Harris Teeter 2007 Annual Report Download - page 44

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40
RUDDICK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
INTANGIBLE ASSETS
The carrying amount of intangible assets at September 30, 2007 and October 1, 2006 was as follows (in
thousands):
2007 2006
Non-Amortizing Intangible Assets – Pension related intangible assets:
Harris Teeter ............................................. $ — $ 441
American & Efird ......................................... — 85
Corporate ................................................ — 1,946
Total non-amortizing intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 2,472
Amortizing Intangible Assets:
Acquired favorable operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,034 17,034
Customer lists ............................................ 5,534 5,681
Land use rights – foreign operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,179 4,057
Non-compete agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,286 4,285
Trademarks, licenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,554 2,500
Total amortizing intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,587 33,557
Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,970 ) (3,351 )
Total amortizing intangibles, net of accumulated amortization . . . . . . . . 27,617 30,206
Total intangible assets, net of accumulated amortization . . . . . . . . . . . . . $ 27,617 $ 32,678
Acquired favorable operating leases are recorded at Harris Teeter. All other amortizing intangible assets
are recorded by American & Efird. Amortization expense for intangible assets was $2,619,000, $2,281,000 and
$765,000 in fiscal years 2007, 2006, and 2005, respectively. Amortizing intangible assets have remaining useful
lives from one year to 48 years. Projected amortization expense for intangible assets existing as of September
30, 2007 is: $2,602,000, $2,519,000, $2,286,000, $1,848,000 and $1,570,000 for fiscal years 2008, 2009, 2010,
2011 and 2012, respectively.
LEASES
The Company leases certain equipment under agreements expiring during the next 6 years. Harris Teeter
leases most of its stores under leases that expire during the next 25 years. It is expected that such leases will be
renewed by exercising options or replaced by leases of other properties. Most store leases provide for additional
rentals based on sales, and certain store facilities are sublet under leases expiring during the next 11 years.
Certain leases also contain rent escalation clauses (step rents) that require additional rental amounts in the later
years of the term.
Rent expense for the fiscal years was as follows (in thousands):
2007 2006 2005
Minimum, net of sublease income . . . . . . . . . . . . . . . . . . . . . . $ 84,106 $ 79,281 $ 68,907
Contingent ......................................... 1,597 1,471 1,249
Total ........................................... $ 85,703 $ 80,752 $ 70,156