Harris Teeter 2010 Annual Report Download - page 41

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Ruddick Corporation and
subsidiaries, including its wholly owned operating companies, Harris Teeter, Inc. (“Harris Teeter”) and American
& Efird, Inc. (“A&E”), collectively referred to herein as the Company. All material intercompany amounts have
been eliminated. To the extent that non-affiliated parties held minority equity investments in joint ventures of the
Company, such investments are classified as noncontrolling interest.
The Company reviews its investments in entities to determine if such entities are deemed to be variable interest
entities (VIE’s) as defined by ASC paragraph 810-10-05-8. The Company will consolidate those VIE’s in which
the Company is the primary beneficiary of the entity. The Company concluded that it did not have any VIE’s that
required consolidation in the reported fiscal years.
In December 2007, the Financial Accounting Standards Board (“FASB”) issued new guidance on accounting
for the noncontrolling interest in the consolidated financial statements. The Company implemented the new
guidance effective September 28, 2009, the beginning of the first quarter of fiscal 2010. The new guidance changed
the accounting and reporting standards for the noncontrolling interest in a subsidiary (previously referred to as
minority interest). There are noncontrolling interest in certain A&E subsidiaries. Net income attributable to the
noncontrolling interest of $594,000 and $484,000 for the 52 weeks of fiscal 2009 and fiscal 2008, respectively, has
been reclassified within the Company’s Consolidated Statements of Operations. The amount of consolidated net
income attributable to both the Company and the noncontrolling interest are shown in the Company’s Consolidated
Statements of Operations. Noncontrolling interest in A&E subsidiaries totaled $6.5 million and $6.8 million at
October 3, 2010 and September 27, 2009, respectively. These amounts have been classified as noncontrolling
interest in the equity section of the Company’s Consolidated Balance Sheets.
Fiscal Year
The Company’s fiscal year ends on the Sunday nearest to September 30. However, the Company’s Harris
Teeter subsidiary’s fiscal periods end on the Tuesday following the Company’s fiscal period end. Fiscal year 2010
includes the 53 weeks ended October 3, 2010 (October 5, 2010 for Harris Teeter), and fiscal years 2009 and 2008
include the 52 weeks ended September 27, 2009 (September 29, 2009 for Harris Teeter) and September 28, 2008
(September 30, 2008 for Harris Teeter), respectively.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual amounts could differ from those estimates.
Cash and Cash Equivalents
For purposes of the statements of consolidated cash flows, the Company considers all highly liquid cash
investments purchased with a maturity of three months or less to be cash equivalents.
Inventories
The Company’s 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. Foreign inventories and limited
categories of domestic inventories are valued on the weighted average and on the first-in, first-out (FIFO) cost
methods. Under the LIFO valuation method at Harris Teeter, all retail store inventories are initially stated at
estimated cost as calculated by the Retail Inventory Method (RIM). Under RIM, the valuation of inventories at
RUDDICK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
36