Harris Teeter 2007 Annual Report Download - page 46

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RUDDICK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
was in compliance with all financial covenants of the Credit Agreement. The Company is charged a variable
commitment fee based on the unused balance net of trade and standby letters of credit which were $23,216,000 at
September 30, 2007. The commitment fee rate based on the net unused balance was 0.120%, 0.120% and 0.225%
for fiscal 2007, 2006 and 2005, respectively.
Total interest expense, net of amounts capitalized, on debt and capital lease obligations was $17,654,000,
$14,125,000 and $12,950,000 for fiscal 2007, 2006 and 2005, respectively. Capitalized interest amounted to
$2,318,000 and $1,083,000 for fiscal 2007 and 2006, respectively.
FINANCIAL INSTRUMENTS
Financial instruments which potentially subject the Company to concentration of credit risk consist
principally of cash equivalents and receivables. The Company limits the amount of credit exposure to
each individual financial institution and places its temporary cash into investments of high credit quality.
Concentrations of credit risk with respect to receivables are limited due to their dispersion across various
companies and geographies.
The carrying amounts for certain of the Company’s financial instruments, including cash and cash
equivalents, accounts and notes receivable, accounts payable and other accrued liabilities approximate fair value
because of their short maturities. The fair value of variable interest debt is equal to its carrying amount. The
estimated fair value of the Company’s significant fixed interest debt obligations (Senior Notes due at various
dates through 2017) outstanding as of September 30, 2007 was $146,136,000 as compared to its carrying amount
of $128,572,000. This estimated fair value is computed based on borrowing rates currently available to the
Company for loans with similar terms and maturities.
CAPITAL STOCK
The capital stock of the Company authorized at September 30, 2007 was 75,000,000 shares of no par value
Common Stock, 4,000,000 shares of Preference Stock (non-cumulative voting $0.56 convertible, $10 liquidation
value), and 1,000,000 shares of Additional Preferred Stock. No shares of Preference Stock or Additional Preferred
Stock were issued or outstanding at September 30, 2007.
One preferred share purchase right is attached to each outstanding share of common stock, which rights
expire on November 16, 2010. Each right entitles the holder to purchase one one-hundredth of a share of a new
Series A Junior Participating Additional Preferred Stock for $60. The rights will become exercisable only under
certain circumstances related to a person or group acquiring or offering to acquire a substantial portion of the
Company’s common stock. If certain additional events then occur, each right would entitle the rightholder to
acquire common stock of the Company, or in some cases of an acquiring entity, having a value equal to twice
the exercise price. Under certain circumstances the Board of Directors may extinguish the rights by exchanging
one share of common stock or an equivalent security for each qualifying right or may redeem each right at a
price of $0.01. There are 600,000 shares of Series A Junior Participating Additional Preferred Stock reserved for
issuance upon exercise of the rights.
The Board of Directors adopted a stock buyback program in 1996, authorizing, at management’s discretion,
the Company to purchase and retire up to 10% of the then outstanding shares of the Company’s common stock
for the purpose of preventing dilution as a result of the operation of the Company’s comprehensive stock option
and awards plans. During fiscal 2006, the Company purchased and retired 395,000 shares at a total cost of
$7,899,000, or an average price of $20.00 per share pursuant to this plan. There were no stock purchases during
fiscal 2007 or fiscal 2005.