Ruddick Corporation Reports Fiscal First Quarter 2007 Results

CHARLOTTE, N.C., Feb. 1 /PRNewswire-FirstCall/ -- Ruddick Corporation today reported that consolidated sales for the 2007 fiscal first quarter ended December 31, 2006 increased by 10.6% to $880.8 million from $796.6 million in the first quarter of fiscal 2006. The increase in sales during the quarter was attributable to sales increases at both the Harris Teeter supermarket subsidiary and the Company's American & Efird ("A&E") thread and technical textiles subsidiary.

In the first quarter of fiscal 2007, consolidated net income was $18.3 million, or $0.38 per diluted share, compared to $16.9 million, or $0.36 per diluted share, in the prior year's first quarter. The 8.2% increase in net earnings over the prior year was driven by operating profit increases at both operating subsidiaries.

Harris Teeter's sales increased by 11.2% to $796.3 million in the first quarter of fiscal 2007 compared to sales of $716.1 million in the first quarter of fiscal 2006. The increase in sales was attributable to new store activity, partially offset by store closings and divestitures, and a comparable store sales increase of 3.31% for the quarter. During the first quarter of fiscal 2007, Harris Teeter opened 5 new stores, closed 2 older stores and completed the major remodeling of 3 stores, 2 of which were expanded in size. Since the first quarter of fiscal 2006, Harris Teeter has opened 20 new stores while closing or divesting 9 stores for a net addition of 11 stores. The company operated 155 stores at December 31, 2006.

Operating profit at Harris Teeter increased by 6.3% to $35.4 million in the first quarter of fiscal 2007 as compared to $33.3 million in the prior year period. Operating profit as a percent of sales was 4.45% in the first quarter of fiscal 2007 as compared to 4.65% in the same period last year. Operating profit was impacted by new store pre-opening costs (comprised of pre-opening rent, labor and associated fringe benefits and recruiting and relocation costs incurred prior to a new store opening) of $5.0 million (0.62% of sales) and $1.6 million (0.23% of sales) in the first quarter of fiscal 2007 and fiscal 2006, respectively. The increase in pre-opening costs from the prior year period resulted from an accelerated new store opening program and $1.2 million of construction period rent expensed during the first quarter of fiscal 2007 as a result of the Company's accounting for construction period rents in accordance with FASB's Staff Position FAS 13-1 "Accounting for Rental Costs Incurred during a Construction Period." Prior to the beginning of the second quarter of fiscal 2006, the Company capitalized such costs during the construction period.

Harris Teeter's operating profit increased primarily through the continued growth in total and comparable store sales as a result of net new store growth and effective retail pricing, product differentiation and targeted promotional spending programs that drove comparable store sales gains. The sales gains along with continued emphasis on operational efficiencies have provided the leverage to help offset incremental costs associated with Harris Teeter's new store development program and increased store supply costs, bank card fees and employee benefit costs.

Thomas W. Dickson, Chairman of the Board, President and Chief Executive Officer of Ruddick Corporation commented that, "We are pleased to have achieved another quarter of positive comparable store sales gains and operating profit increases at Harris Teeter. Our comparable store sales increase improved from the prior quarter and was achieved at the same time that some of our new store openings included locations in proximity to some of our existing stores, which can cannibalize some sales but increase our overall market share. We remain committed to providing our customers the best quality, variety and selection and outstanding customer service at competitive prices that deliver significant values."

A&E sales of $84.5 million in the first quarter of fiscal 2007 increased by 5.0% from the $80.5 million in the prior year period. The increase was driven by increased sales at the majority of A&E's foreign operations and from the recent acquisition of TSP Tovarna Sukancev in Trakov d.d. in Slovenia and obtaining a majority ownership interest in two joint ventures in South Africa. Foreign sales increases were offset, in part, by a decline in domestic sales between the first quarters of fiscal 2007 and fiscal 2006. Foreign sales accounted for approximately 55% of A&E total sales for the first quarter of fiscal 2007 as compared to approximately 49% in the prior year period.

In the first quarter of fiscal 2007, A&E recorded operating profit of $0.4 million as compared to an operating loss of $1.3 million in the previous year's first fiscal quarter. First quarter operating results for fiscal 2007 improved over the prior year period for both domestic and foreign operations.

Dickson said, "We continue to make significant progress in the transformation of A&E's business. Our transformation is designed to move A&E from its dependence on the U.S. apparel industry to a company that serves its global customers in a variety of industries that utilize threads and technical textiles. We remain committed to providing a wide range of quality products and services that create value for our customers throughout the world."

For the first three months of fiscal 2007, depreciation and amortization for the consolidated Ruddick Corporation totaled $24.0 million and capital expenditures totaled $40.6 million. During the first fiscal quarter of 2007, Harris Teeter spent $39.1 million in capital expenditures and A&E spent $1.5 million in capital expenditures. During the first quarter of fiscal 2007 Harris Teeter had a net return of $4.2 million ($1.5 million additional investments less $5.7 million received from property investment sales and partnership distributions) in connection with the development of certain of its new stores.

Harris Teeter's continued improvement in operating performance and financial position provides the flexibility to expand its store development program for new and replacement stores along with the remodeling and expansion of existing stores. The company plans to open an additional 16 new stores (1 of which will be a replacement for an existing store) and complete the remodeling on 6 more stores during the remainder of fiscal 2007. The new store development program for fiscal 2007 is expected to result in a 14.7% increase in retail square footage as compared to an 8.4% increase in fiscal 2006. The Company routinely evaluates its existing store operations in regards to its overall business strategy and from time to time will close or divest older or underperforming stores.

Harris Teeter's capital expenditures are presently planned to be approximately $214 million for fiscal 2007 and the Company's plans call for expanding Harris Teeter's Northern Virginia market. By comparison to prior years, the Company's new store opening schedule for 2007 is more heavily weighted towards openings earlier in the year with 7 stores scheduled to open in the first half of 2007 as compared to 4 stores that opened in the first half of 2006. 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 and anticipated opening schedule.

Fiscal 2007 consolidated capital expenditures are planned to total approximately $224 million, consisting of $214 million for Harris Teeter and $10 million for A&E. Such capital investment is expected to be financed by internally generated funds and borrowings under the Company's revolving line of credit. 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 2007 due to the intensely competitive retail grocery market and challenging textile and apparel environment. Further operating improvement will be dependent on the Company's ability to offset increased operating costs (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 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; 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 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 seven southeastern states 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: 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 December 31, January 1, 2006 2006 NET SALES Harris Teeter $796,261 $716,122 American & Efird 84,513 80,514 Total 880,774 796,636 COST OF SALES Harris Teeter 553,417 501,805 American & Efird 65,945 63,988 Total 619,362 565,793 GROSS PROFIT Harris Teeter 242,844 214,317 American & Efird 18,568 16,526 Total 261,412 230,843 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Harris Teeter 207,406 180,985 American & Efird 18,164 17,857 Corporate 2,031 1,774 Total 227,601 200,616 OPERATING PROFIT (LOSS) Harris Teeter 35,438 33,332 American & Efird 404 (1,331) Corporate (2,031) (1,774) Total 33,811 30,227 OTHER EXPENSE (INCOME) Interest expense 4,377 3,514 Interest income (30) (323) Net investment gains (27) (151) Minority interest 170 92 Total 4,490 3,132 INCOME BEFORE TAXES 29,321 27,095 INCOME TAXES 11,024 10,188 NET INCOME $18,297 $16,907 NET INCOME PER SHARE Basic $0.39 $0.36 Diluted $0.38 $0.36 WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK OUTSTANDING Basic 47,433 47,249 Diluted 47,973 47,613 DIVIDENDS DECLARED PER SHARE - Common $0.11 $0.11 RUDDICK CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands) (unaudited) December 31, January 1, 2006 2006 ASSETS CURRENT ASSETS Cash and Cash Equivalents $15,761 $18,195 Accounts Receivable, Net 103,995 94,278 Inventories 283,554 260,463 Net Current Deferred Income Tax Benefits 12,039 12,828 Prepaid and Other Current Assets 19,653 21,392 Total Current Assets 435,002 407,156 PROPERTY, NET 744,169 611,315 INVESTMENTS 105,897 84,656 GOODWILL 8,169 8,169 INTANGIBLE ASSETS 31,990 31,101 OTHER LONG-TERM ASSETS 68,124 62,093 Total Assets $1,393,351 $1,204,490 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Notes Payable 11,217 9,464 Current Portion of Long-Term Debt 9,456 10,601 Accounts Payable 184,246 168,075 Federal and State Income Taxes 7,524 12,923 Accrued Compensation 29,153 26,080 Other Current Liabilities 75,252 59,437 Total Current Liabilities 316,848 286,580 LONG-TERM DEBT 248,562 154,997 NET LONG-TERM DEFERRED INCOME TAX LIABILITIES 6,975 8,980 PENSION LIABILITIES 52,744 70,598 OTHER LONG-TERM LIABILITIES 73,591 63,385 MINORITY INTEREST 7,095 6,073 SHAREHOLDERS' EQUITY Common Stock 73,835 63,943 Retained Earnings 647,455 594,614 Accumulated Other Comprehensive Income (Loss) (33,754) (44,680) Total Shareholders' Equity 687,536 613,877 Total Liabilities and Shareholders' Equity $1,393,351 $1,204,490 RUDDICK CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) 13 Weeks Ended December 31, January 1, 2006 2006 CASH FLOW FROM OPERATING ACTIVITIES Net Income $18,297 $16,907 Non-Cash Items Included in Net Income Depreciation and Amortization 24,006 21,439 Deferred Income Taxes (4,314) (4,273) Net Loss on Sale of Property 81 116 Impairment Losses - 1,180 Share-Based Compensation 926 503 Other, Net 1,007 (97) Changes in Operating Accounts Utilizing Cash (29,690) (28,647) NET CASH PROVIDED BY OPERATING ACTIVITIES 10,313 7,128 INVESTING ACTIVITIES Capital Expenditures (40,633) (36,494) Purchase of Other Investments (1,512) (9,575) Proceeds from Sale of Property and Partnership Distributions 6,224 8,970 Proceeds from Sale of Temporary Investments - 16,859 Purchase of Temporary Investments - (3,930) Company-Owned Life Insurance, Net (1,769) (1,928) Other, Net (1,423) (401) NET CASH USED IN INVESTING ACTIVITIES (39,113) (26,499) FINANCING ACTIVITIES Net Proceeds from (Payments on) Short-Term Borrowings 955 (1,203) Net Proceeds from Revolver Borrowings 17,500 - Proceeds from Issuance of Long-Term Debt - 2,427 Payments on Long-Term Debt (186) (274) Dividends Paid (5,264) (5,246) Proceeds from Stock Issued 1,580 798 Share-Based Compensation Tax Benefits 1,025 54 Purchase and Retirement of Common Stock - (7,899) Other, Net (237) (276) NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 15,373 (11,619) DECREASE IN CASH AND CASH EQUIVALENTS (13,427) (30,990) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 29,188 49,185 CASH AND CASH EQUIVALENTS AT END OF PERIOD $15,761 $18,195 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash Paid During the Period for: Interest $4,206 $3,380 Income Taxes $622 $6,603 Non-Cash Activity: Assets Acquired Under Capital Leases $2,975 $- RUDDICK CORPORATION OTHER STATISTICS December 31, 2006 (dollars in millions) Consolidated Harris American Ruddick Teeter & Efird Corporate Corporation Depreciation and Amortization: 1st Quarter $19.1 $4.7 $0.2 $24.0 Capital Expenditures: 1st Quarter $39.1 $1.5 $- $40.6 Purchase of Other Investment Assets: 1st Quarter $1.5 $- $- $1.5 Harris Teeter Store Count: Quarter Beginning number of stores 152 Opened during the period 5 Closed during the period (2) Stores in operation at end of period 155 Quarter Harris Teeter Comparable Store Sales Increase 3.31% 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 with the intention of closing the existing store is included as a replacement store in the comparable store sales measure as if it were the same store, but only if, in fact, the existing store is concurrently closed. Sales increases from remodeled and expanded existing comparable stores are included in the calculations of comparable store sales.