Harris Teeter 2009 Annual Report Download - page 46

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42
RUDDICK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
Earnings Per Share (“EPS”)
Basic EPS is based on the weighted average outstanding common shares. Diluted EPS is based on the
weighted average outstanding common shares adjusted by the dilutive effect of potential common stock
equivalents resulting from the operation of the Company’s comprehensive stock option and awards plans.
Stock Options and Stock Awards
The Company uses fair-value accounting for all share-based payments to employees for new awards and
previously granted awards that were not vested as of the first quarter of fiscal 2006. Compensation expense for
stock awards are based on the grant date fair value and are expensed ratably over their vesting period, resulting
in more expense in the early years. Income tax benefits attributable to stock options exercised are credited to
capital stock.
Other Comprehensive Income
Other comprehensive income refers to revenues, expenses, gains and losses that are not included in
net earnings but rather are recorded directly in shareholders’ equity. The components of accumulated other
comprehensive loss, net of taxes at September 27, 2009, September 28, 2008 and September 29, 2007 consisted
of the following (in thousands):
2009 2008 2007
Accumulated unrecognized losses for minimum pension liabilities . . . $ (112,168 ) $(33,527 ) $(44,382 )
Accumulated unrecognized losses for postemployment liabilities . . . (230 ) 78 (68 )
Accumulated unrecognized losses on cash flow hedges ........... (354 ) — —
Accumulated net gains for foreign currency translation adjustments .... 4,817 6,470 5,391
Total accumulated other comprehensive loss .................... $ (107,935) $(26,979) $(39,059)
Cash Flows
A portion of the sales and operating costs of A&E’s foreign operations are denominated in currencies other
than the U.S. dollar. This creates an exposure to foreign currency exchange rates. The impact of changes in the
relationship of other currencies to the U.S. dollar has historically not been significant, and such changes in the
future are not expected to have a material impact on the Company’s results of operations or cash flows.
Reclassifications
To conform with classifications used in the current year, the financial statements for the prior year reflect
certain reclassifications.
INVENTORIES
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. The LIFO cost of such inventories
was $37,131,000 and $32,651,000 less than the first-in, first-out (FIFO) cost method at September 27, 2009 and
September 28, 2008, respectively. Foreign inventories and limited categories of domestic inventories, totaling
$69,500,000 for fiscal 2009 and $76,360,000 for fiscal 2008, are valued on the weighted average and on the FIFO
cost methods.