Harris Teeter 2009 Annual Report Download - page 53

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49
RUDDICK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
As of September 27, 2009, all outstanding stock options were exercisable and the price per share ranged
from $11.50 to $35.24. The total cash received from stock options exercised for the exercise price and related tax
deductions are included in the Consolidated Condensed Statements of Shareholders’ Equity and Comprehensive
Income. The Company has historically issued new shares to satisfy the stock options exercised. The aggregate
intrinsic value of stock options outstanding at September 27, 2009 and September 28, 2008 was as follows (in
thousands):
2009 2008
Intrinsic value of outstanding options at end of fiscal year .......................... $3,859 $8,346
Intrinsic value of options exercisable at end of fiscal year . . . . . . . . . . . . . . . . . . . . . . . . . . 3,859 6,713
The aggregate intrinsic value of stock options exercised during fiscal 2009, 2008 and 2007 was $1,153,000,
$4,847,000 and $6,178,000, respectively.
INCOME TAXES
The Company adopted the provisions on accounting for uncertainty in income taxes as prescribed by ASC
Subtopic 740-10 at the beginning of fiscal 2008. At the date of adoption, the Company’s consolidated balance
sheet included $6.7 million of tax positions that are highly certain but for which there is uncertainty about the
timing. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of
these positions would not affect the annual effective tax rate but would accelerate the payment of cash to the tax
authority to an earlier period. Also as of the adoption date, the Company had accrued interest expense related to
the unrecognized tax liabilities of approximately $1.2 million. Due to the timing nature of the tax positions and
the amount of related interest previously accrued, there was no cumulative effect of adopting the new provisions
required to be recorded against retained earnings or material effect on the Company’s financial position, results
of operations or cash flows.
The following table provides a reconciliation of the unrecognized tax liability for fiscal years 2009 and
2008 (in thousands):
2009 2008
Gross taxes at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,036 $ 7,089
Additions based on tax positions related to the current year ...................... — —
Additions for tax positions of prior years ..................................... 510 239
Reductions for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,590) (792)
Reductions for settlements ................................................ — —
Reductions for deposits made .............................................. — (1,500)
Gross taxes at end of year ................................................. 3,956 5,036
Accumulated interest .................................................... 1,239 1,400
Federal tax benefit of state income tax deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (192) (289)
Balance included in the Consolidated Balance Sheets at end of year . . . . . . . . . . . . . . . $ 5,003 $ 6,147
The Company and its subsidiaries file a consolidated U.S. federal income tax return. The U.S. federal
statute of limitations remains open for the fiscal year 1999 and onward with fiscal years 1999 to 2004 under
examination by the Internal Revenue Service (the “IRS”). In connection with the fiscal years under examination,
the Company has reached a settlement with the Appeals Division of the IRS and is in the process of completing
the required documents and amending tax returns where required. The Company and some of its subsidiaries
file separate tax returns with the state of North Carolina. The North Carolina statute of limitations for a
few entities remains open for the fiscal years 2004 to 2006 due to an on-going audit by the North Carolina