CHARLOTTE, N.C., Aug. 2 /PRNewswire-FirstCall/ -- Ruddick Corporation(NYSE: RDK) today reported that consolidated sales for the fiscal thirdquarter ended July 1, 2007 increased by 11.2% to $923 million from $830million in the third quarter of fiscal 2006. For the 39 weeks ended July 1,2007, sales of $2.70 billion were 11.0% above the $2.43 billion for thecomparable period of fiscal 2006. The overall increase in sales during thequarter was attributable to sales increases at the Company's Harris Teetersupermarket subsidiary that were offset, in part, by a sales decline at theCompany's American & Efird ("A&E") sewing thread and technical textilessubsidiary. Both operating subsidiaries realized sales increases for thefiscal year-to-date period. The Company reported that consolidated net income increased 19.4% to$21.2 million, or $0.44 per diluted share, for the third quarter of fiscal2007, from $17.8 million, or $0.37 per diluted share in prior year period.For the 39 weeks ended July 1, 2007, consolidated net income increased by9.3% to $59.5 million, or $1.24 per diluted share, from $54.4 million, or$1.14 per diluted share, in the same period of fiscal 2006. The increase inearnings over the prior year was driven primarily by improved operatingprofit at Harris Teeter. As previously disclosed, results for the 39 weeksof fiscal 2006 included net pre-tax gains totaling $3.3 million ($1.5million of expense related to new Supplemental Executive Retirement Plans,a $0.8 million gain for insurance proceeds and a $4.0 million gain from thesale of a real estate investment). These transactions effectively increasedprior year net income by $2.4 million or $0.05 per diluted share for the39-week period of fiscal 2006. Harris Teeter sales increased by 12.9% to $836.4 million in the thirdquarter of fiscal 2007 compared to sales of $740.6 million in the thirdquarter of fiscal 2006. For the 39 weeks ended July 1, 2007, sales rose12.3% to $2.44 billion from $2.17 billion in the same period of fiscal2006. The increase in sales was attributable to net new store openingactivity, partially offset by store closings and divestitures, andcomparable store sales increases of 5.33% for the 2007 third fiscal quarterand 4.51% for the 39-week period. During the first nine months of fiscal 2007, Harris Teeter opened 12new stores, closed 5 older stores and completed the major remodeling of 5stores, 3 of which were expanded in size. Since the third quarter of fiscal2006, Harris Teeter has opened 17 new stores while closing or divesting 7stores for a net addition of 10 stores. The company operated 159 stores atJuly 1, 2007. Operating profit at Harris Teeter increased by 26.9% to $39.9 millionfor the third quarter of fiscal 2007, from $31.4 million in the prior yearperiod. Operating profit as a percent of sales increased 53 basis points to4.77% in the third quarter of fiscal 2007 from 4.24% in the same periodlast year. For the 39 weeks ended July 1, 2007 operating profit was $113.5million, an increase of 16.5% when compared to $97.5 million in the prioryear period. For the first nine months of fiscal 2007 operating profit as apercent of sales improved by 17 basis points to 4.66% from 4.49% for thesame period last year. Operating profit was reduced by new store pre-opening costs of $4.0million (0.47% of sales) and $4.7 million (0.64% of sales) in the thirdquarter of fiscal 2007 and fiscal 2006, respectively. Pre-opening costs forthe 39-week periods ended July 1, 2007 and July 2, 2006 were $13.5 million(0.55% of sales) and $9.7 million (0.45% of sales), respectively. Theincrease in pre-opening costs for the year resulted from an accelerated newstore program. Harris Teeter's operating profit increased primarily through thecontinued growth in total store sales as a result of net new store growthand comparable store sales gains driven by a continuous attention tocustomer service, and targeted promotional spending and retail pricingprograms. The sales increases along with continued emphasis on operationalefficiencies and cost controls have provided the leverage to offset part ofthe incremental costs associated with Harris Teeter's accelerated new storeprogram (pre-opening costs and incremental start-up costs), increasedclosed store expenses and associate benefit costs. Thomas W. Dickson, Chairman of the Board, President and Chief ExecutiveOfficer of Ruddick Corporation commented that, "We are very pleased withour results for the third quarter. Our focus on superior customer serviceand execution has resulted in a banner quarter for comparable store salesgains and operating profit. Our third quarter comparable store salesincrease of 5.33% is the highest increase we have achieved since fiscal1998 and our operating profit margin of 4.77% is a new record. Theseresults were achieved at the same time we have continued with ouraccelerated new store opening schedule. We remain committed to ourCompany's future growth and providing our customers with the best overallshopping experience that delivers significant quality, variety and valueeach and every time they shop." A&E's sales of $86.6 million in the third quarter of fiscal 2007decreased 3.4% from $89.6 million for the same quarter of fiscal 2006.A&E's sales for the 39 weeks ended July 1, 2007 were $257.3 million, anincrease of 0.6% from the prior year period when sales were $255.8 million.The increase in sales for the year-to-date period was driven by salesattributable to the fiscal 2006 acquisition of TSP Tovarna Sukancev inTrakov d.d. in Slovenia and obtaining a majority ownership interest in twojoint ventures in South Africa. Foreign sales accounted for approximately54% and 51% of A&E's sales for the 39-week periods of fiscal 2007 andfiscal 2006, respectively. A&E's operating profit was $0.9 million for the third quarter of fiscal2007 compared to $1.3 million in the previous year's third fiscal quarter.For the 39 weeks ended July 1, 2007, A&E recorded operating profit of $1.7million compared to a small operating loss in the prior year period. A&Econtinues to realize operating profit improvements in their Asianoperations, however, weak apparel thread manufacturing operating scheduleshave continued in the Americas offsetting the improvements in Asia.Management remains focused on the integration of the acquired businessesand expanding its product lines throughout A&E's global supply chain. Dickson said, "We continue to transform A&E's business from one that isdependent on the U.S. apparel industry to a company that serves itscustomers in a variety of industries that utilize sewing threads andtechnical textiles on a global basis with particular emphasis on Asia. Wehave realized increased sales and improved operating profits in our Asianoperations and continue to work at expanding our non-apparel business inthe U.S. and throughout A&E's global supply chain. We remain committed toproviding a wide range of quality products and services that create valuefor our customers around the world." For the first nine months of fiscal 2007, depreciation and amortizationfor the consolidated Ruddick Corporation totaled $74.7 million and capitalexpenditures totaled $147.9 million. Total capital expenditures during the39 weeks ended July 1, 2007 were comprised of $141.0 million for HarrisTeeter, $4.2 million for A&E and $2.7 million for Corporate. In connectionwith the development of certain of its new stores, Harris Teeter realized anet investment return of $8.6 million ($14.5 million received from propertyinvestment sales and partnership distributions less $5.9 million additionalinvestments) during the first nine months of fiscal 2007. Consolidated capital expenditures for fiscal 2007 are planned to totalapproximately $225 million, consisting of $209 million for Harris Teeter,$9 million for A&E and $7 million for Corporate. Such capital investment isexpected to be financed by internally generated funds and borrowings underthe Company's revolving line of credit. In the normal course of business,the Company will continue to evaluate other financing opportunities basedon the Company's needs and market conditions. Harris Teeter's continued improvement in operating performance andfinancial position provides the flexibility to expand its store developmentprogram for new and replacement stores along with the remodeling andexpansion of existing stores. The Company plans to open an additional 7 newstores during the fourth quarter for a total of 19 new store openings forfiscal 2007. In addition, Harris Teeter expects to complete the majorremodeling of 3 more stores during the fourth quarter of fiscal 2007. Thenew store development program for fiscal 2007 is expected to result in a12.8% increase in retail square footage as compared to an 8.4% increase infiscal 2006. The Company routinely evaluates its existing store operationsas part of its overall business strategy and from time to time will closeor divest older or underperforming stores. Harris Teeter's capital expenditures are presently planned to beapproximately $202 million for fiscal 2008 and includes the anticipatedopening of 16 new stores (3 of which will be replacements for existingstores) and the completion of 8 major remodels (4 of which will be expandedin size). The Company's plans call for expanding Harris Teeter's existingmarkets including the Northern Virginia market. Real estate development byits nature is both unpredictable and subject to external factors includingweather, construction schedules and costs. Any change in the amount andtiming of new store development would impact the expected capitalexpenditures and anticipated opening schedule. The Company's management remains cautious in its expectations for theremainder of fiscal 2007 due to the intensely competitive retail grocerymarket, the number of new store openings for Harris Teeter and thechallenging textile and apparel environment. Further operating improvementwill be dependent on the Company's ability to offset increased operatingcosts (including pre-opening costs) with additional operating efficiencies,and to effectively execute the Company's strategic expansion plans. This news release may contain forward-looking statements that involveuncertainties. A discussion of various important factors that could causeresults to differ materially from those expressed in such forward-lookingstatements is shown in reports filed by the Company with the Securities andExchange Commission and include: generally adverse economic and industryconditions; changes in the competitive environment; economic or politicalchanges in countries where the Company operates; changes in federal, stateor local regulations affecting the Company; the passage of future taxlegislation, or any negative regulatory or judicial position whichprevails; management's ability to predict the adequacy of the Company'sliquidity to meet future requirements; changes in the Company's expansionplans and their effect on store openings, closings and other investments;the ability to predict the required contributions to the Company's pensionand other retirement plans; the cost and availability of energy and rawmaterials; the continued solvency of third parties on leases the Companyguarantees; the Company's ability to recruit, train and retain effectiveemployees; changes in labor and employer benefits costs, such as increasedhealth care and other insurance costs; the Company's ability tosuccessfully integrate the operations of acquired businesses; the extentand speed of successful execution of strategic initiatives; and, unexpectedoutcomes of any legal proceedings arising in the normal course of business.Other factors not identified above could cause actual results to differmaterially from those included, contemplated or implied by theforward-looking statements made in this news release. Ruddick Corporation is a holding company with two primary operatingsubsidiaries: Harris Teeter, Inc., a leading regional supermarket chainwith operations in seven southeastern states and American & Efird, Inc.,one of the world's largest global manufacturers and distributors ofindustrial sewing thread, embroidery thread and technical textiles. Selected information regarding Ruddick Corporation and its subsidiariesfollows. For more information on Ruddick Corporation, visit our web siteat: http://www.ruddickcorp.com. Contact: John B. Woodlief Vice President - Finance and Chief Financial Officer 704-372-5404 RUDDICK CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) 13 WEEKS ENDED 39 WEEKS ENDED July 1, July 2, July 1, July 2, 2007 2006 2007 2006 NET SALES Harris Teeter $836,421 $740,564 $2,438,257 $2,171,757 American & Efird 86,571 89,649 257,344 255,800 Total 922,992 830,213 2,695,601 2,427,557 COST OF SALES Harris Teeter 574,390 513,003 1,682,150 1,506,834 American & Efird 67,108 70,065 200,640 201,151 Total 641,498 583,068 1,882,790 1,707,985 GROSS PROFIT Harris Teeter 262,031 227,561 756,107 664,923 American & Efird 19,463 19,584 56,704 54,649 Total 281,494 247,145 812,811 719,572 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Harris Teeter 222,158 196,133 642,564 567,466 American & Efird 18,530 18,309 55,022 54,657 Corporate 1,645 1,221 5,680 5,143 Total 242,333 215,663 703,266 627,266 OPERATING PROFIT (LOSS) Harris Teeter 39,873 31,428 113,543 97,457 American & Efird 933 1,275 1,682 (8) Corporate (1,645) (1,221) (5,680) (5,143) Total 39,161 31,482 109,545 92,306 OTHER EXPENSE (INCOME) Interest expense 4,843 3,445 13,665 10,450 Interest income (67) (96) (182) (517) Net investment loss (gains) (278) (262) (252) (4,499) Minority interest 203 191 508 465 Total 4,701 3,278 13,739 5,899 INCOME BEFORE TAXES 34,460 28,204 95,806 86,407 INCOME TAXES 13,251 10,437 36,310 31,972 NET INCOME $21,209 $17,767 $59,496 $54,435 NET INCOME PER SHARE: Basic $0.44 $0.38 $1.25 $1.15 Diluted $0.44 $0.37 $1.24 $1.14 WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING: Basic 47,668 47,233 47,559 47,211 Diluted 48,197 47,689 48,087 47,644 DIVIDENDS DECLARED PER SHARE - Common $0.11 $0.11 $0.33 $0.33 RUDDICK CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands) (unaudited) July 1, July 2, 2007 2006 ASSETS CURRENT ASSETS: Cash and Cash Equivalents $20,318 $20,819 Accounts Receivable, Net 107,197 106,099 Refundable Income Taxes 1,026 - Inventories 286,628 252,142 Deferred Income Taxes 12,913 12,812 Prepaid and Other Current Assets 22,057 21,251 Total Current Assets 450,139 413,123 PROPERTY, NET 816,558 680,599 INVESTMENTS 106,403 107,156 GOODWILL 8,169 8,169 INTANGIBLE ASSETS 30,684 29,954 OTHER LONG-TERM ASSETS 68,156 65,397 Total Assets $1,480,109 $1,304,398 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Notes Payable $12,995 $11,538 Current Portion of Long-Term Debt and Capital Lease Obligations 8,176 9,160 Accounts Payable 203,929 186,455 Federal and State Income Taxes - 15 Accrued Compensation 44,521 40,164 Other Current Liabilities 78,572 68,671 Total Current Liabilities 348,193 316,003 LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS 264,914 203,066 LONG-TERM DEFERRED INCOME TAXES 4,123 3,535 PENSION LIABILITIES 50,883 62,535 OTHER LONG-TERM LIABILITIES 81,693 66,222 MINORITY INTEREST 6,403 6,445 SHAREHOLDERS' EQUITY: Common Stock 78,816 68,451 Retained Earnings 678,094 621,750 Accumulated Other Comprehensive Income (Loss) (33,010) (43,609) Total Shareholders' Equity 723,900 646,592 Total Liabilities and Shareholders' Equity $1,480,109 $1,304,398 RUDDICK CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) 39 WEEKS ENDED July 1, July 2, 2007 2006 CASH FLOW FROM OPERATING ACTIVITIES Net Income $59,496 $54,435 Non-Cash Items Included in Net Income Depreciation and Amortization 74,745 66,398 Deferred Income Taxes (8,039) (9,703) Net Gain on Sale of Property (1,969) (3,277) Impairment Losses 618 2,603 Share-Based Compensation 2,883 1,881 Other, Net 1,982 1,056 Changes in Operating Accounts Utilizing Cash (4,837) (14,920) Other, Net - 1,000 NET CASH PROVIDED BY OPERATING ACTIVITIES 124,879 99,473 INVESTING ACTIVITIES Capital Expenditures (147,863) (158,111) Purchase of Other Investments (5,898) (34,988) Proceeds from Sale of Property and Partnership Distributions 17,529 25,478 Proceeds from Sale of Temporary Investments - 16,859 Purchase of Temporary Investments - (3,930) Company-Owned Life Insurance, Net (3,472) (1,320) Other, Net (1,328) (1,456) NET CASH USED IN INVESTING ACTIVITIES (141,032) (157,468) FINANCING ACTIVITIES Net Proceeds from Short-Term Borrowings 2,733 872 Net Proceeds from Revolver Borrowings 23,100 55,500 Proceeds from Issuance of Long-Term Debt - 2,427 Payments on Long-Term Debt and Capital Lease Obligations (7,889) (9,146) Dividends Paid (15,824) (15,638) Proceeds from Stock Issued 4,215 3,416 Excess Tax Benefits from Share- Based Compensation 1,425 565 Purchase and Retirement of Common Stock - (7,899) Other, Net (477) (468) NET CASH PROVIDED BY FINANCING ACTIVITIES 7,283 29,629 DECREASE IN CASH AND CASH EQUIVALENTS (8,870) (28,366) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 29,188 49,185 CASH AND CASH EQUIVALENTS AT END OF PERIOD $20,318 $20,819 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash Paid During the Period for: Interest, Net of Amounts Capitalized $12,248 $10,351 Income Taxes 41,094 46,893 Non-Cash Activity: Assets Acquired Under Capital Leases 19,205 - RUDDICK CORPORATION OTHER STATISTICS July 1, 2007 (dollars in millions) Consolidated Harris American Ruddick Teeter & Efird Corporate Corporation Depreciation and Amortization: Third Fiscal Quarter $20.9 $4.9 $- $25.8 Fiscal Year to Date 59.7 14.5 0.5 74.7 Capital Expenditures: Third Fiscal Quarter $59.0 $0.9 $0.1 $60.0 Fiscal Year to Date 141.0 4.2 2.7 147.9 Purchase of Other Investment Assets: Third Fiscal Quarter $2.9 $- $- $2.9 Fiscal Year to Date 5.9 - - 5.9 Harris Teeter Store Count: Quarter Year to Date Beginning number of stores 156 152 Opened during the period 5 12 Closed during the period (2) (5) Stores in operation at end of period 159 159 Quarter Year to Date Harris Teeter Comparable Store Sales Increase 5.33% 4.51% 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.
