Harris Teeter 2009 Annual Report Download - page 47

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43
RUDDICK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
The following table summarizes the components of inventories at September 27, 2009 and September 28,
2008 (in thousands):
2009 2008
Finished Goods ................................. $ 286,113 $ 281,952
Raw Materials and Supplies ....................... 19,504 23,901
Work in Process ................................ 4,654 6,736
Total Inventories ................................ $ 310,271 $ 312,589
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 $57,965,000 at September 27, 2009 and $54,880,000 at September 28,
2008, and no policy loans were outstanding at either date.
INTANGIBLE ASSETS
The carrying amount of intangible assets at September 27, 2009 and September 28, 2008 was as follows
(in thousands):
2009 2008
Acquired favorable operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,170 $ 18,170
Customer lists ......................................................... 5,534 5,534
Land use rights – foreign operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,451 4,439
Non-compete agreements ................................................ 2,963 4,054
Trademarks, licenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,554 2,554
Total amortizing intangibles .............................................. 33,672 34,751
Accumulated amortization ............................................... (9,918) (8,396)
Total intangible assets, net of accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . $ 23,754 $ 26,355
Acquired favorable operating leases are recorded at Harris Teeter. All other intangible assets are recorded
by A&E. The Company has no non-amortizing intangible assets. Amortization expense for intangible assets was
$2,613,000, $2,658,000 and $2,619,000 in fiscal years 2009, 2008, and 2007, respectively. Amortizing intangible
assets have remaining useful lives from one year to 46 years. Projected amortization expense for intangible
assets existing as of September 27, 2009 is: $2,340,000, $1,898,000, $1,697,000, $1,595,000 and $1,544,000 for
fiscal years 2010, 2011, 2012, 2013 and 2014, respectively.
GOODWILL
Goodwill is recorded by A&E. On an annual basis, A&E performs a fair value-based impairment test on
the net book value of goodwill and will perform the same procedures on an interim basis if certain events or
circumstances indicate that an impairment loss may have occurred. The annual review was conducted in the
first quarter of fiscal 2009, resulting in no goodwill impairment charge being required. However, the continuing
deterioration of the economy during fiscal 2009, particularly with respect to A&E’s customers in the retail apparel
and non-apparel markets, caused management to lower the expected future cash flows of A&E’s U.S. operating
segment used in the strategic plan that is completed annually in third fiscal quarter. The reduced cash flow
projections indicated the possibility of impairment which required A&E to perform an interim impairment test