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TheStreet Open House

Harris Teeter Supermarkets, Inc. Reports Results For The Third Quarter Of Fiscal 2013

Stocks in this article: HTSI

Harris Teeter Supermarkets, Inc. operates a leading regional supermarket chain in eight states primarily in the southeastern and mid-Atlantic United States, and the District of Columbia.

Selected information regarding Harris Teeter Supermarkets, Inc. and its subsidiaries follows. For more information on Harris Teeter Supermarkets, Inc., visit our web site at: www.harristeeter.com .

Harris Teeter Supermarkets, Inc.                
Consolidated Condensed Statements of Earnings
(in thousands, except per share data)
(unaudited)
 
13 Weeks Ended 39 Weeks Ended
July 2, 2013 July 1, 2012 July 2, 2013 July 1, 2012
Sales $ 1,185,842 100.00 % $ 1,152,676 100.00 % $ 3,516,010 100.00 % $ 3,392,621 100.00 %
Cost of Sales   823,658   69.46 %   804,337   69.78 %   2,459,512   69.95 %   2,373,905   69.97 %
Gross Profit 362,184 30.54 % 348,339 30.22 % 1,056,498 30.05 % 1,018,716 30.03 %
 
Selling, General and Administrative   307,138   25.90 %   315,781   27.40 %   904,681   25.73 %   887,410   26.16 %
Operating Profit   55,046   4.64 %   32,558   2.82 %   151,817   4.32 %   131,306   3.87 %
 
Other Expense (Income):
Interest expense 3,959 0.33 % 4,531 0.39 % 12,488 0.36 % 12,603 0.37 %
Interest income   (69 ) -0.01 %   (402 ) -0.03 %   (206 ) -0.01 %   (484 ) -0.01 %
  3,890   0.33 %   4,129   0.36 %   12,282   0.35 %   12,119   0.36 %
 
Earnings From Continuing Operations
Before Income Taxes 51,156 4.31 % 28,429 2.47 % 139,535 3.97 % 119,187 3.51 %
Income Tax Expense   19,009   1.60 %   8,468   0.73 %   51,709   1.47 %   42,954   1.27 %
Earnings from Continuing Operations, Net   32,147   2.71 %   19,961   1.73 %   87,826   2.50 %   76,233   2.25 %
 
Loss from Operations of Discontinued Operations - - - (15,755 )
Loss on Disposition of Discontinued Operations - (692 ) - (3,281 )
Income Tax Expense (Benefit)   1,088     3,484     1,088     (2,501 )
Loss from Discontinued Operations, Net   (1,088 )   (4,176 )   (1,088 )   (16,535 )
 
Net Earnings $ 31,059   $ 15,785   $ 86,738   $ 59,698  
 
Earnings (Loss) Per Share - Basic:
Continuing Operations $ 0.66 $ 0.41 $ 1.80 $ 1.56
Discontinued Operations $ (0.02 ) $ (0.09 ) $ (0.02 ) $ (0.34 )
Net Earnings $ 0.63 $ 0.32 $ 1.77 $ 1.22
 
Earnings (Loss) Per Share - Diluted:
Continuing Operations $ 0.65 $ 0.41 $ 1.79 $ 1.55
Discontinued Operations $ (0.02 ) $ (0.09 ) $ (0.02 ) $ (0.34 )
Net Earnings $ 0.63 $ 0.32 $ 1.76 $ 1.22
 
Weighted Average Number of Shares of
Common Stock Outstanding:
Basic 48,934 48,785 48,909 48,738
Diluted 49,229 49,068 49,193 49,034
 
Quarterly Dividends Declared Per Common Share $ 0.15 $ 0.14 $ 0.45 $ 0.41
Special Dividends Declared Per Common Share $ - $ - $ 0.50 $ -
 
Effective Tax Rate on Continuing Operations 37.2 % 29.8 % 37.1 % 36.0 %
Harris Teeter Supermarkets, Inc.    
Consolidated Condensed Balance Sheets
(in thousands)
(unaudited)
July 2, October 2, July 1,
2013 2012 2012

Assets

Current Assets:
Cash and Cash Equivalents $ 210,220 $ 212,211 $ 207,733
Accounts Receivable, Net 66,820 59,267 76,004
Refundable Income Taxes 445 27,583 11,472
Inventories 310,169 305,106 286,541
Deferred Income Taxes 9,013 6,044 8,178
Prepaid Expenses and Other Current Assets   31,768     24,182     27,726  
Total Current Assets 628,435 634,393 617,654
 
Property, Net 1,130,442 1,102,703 1,057,598
Investments 103,244 107,424 107,395
Deferred Income Taxes 7,675 - -
Goodwill 19,301 19,301 19,301
Intangible Assets 14,079 15,039 15,349
Other Long-Term Assets 76,956 73,628 72,258
     
Total Assets $ 1,980,132   $ 1,952,488   $ 1,889,555  
 
 

Liabilities and Shareholders' Equity

Current Liabilities:
Current Portion of Long-Term Debt and Capital Lease Obligations $ 4,729 $ 4,219 $ 4,211
Accounts Payable 270,989 281,142 256,594
Accrued Compensation 54,581 69,390 59,974
Other Current Liabilities   97,446     96,887     92,425  
Total Current Liabilities 427,745 451,638 413,204
 
Long-Term Debt and Capital Lease Obligations 210,633 208,271 210,052
Deferred Income Taxes - 10,941 16,574
Pension Liabilities 134,651 119,883 88,012
Other Long-Term Liabilities 125,402 124,136 124,490
 
Equity:
Common Stock 115,885 111,347 109,738
Retained Earnings 1,079,679 1,039,935 1,024,024
Accumulated Other Comprehensive Loss   (113,863 )   (113,663 )   (96,539 )
Total Equity 1,081,701 1,037,619 1,037,223
     
Total Liabilities and Equity $ 1,980,132   $ 1,952,488   $ 1,889,555  
Harris Teeter Supermarkets, Inc.  
Consolidated Condensed Statements of Cash Flows
(in thousands)
(unaudited)
39 Weeks Ended
July 2, July 1,
2013 2012
Cash Flow From Operating Activities:
Net Earnings $ 86,738 $ 59,698
Loss from Discontinued Operations 1,088 16,535
Non-Cash Items Included in Net Income
Depreciation and Amortization 110,931 101,013
Deferred Income Taxes (19,791 ) (6,393 )
Net Gain on Sale of Property and Investments 358 (693 )
Share-Based Compensation 5,828 5,606
Other, Net (748 ) (1,821 )
Changes in Operating Accounts Providing (Utilizing) Cash
Accounts Receivable (7,553 ) (28,916 )
Inventories (5,063 ) 595
Prepaid Expenses and Other Current Assets 16,474 (3,124 )
Accounts Payable (10,157 ) 118
Other Current Liabilities (14,091 ) (1,675 )
Other Long-Term Operating Accounts   14,541     (26,990 )
Net Cash Provided by Operating Activities   178,555     113,953  
 
Investing Activities:
Capital Expenditures (135,059 ) (118,941 )
Purchase of Other Investments (7,432 ) (3,327 )
Business Acquisition - (26,296 )
Proceeds from Sale of Property and Investments 14,355 171,300
Net (Investments in) Proceeds from Company-Owned Life Insurance (1,840 ) 12,542
Other, Net   -     (28 )
Net Cash (Used) Provided by Investing Activities   (129,976 )   35,250  
 
Financing Activities:
Payments on Long-Term Debt and Capital Lease Obligations (2,443 ) (81,933 )
Dividends Paid (46,994 ) (20,209 )
Proceeds from Stock Issued 306 314
Share-Based Compensation Tax Benefits 554 1,838
Shares Effectively Purchased and Retired for Withholding Taxes (2,155 ) (5,129 )
Other, Net   162     (830 )
Net Cash Used by Financing Activities   (50,570 )   (105,949 )
 
(Decrease) Increase in Cash and Cash Equivalents (1,991 ) 43,254
Cash and Cash Equivalents at Beginning of Period 212,211 164,479
   
Cash and Cash Equivalents at End of Period $ 210,220   $ 207,733  
 
Supplemental Disclosures of Cash Flow Information
Cash Paid During the Year for:
Interest, Net of Amounts Capitalized $ 12,675 $ 14,205
Income Taxes 46,350 54,940
Non-Cash Activity - Assets Acquired Under Capital Leases 5,315 8,866
Harris Teeter Supermarkets, Inc.    
Other Statistics
(dollars in thousands)
13 Weeks Ended 39 Weeks Ended
July 2, 2013 July 1, 2012 July 2, 2013 July 1, 2012

Operating Profit Analysis:

Dollars Margin Dollars Margin Dollars Margin Dollars Margin
Operating profit without Lowes Foods
Transaction costs and insurance gains $ 55,046 4.64 % $ 51,770 4.49 % $ 151,817 4.32 % $ 150,518 4.44 %
Lowes Foods Transaction costs - - (22,328 ) -1.94 % - - (22,328 ) -0.66 %
Gains from insurance proceeds   - -     3,116   0.27 %   -   -     3,116   0.09 %
Consolidated operating profit $ 55,046 4.64 % $ 32,558   2.82 % $ 151,817   4.32 % $ 131,306   3.87 %
 
LIFO Charge (Included in Cost of Goods Sold): $ - -   $ 1,479   0.13 % $ 670   0.02 % $ 7,388   0.22 %
 
New Store Pre-Opening Costs (excluding
stores acquired from Lowes Foods) (1) $ 1,861 0.16 % $ 1,633   0.14 % $ 3,602   0.10 % $ 4,474   0.13 %
 
 
13 Weeks Ended 39 Weeks Ended
July 2, July 1, July 2, July 1,
2013 2012 2013 2012
Comparable Store Statistics:
Increase in Comparable Store Sales 1.29 % 3.70 % 2.48 % 4.30 %
Effect of Shift in Holidays   0.70 % 0.00 %   0.13 % 0.00 %
Increase in Comparable Store Sales Excluding the Holiday Shift 1.99 % 3.70 % 2.61 % 4.30 %
 
(Decrease) Increase in Active Household - VIC Customers -0.09 % 1.86 % 0.88 % 1.88 %
Effect of Shift in Holidays   0.23 % 0.00 %   0.05 % 0.00 %
Increase in Active Household - VIC Customers Excluding the Holiday Shift 0.14 % 1.86 % 0.93 % 1.88 %
 
(Decrease) Increase in Number of Items Sold -0.45 % 0.39 % 1.08 % 0.14 %
Effect of Shift in Holidays   0.63 % 0.00 %   0.14 % 0.00 %
Increase in Number of Items Sold Excluding the Holiday Shift 0.18 % 0.39 % 1.22 % 0.14 %
 
Store Brand Penetration Based on Units 24.34 % 23.80 % 24.48 % 24.10 %
Store Brand Penetration Based on Sales 25.22 % 24.90 % 25.24 % 25.04 %
 
Store Count
Beginning number of stores 211 206 208 204
Opened during the period 2 3 5 6
Temporarily closed during the period - (1 ) - (1 )
Closed during the period   (1 ) (7 )   (1 ) (8 )
Stores in operation at end of period   212   201     212   201  
 
Number of Major Store Remodels Completed 2 1 3 3
Number of Expansion Remodels Included Above - - - 1
 
Total Square Footage at Beginning of Period 10,336,970 9,980,780 10,218,118 9,818,232
New Stores and Remodels 100,495 146,324 219,347 343,283
Closed Stores   (16,206 ) (315,726 )   (16,206 ) (350,137 )
Total Square Footage at End of Period   10,421,259   9,811,378     10,421,259   9,811,378  
 
 

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. If the location is closed, the sales during the
period are removed from the calculation. If the location is completely rebuilt, it is reported as a replacement store and included in the same
store sales calculation for the weeks actually open.
 
(1) Pre-opening costs are included with SG&A expenses and consist of rent, labor and associated fringe benefits, and recruiting and
relocation costs incurred prior to a new store opening.




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