Harris Teeter 1997 Annual Report Download - page 22

Ruddick
RUDDICK CORPORATION
AND SUBSIDIARIES
20
Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Ruddick Corporation and its wholly owned
operating companies, American & Efird, Inc. and Harris Teeter, Inc., and in fiscal 1996 and 1995, Jordan Graphics, Inc.
(disposed in 1996), collectively referred to herein as the Company. All material intercompany amounts have been elimi-
nated. To the extent that non-affiliated parties held minority equity investments in joint ventures of the Company, such
investments are classified as minority interest.
Cash Equivalents
For purposes of the statements of consolidated cash flows, the Company considers all highly liquid cash investments pur-
chased with a maturity of three months or less to be cash equivalents.
Inventories
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. The LIFO cost of such inventories was $20,949,000 and $19,047,000 less than the
first-in, first-out (FIFO) cost method at September 28, 1997 and September 29, 1996, respectively.
Property and Depreciation
Property is at cost and is depreciated, using principally the straight-line method, over the following useful lives:
Land improvements 10-40 years
Buildings 10-50 years
Machinery and equipment 3-15 years
Leasehold improvements are depreciated over the lesser of the estimated useful life or the remaining term of the lease.
Assets under capital leases are amortized on a straight-line basis over the lesser of 20 years or the lease term. Maintenance
and repairs are charged against income when incurred. Expenditures for major renewals, replacements and betterments are
added to property. The cost and the related accumulated depreciation of assets retired are eliminated from the accounts;
gains or losses on disposal are added to or deducted from income. Property categories include $35,635,000 and
$17,963,000 undepreciated construction in progress at September 28, 1997 and September 29, 1996, respectively.
Investments
The Company holds a financial position in certain shopping centers in which Harris Teeter, Inc., is an anchor tenant.
Additionally it makes loans to and equity investments in a number of emerging growth companies, as well as selected pub-
licly traded companies. Real estate and financial investments are carried at the lower of cost or market. In management’s
opinion, the net aggregate carrying value of financial instruments of $8,435,000 and $7,335,000 held for investment
approximated their aggregate fair values at September 28, 1997 and September 29, 1996, respectively.
Other Assets
Other assets include cash surrender value of Company owned life insurance (COLI), investment in unconsolidated for-
eign subsidiaries and various acquisition costs. The cash surrender value of life insurance is recorded net of policy loans.
The net life insurance expense, including interest expense of $18,490,000 in 1997, $18,564,000 in 1996, and $12,845,000 in
1995, is included in other administrative expense in the statements of consolidated income and retained earnings.
Acquisition costs allocated to other assets, including favorable lease rights and goodwill, are being amortized over 10-15 years.
Notes to Consolidated Financial Statements