Harris Teeter 2007 Annual Report Download - page 43

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39
RUDDICK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and
Financial Liabilities–Including an amendment of FASB Statement No. 115.” SFAS No. 159 permits companies to
measure many financial instruments and certain other items at fair value at specified election dates. Unrealized
gains and losses on these items will be reported in earnings at each subsequent reporting date. The fair value
option may be applied instrument by instrument (with a few exceptions), is irrevocable and is applied only to
entire instruments and not to portions of instruments. This new standard becomes effective for the Company’s
2009 fiscal year beginning on September 29, 2008. The Company continues to evaluate the impact of SFAS No.
159 on its consolidated financial statements.
INVENTORIES
Inventories are valued at the lower of cost or market with the cost of substantially all domestic U.S.
inventories being determined using the last-in, first-out (LIFO) method. The LIFO cost of such inventories
was $22,175,000 and $20,514,000 less than the first-in, first-out (FIFO) cost method at September 30, 2007
and October 1, 2006, respectively. Foreign inventories and limited categories of domestic inventories, totaling
$72,616,000 for fiscal 2007 and $66,186,000 for fiscal 2006, are valued on the weighted average and on the FIFO
cost methods. At September 30, 2007 (October 1, 2006) the value of finished goods inventory was $264,375,000
($234,492,000), work in progress was $6,504,000 ($7,443,000) and raw materials and supplies were $24,783,000
($23,768,000).
COMPANY OWNED LIFE INSURANCE (COLI)
The Company has purchased life insurance policies to fund its obligations under certain benefit plans for
officers, key employees and directors. The cash surrender value of these policies is recorded net of policy loans
and included with other long-term assets in the Company’s consolidated balance sheets. The cash value of the
Company’s life insurance policies were $52,055,000 at September 30, 2007 and $47,950,000 at October 1, 2006,
and no policy loans were outstanding at either date.
GOODWILL
Goodwill is recorded by the Company’s American & Efird textile subsidiary. In accordance with SFAS
No. 142, “Goodwill and Other Intangible Assets,” the Company conducts an annual review during the first fiscal
quarter to determine if there exits any impairment of goodwill. There has been no goodwill impairment charge
required for the periods presented.