Harris Teeter 2007 Annual Report Download - page 37

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RUDDICK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Ruddick Corporation and
subsidiaries, including its wholly owned operating companies, Harris Teeter, Inc. and American & Efird, Inc.,
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 minority 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 FIN 46 and FIN 46-R. The Company will consolidate those VIE’s in which
the Company is the primary beneficiary of the entity. As of the fiscal year ended on September 30, 2007, the
Company concluded that it does not have any VIE’s that required consolidation.
Fiscal Year
The Company’s fiscal year ends on the Sunday nearest to September 30. However, the Company’s Harris
Teeter subsidiary’s fiscal periods end on the Tuesday following the Company’s fiscal period end. Fiscal years
2007, 2006 and 2005 include the 52 weeks ended September 30, 2007 (October 2, 2007 for Harris Teeter),
October 1, 2006 (October 3, 2006 for Harris Teeter) and October 2, 2005 (October 4, 2005 for Harris Teeter),
respectively.
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.
Temporary Investments
The Company has historically invested in various municipal and tax-exempt bonds and other similar
investments in order to enhance its return on excess cash. The Company selected specific investments based on
certain criteria, which include, but are not limited to, suitable liquidity and credit quality requirements.
Inventories
The Company’s 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. Foreign inventories and
limited categories of domestic inventories are valued on the weighted average and on the first-in, first-out (FIFO)
cost methods. Under the LIFO valuation method at Harris Teeter, 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 resulting gross margins are calculated by applying a calculated cost-to-retail ratio to the retail
value of inventories. LIFO indices are developed approximately one month prior to year end except for inventory
held at Harris Teeter’s distribution facilities which are developed at year end. The annual LIFO measurement is
achieved by applying the indices to the actual inventory on hand as of year end.