Harris Teeter 2008 Annual Report Download - page 43

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RUDDICK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
The major components of cost of sales in the textile manufacturing and distribution segment are (a) the
materials and supplies, labor costs and overhead costs associated with the manufactured products sold, (b) the
purchased cost of products bought for resale, (c) any charges, or credits, associated with LIFO reserves and
reserves for obsolete and slow moving inventories, (d) the freight costs incurred to deliver the products to the
customer from the point of sale, and (e) all other costs required to be classified as cost of sales under authoritative
accounting pronouncements.
Selling, General and Administrative Expenses
The major components of selling, general and administrative expenses in the retail supermarket segment
are (a) the costs associated with store operations, including store labor and training, fringe benefits and incentive
compensation, supplies and maintenance, regional and district management and store support, store rent and
other occupancy costs, property management and similar costs, (b) advertising costs, (c) shipping and handling
costs, excluding freight, warehousing and distribution costs, (d) merchandising and purchasing department
staffing, supplies and associated costs, (e) customer service and support, and (f) the costs of maintaining general
and administrative support functions, including, but not limited to, personnel administration, finance and
accounting, treasury, credit, information systems, marketing, and environmental, health and safety, based on
appropriate classification under generally accepted accounting principles.
The major components of selling, general and administrative expenses in the textile manufacturing
and distribution segment are (a) the costs of maintaining a sales force, including compensation, incentive
compensation, benefits, office and occupancy costs, travel and all other costs of the sales force, (b) shipping and
handling costs, excluding freight, (c) the costs of advertising, customer service, sales support and other similar
costs, and (d) the costs of maintaining general and administrative support functions, including, but not limited
to, personnel administration, finance and accounting, treasury, credit, information systems, training, marketing,
and environmental, health and safety, to the extent that such overhead activities are not allocable to indirect
manufacturing costs in cost of sales under generally accepted accounting principles. The Company also includes
the net income of unconsolidated subsidiaries within selling, general and administrative expenses.
The major components of selling, general and administrative expenses in the corporate segment are (a) the
costs associated with a portion of compensation and benefits of holding company employees, and (b) certain
other costs that are not related to the operating companies.
Advertising
Costs incurred to produce media advertising are expensed in the period in which the advertising first
takes place. All other advertising costs are also expensed when incurred. Cooperative advertising income
from vendors is recorded in the period in which the related expense is incurred and amounted to $1,717,000,
$1,635,000 and $1,745,000 in fiscal 2008, 2007 and 2006, respectively. Net advertising expenses of $25,818,000,
$24,486,000, and $23,311,000 were included in the Company’s results of operations for fiscal 2008, 2007 and
2006, respectively.
Foreign Currency
Assets and liabilities of foreign operations (if applicable) are translated at the current exchange rates as of
the end of the accounting period, and revenues and expenses are translated using average exchange rates. The
resulting translation adjustments are net of income taxes and accumulated as a component of other comprehensive
income in shareholders’ equity.