Harris Teeter 2008 Annual Report Download - page 45

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41
RUDDICK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
COMPANY OWNED LIFE INSURANCE (COLI)
The Company has purchased life insurance policies to fund its obligations under certain benefit plans for
officers, key employees and directors. The cash surrender value of these policies is recorded net of policy loans
and included with other long-term assets in the Company’s consolidated balance sheets. The cash value of the
Company’s life insurance policies were $54,880,000 at September 28, 2008 and $52,055,000 at September 30,
2007, and no policy loans were outstanding at either date.
INTANGIBLE ASSETS
The carrying amount of intangible assets at September 28, 2008 and September 30, 2007 was as follows
(in thousands):
2008 2007
Amortizing Intangible Assets:
Acquired favorable operating leases .............................. $18,170 $17,034
Customer lists................................................ 5,534 5,534
Land use rights – foreign operations .............................. 4,439 4,179
Non-compete agreements....................................... 4,054 4,286
Trademarks, licenses and other .................................. 2,554 2,554
Total amortizing intangibles ....................................... 34,751 33,587
Accumulated amortization ........................................ (8,396) (5,970)
Total intangible assets, net of accumulated amortization................. $26,355 $27,617
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 $2,658,000, $2,619,000 and
$2,281,000 in fiscal years 2008, 2007, and 2006, respectively. Amortizing intangible assets have remaining useful
lives from one year to 47 years. Projected amortization expense for intangible assets existing as of September 28,
2008 is: $2,573,000, $2,340,000, $1,902,000, $1,624,000 and $1,406,000 for fiscal years 2009, 2010, 2011, 2012
and 2013, respectively.
GOODWILL
Goodwill is recorded by the Company’s American & Efird textile subsidiary. In accordance with SFAS
No. 142, “Goodwill and Other Intangible Assets,” the Company conducts an annual review during the first fiscal
quarter to determine if there exits any impairment of goodwill. There has been no goodwill impairment charge
required for the periods presented.
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 10 years.
Certain leases also contain rent escalation clauses (step rents) that require additional rental amounts in the later
years of the term.