,019 Pension Liabilities 110,299
113,617 133,506 Other Long-Term Liabilities 114,819 113,250 111,033
Equity: Common Stock 105,629 104,211 97,475 Retained
Earnings 991,788 984,535 950,588 Accumulated Other Comprehensive
Loss (101,769 ) (100,423 ) (106,046 ) Accumulated Other
Comprehensive Loss of Discontinued Operations -
(19,048 ) (18,814 ) Total Equity of Ruddick
Corporation 995,648 969,275 923,203 Noncontrolling Interest of
Discontinued Operations - 5,807
5,508 Total Equity 995,648 975,082 928,711
Total Liabilities and Equity $ 1,888,674 $
1,984,424 $ 1,858,637 RUDDICK
CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in
thousands) (unaudited) 13 Weeks 13 Weeks January 1, January 2, 2012
2011 Cash Flow From Operating Activities: Net Earnings $ 13,659 $
38,133 Non-Cash Items Included in Net Income Depreciation and
Amortization 33,269 31,594 Deferred Income Taxes (3,259 ) 951 Net
Gain on Sale of Property 8,680 (19,400 ) Non-cash Loss From
Discontinued Operations 13,597 - Share-Based Compensation 4,926
1,878 Other, Net (3,124 ) (568 ) Changes in Operating Accounts
Providing (Utilizing) Cash Accounts Receivable (7,072 ) 3,652
Inventories (6,421 ) (9,763 ) Prepaid Expenses and Other Current
Assets (784 ) 482 Accounts Payable (29,579 ) (7,941 ) Other Current
Liabilities (26,218 ) (5,559 ) Other Long-Term Operating Accounts
(23,939 ) (26,722 ) Other Net Cash Used by Operating Activities of
Discontinued Operations - (6,101 ) Net Cash
Provided by Operating Activities (26,265 ) 636
Investing Activities: Capital Expenditures (29,204 ) (31,875
) Purchase of Other Investments (417 ) (8,570 ) Proceeds from Sale
of Property 169,663 46,086 Investments in COLI, net of Proceeds
from Death Benefits (572 ) (1,057 ) Other, Net - (98 ) Net Cash
Provided by Investing Activities of Discontinued Operations
- 567 Net Cash Provided by Investing
Activities 139,470 5,053
Financing Activities: Payments on Long-Term Debt and Capital Lease
Obligations (647 ) (20,562 ) Dividends Paid (6,406 ) (6,388 )
Proceeds from Stock Issued 37 361 Share-Based Compensation Tax
Benefits 1,615 728 Shares Effectively Purchased and Retired for
Withholding Taxes (5,129 ) (2,485 ) Other, Net 35 34
Net Cash Used in Financing Activities of
Discontinued Operations
- (1,242 ) Net Cash Used in Financing
Activities (10,495 ) (29,554 ) Increase in
Cash and Cash Equivalents 102,710 (23,865 ) Effect of Foreign
Currency Fluctuations on Cash of Discontinued Operations - (59 )
Cash and Cash Equivalents at Beginning of Period 164,479 73,612
Cash and Cash Equivalents at End of Period $ 267,189
$ 49,688 Cash and Cash Equivalents of
Continuing Operations $ 265,678 $ 39,058 Cash and Cash Equivalents
of Discontinued Operations $ - $ 10,630 SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION Cash Paid During the Year for:
Interest, Net of Amounts Capitalized $ 4,782 $ 4,766 Income Taxes
6,318 1,106 Non-Cash Activity: Assets Acquired Under Capital Leases
8,866 11,685 Note Received in Connection with Sale of Investments -
2,855
Ruddick Corporation Other
Statistics January 1, 2012 (dollars in millions)
Consolidated Harris Ruddick Teeter Corporate Corporation
Depreciation and Amortization: 1st Fiscal Quarter $ 33.0
$ 0.3
$ 33.3 Capital Expenditures: 1st Fiscal Quarter $ 29.2
$ -
$ 29.2 Purchase of Other Investment Assets: 1st Fiscal
Quarter $ 0.4
$ -
$ 0.4 Harris Teeter Store Count: Quarter
Beginning number of stores 204 Opened during the period 3
Closed during the period (1 ) Stores in operation at end of
period 206 Quarter Harris Teeter
Comparable Store Sales 5.33 %
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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