Harris Teeter 2012 Annual Report Download - page 32

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Pursuant to the authorization granted by its shareholders at the 2012 Annual Meeting of Shareholders and by the Company’s
board of directors, the Company filed Articles of Amendment to the Company’s Restated Articles of Incorporation to change
the name of the Company from “Ruddick Corporation” to “Harris Teeter Supermarkets, Inc.” The name change became effective
on April 2, 2012.
The accompanying consolidated financial statements include the accounts of Harris Teeter Supermarkets, Inc. and
subsidiaries, including its wholly-owned operating company, Harris Teeter, Inc. (“Harris Teeter”), collectively referred to herein
as the Company. All material intercompany amounts have been eliminated. To the extent that non-affiliated parties held minority
equity investments in joint ventures of the Company, such investments are classified as noncontrolling interest.
The Company reviews its investments in entities to determine if such entities are deemed to be variable interest entities
(“VIE’s”) as defined by ASC paragraph 810-10-05-8. The Company will consolidate those VIE’s in which the Company is the
primary beneficiary of the entity. The Company concluded that it did not have any VIE’s that required consolidation in the
reported fiscal years.
On November 7, 2011, the Company completed the sale of all of its ownership interest in its thread manufacturing subsidiary,
American & Efird (“A&E”) to two newly formed affiliates of KPS Capital Partners, LP. The purchase price was $180.0 million in
cash consideration, subject to adjustments for working capital and certain liabilities, including under-funded pension liabilities and
foreign debt. A&E’s results of operations and financial position are reported as discontinued operations in these financial statements.
Operations
The Company operates one primary business segment, retail grocery (including related real estate and store development
activities) through its wholly-owned subsidiary Harris Teeter. Harris Teeter is a regional supermarket chain operating primarily
in the southeastern and mid-Atlantic United States, and the District of Columbia.
Fiscal Year
Effective with its name change on April 2, 2012, the Company’s fiscal year end was changed from the Sunday nearest to
September 30 to the Tuesday nearest to September 30 to coincide with Harris Teeter’s fiscal year end. Fiscal 2012 includes the
52 weeks ended October 2, 2012, Fiscal 2011 includes the 52 weeks ended October 2, 2011 (October 4, 2011 for Harris Teeter)
and fiscal 2010 includes the 53 weeks ended October 3, 2010 (October 5, 2010 for Harris Teeter).
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual amounts could differ from those estimates.
Cash and Cash Equivalents
For purposes of the statements of consolidated cash flows, the Company considers all highly liquid cash investments
purchased with a maturity of three months or less to be cash equivalents.
Inventories
The Company’s inventories are valued at the lower of cost or market with the cost of substantially all inventories being
determined using the last-in, first-out (LIFO) method. Limited categories of inventories are valued on the weighted average and
on the first-in, first-out (FIFO) cost methods. Under the LIFO valuation method, all retail store inventories are initially stated
at estimated cost as calculated by the Retail Inventory Method (RIM). Under RIM, the valuation of inventories at cost and the
HARRIS TEETER SUPERMARKETS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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