CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | |||||||||||||||||||
In Millions | 12 Months Ended
Jan. 30, 2010 | 12 Months Ended
Jan. 31, 2009 | |||||||||||||||||
Current assets | |||||||||||||||||||
Cash and temporary cash investments | $424 | $263 | |||||||||||||||||
Deposits in-transit | 654 | 631 | |||||||||||||||||
Receivables | 909 | 944 | |||||||||||||||||
FIFO inventory | 5,705 | 5,659 | |||||||||||||||||
LIFO reserve | (803) | (754) | |||||||||||||||||
Prefunded employee benefits | 300 | 300 | |||||||||||||||||
Prepaid and other current assets | 261 | 209 | |||||||||||||||||
Total current assets | 7,450 | 7,252 | |||||||||||||||||
Property, plant and equipment, net | 13,929 | 13,161 | |||||||||||||||||
Goodwill | 1,158 | 2,271 | |||||||||||||||||
Other assets | 556 | 573 | |||||||||||||||||
Total Assets | 23,093 | 23,257 | |||||||||||||||||
Current liabilities | |||||||||||||||||||
Current portion of long-term debt including obligations under capital leases and financing obligations | 579 | 558 | |||||||||||||||||
Trade accounts payable | 3,890 | 3,822 | |||||||||||||||||
Accrued salaries and wages | 786 | 828 | |||||||||||||||||
Deferred income taxes | 341 | 361 | |||||||||||||||||
Other current liabilities | 2,118 | 2,077 | |||||||||||||||||
Total current liabilities | 7,714 | 7,646 | |||||||||||||||||
Long-term debt including obligations under capital leases and financing obligations | |||||||||||||||||||
Face-value of long-term debt including obligations under capital leases and financing obligations | 7,420 | 7,460 | |||||||||||||||||
Adjustment related to fair-value of interest rate hedges | 57 | 45 | |||||||||||||||||
Long-term debt including obligations under capital leases and financing obligations | 7,477 | 7,505 | |||||||||||||||||
Deferred income taxes | 568 | 384 | |||||||||||||||||
Pension and postretirement benefit obligations | 1,082 | 1,174 | |||||||||||||||||
Other long-term liabilities | 1,346 | 1,248 | |||||||||||||||||
Total Liabilities | 18,187 | 17,957 | |||||||||||||||||
Commitments and contingencies (see Note 12) | [1] | [1] | |||||||||||||||||
SHAREOWNERS' EQUITY | |||||||||||||||||||
Preferred stock, $100 par per share, 5 shares authorized and unissued | 0 | 0 | |||||||||||||||||
Common stock, $1 par per share, 1,000 shares authorized; 958 shares issued in 2009 and 955 shares issued in 2008 | 958 | 955 | |||||||||||||||||
Additional paid-in capital | 3,361 | 3,266 | |||||||||||||||||
Accumulated other comprehensive loss | (593) | (495) | |||||||||||||||||
Accumulated earnings | 7,344 | 7,518 | |||||||||||||||||
Common stock in treasury, at cost, 316 shares in 2009 and 306 shares in 2008 | (6,238) | (6,039) | |||||||||||||||||
Total Shareowners' Equity - The Kroger Co. | 4,832 | 5,205 | |||||||||||||||||
Noncontrolling interests | 74 | 95 | |||||||||||||||||
Total Equity | 4,906 | 5,300 | |||||||||||||||||
Total Liabilities and Equity | $23,093 | $23,257 | |||||||||||||||||
[1]see Note 12 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | ||
Share data in Millions, except Per Share data | Jan. 30, 2010
| Jan. 31, 2009
|
CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, par per share (in dollars per share) | $100 | $100 |
Preferred stock, shares authorized | 5 | 5 |
Preferred stock, shares unissued | 5 | 5 |
Common stock, par per share (in dollars per share) | $1 | $1 |
Common stock, shares authorized | 1,000 | 1,000 |
Common stock, shares issued | 958 | 955 |
Common stock in treasury, shares | 316 | 306 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | |||
In Millions, except Per Share data | 12 Months Ended
Jan. 30, 2010 | 12 Months Ended
Jan. 31, 2009 | 12 Months Ended
Feb. 02, 2008 |
CONSOLIDATED STATEMENTS OF OPERATIONS | |||
Sales | $76,733 | $76,148 | $70,336 |
Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below | 58,958 | 58,544 | 53,711 |
Operating, general and administrative | 13,398 | 13,050 | 12,265 |
Rent | 648 | 659 | 643 |
Depreciation and amortization | 1,525 | 1,443 | 1,355 |
Goodwill impairment charge | 1,113 | ||
Operating Profit | 1,091 | 2,452 | 2,362 |
Interest expense | 502 | 485 | 474 |
Earnings before income tax expense | 589 | 1,967 | 1,888 |
Income tax expense | 532 | 717 | 664 |
Net earnings including noncontrolling interests | 57 | 1,250 | 1,224 |
Net earnings (loss) attributable to noncontrolling interests | (13) | 1 | 15 |
Net earnings attributable to The Kroger Co. | $70 | $1,249 | $1,209 |
Net earnings attributable to The Kroger Co. per basic common share (in dollars per share) | 0.11 | 1.91 | 1.75 |
Average number of common shares used in basic calculation (in shares) | 647 | 652 | 690 |
Net earnings attributable to The Kroger Co. per diluted common share (in dollars per share) | 0.11 | 1.89 | 1.73 |
Average number of common shares used in diluted calculation (in shares) | 650 | 658 | 697 |
Dividends declared per common share (in dollars per share) | 0.37 | 0.36 | 0.3 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | |||
In Millions | 12 Months Ended
Jan. 30, 2010 | 12 Months Ended
Jan. 31, 2009 | 12 Months Ended
Feb. 02, 2008 |
Cash Flows From Operating Activities: | |||
Net earnings including noncontrolling interests | $57 | $1,250 | $1,224 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||
Depreciation and amortization | 1,525 | 1,443 | 1,355 |
Goodwill impairment charge | 1,113 | ||
Asset impairment charge | 48 | 26 | 24 |
LIFO charge | 49 | 196 | 108 |
Stock-based employee compensation | 83 | 91 | 87 |
Expense for Company-sponsored pension plans | 31 | 44 | 67 |
Deferred income taxes | 222 | 341 | (68) |
Other | 53 | (63) | 14 |
Changes in operating assets and liabilities net of effects from acquisitions of businesses: | |||
Deposits in-transit | (23) | 45 | (62) |
Inventories | (45) | (193) | (381) |
Receivables | (21) | (28) | (17) |
Prepaid expenses | (51) | 47 | 3 |
Trade accounts payable | 54 | (53) | 165 |
Accrued expenses | (46) | (33) | 174 |
Income taxes receivable and payable | 49 | (206) | 43 |
Contribution to Company-sponsored pension plans | (265) | (20) | (51) |
Other | 89 | 9 | (104) |
Net cash provided by operating activities | 2,922 | 2,896 | 2,581 |
Cash Flows From Investing Activities: | |||
Payments for capital expenditures | (2,297) | (2,149) | (2,126) |
Proceeds from sale of assets | 20 | 59 | 49 |
Payments for acquisitions | (36) | (80) | (90) |
Other | (14) | (9) | (51) |
Net cash used by investing activities | (2,327) | (2,179) | (2,218) |
Cash Flows From Financing Activities: | |||
Proceeds from issuance of long-term debt | 511 | 1,377 | 1,372 |
Payments on long-term debt | (432) | (1,048) | (560) |
Borrowings (payments) on credit facility | (129) | (441) | 218 |
Excess tax benefits on stock-based awards | 4 | 15 | 36 |
Proceeds from issuance of capital stock | 51 | 172 | 188 |
Treasury stock purchases | (218) | (637) | (1,421) |
Dividends paid | (238) | (227) | (202) |
Increase in book overdrafts | 14 | 2 | 61 |
Other | 3 | 18 | (2) |
Net cash used by financing activities | (434) | (769) | (310) |
Net increase (decrease) in cash and temporary cash investments | 161 | (52) | 53 |
Cash from Consolidated Variable Interest Entity | 73 | ||
Cash and temporary cash investments: | |||
Beginning of year | 263 | 242 | 189 |
End of year | 424 | 263 | 242 |
Reconciliation of capital expenditures: | |||
Payments for capital expenditures | (2,297) | (2,149) | (2,126) |
Changes in construction-in-progress payables | (18) | (4) | 66 |
Total capital expenditures | (2,315) | (2,153) | (2,060) |
Disclosure of cash flow information: | |||
Cash paid during the year for interest | 542 | 485 | 477 |
Cash paid during the year for income taxes | $130 | $641 | $640 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (USD $) | |||||||
In Millions | Common Stock
| Additional Paid-In Capital
| Treasury Stock
| Accumulated Other Comprehensive Gain (Loss)
| Accumulated Earnings
| Noncontrolling Interest
| Total
|
Balances at Feb. 03, 2007 | $937 | $2,755 | ($4,011) | ($259) | $5,501 | $4 | $4,927 |
Balances, (in shares) at Feb. 03, 2007 | 937 | 232 | |||||
Issuance of common stock: | |||||||
Stock options exercised | 10 | 175 | 3 | 188 | |||
Stock options exercised (in shares) | 10 | ||||||
Restricted stock issued | (25) | 11 | (14) | ||||
Restricted stock issued (in shares) | (1) | ||||||
Treasury stock activity: | |||||||
Treasury stock purchases, at cost | (1,151) | (1,151) | |||||
Treasury stock purchases, at cost (in shares) | 43 | ||||||
Stock options exchanged | (270) | (270) | |||||
Stock options exchanged (in shares) | 10 | ||||||
Tax benefits (detriments) from exercise of stock options | 35 | 35 | |||||
Share-based employee compensation | 87 | 87 | |||||
Other comprehensive gain (loss) net of income tax of $(58) in 2009, $(224) in 2008, $82 in 2007 | 137 | 137 | |||||
Other | 4 | (4) | 4 | (12) | (8) | ||
Cash dividends declared ($0.37 per common share in 2009, $0.36 per common share in 2008, and $0.30 per common share in 2007) | (206) | (206) | |||||
Net earnings (loss) including noncontrolling interests | 1,209 | 15 | 1,224 | ||||
Balances at Feb. 02, 2008 | 947 | 3,031 | (5,422) | (122) | 6,508 | 7 | 4,949 |
Balances, (in shares) at Feb. 02, 2008 | 947 | 284 | |||||
Issuance of common stock: | |||||||
Stock options exercised | 8 | 162 | 3 | 173 | |||
Stock options exercised (in shares) | 8 | ||||||
Restricted stock issued | (46) | 30 | (16) | ||||
Restricted stock issued (in shares) | (1) | ||||||
Treasury stock activity: | |||||||
Treasury stock purchases, at cost | (448) | (448) | |||||
Treasury stock purchases, at cost (in shares) | 16 | ||||||
Stock options exchanged | (189) | (189) | |||||
Stock options exchanged (in shares) | 7 | ||||||
Tax benefits (detriments) from exercise of stock options | 15 | 15 | |||||
Share-based employee compensation | 91 | 91 | |||||
Other comprehensive gain (loss) net of income tax of $(58) in 2009, $(224) in 2008, $82 in 2007 | (373) | (373) | |||||
Purchase of non-wholly owned entity | 101 | 101 | |||||
Other | 13 | (13) | (2) | (14) | (16) | ||
Cash dividends declared ($0.37 per common share in 2009, $0.36 per common share in 2008, and $0.30 per common share in 2007) | (237) | (237) | |||||
Net earnings (loss) including noncontrolling interests | 1,249 | 1 | 1,250 | ||||
Balances at Jan. 31, 2009 | 955 | 3,266 | (6,039) | (495) | 7,518 | 95 | 5,300 |
Balances, (in shares) at Jan. 31, 2009 | 955 | 306 | |||||
Issuance of common stock: | |||||||
Stock options exercised | 3 | 54 | (6) | 51 | |||
Stock options exercised (in shares) | 3 | ||||||
Restricted stock issued | (59) | 42 | (17) | ||||
Restricted stock issued (in shares) | (1) | ||||||
Treasury stock activity: | |||||||
Treasury stock purchases, at cost | (156) | (156) | |||||
Treasury stock purchases, at cost (in shares) | 8 | ||||||
Stock options exchanged | (62) | (62) | |||||
Stock options exchanged (in shares) | 3 | ||||||
Tax benefits (detriments) from exercise of stock options | (2) | (2) | |||||
Share-based employee compensation | 83 | 83 | |||||
Other comprehensive gain (loss) net of income tax of $(58) in 2009, $(224) in 2008, $82 in 2007 | (98) | (98) | |||||
Other | 19 | (17) | (3) | (8) | (9) | ||
Cash dividends declared ($0.37 per common share in 2009, $0.36 per common share in 2008, and $0.30 per common share in 2007) | (241) | (241) | |||||
Net earnings (loss) including noncontrolling interests | 70 | (13) | 57 | ||||
Balances at Jan. 30, 2010 | $958 | $3,361 | ($6,238) | ($593) | $7,344 | $74 | $4,906 |
Balances, (in shares) at Jan. 30, 2010 | 958 | 316 |
1_CONSOLIDATED STATEMENT OF CHA
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) (USD $) | |||
In Millions, except Per Share data | 12 Months Ended
Jan. 30, 2010 | 12 Months Ended
Jan. 31, 2009 | 12 Months Ended
Feb. 02, 2008 |
CONSOLIDATED STATEMENT OF CHANGES IN SHAREOWNERS' EQUITY | |||
Other comprehensive gain (loss), income tax | ($58) | ($224) | $82 |
Cash dividends declared per common share (in dollars per share) | 0.37 | 0.36 | 0.3 |
2_CONSOLIDATED STATEMENT OF CHA
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (Comprehensive income) (USD $) | |||
In Millions | 12 Months Ended
Jan. 30, 2010 | 12 Months Ended
Jan. 31, 2009 | 12 Months Ended
Feb. 02, 2008 |
Comprehensive income: | |||
Net earnings including noncontrolling interests | $57 | $1,250 | $1,224 |
Unrealized gain (loss) on hedging activities, net of income tax of $2 in 2008 and $(13) in 2007 | 3 | (21) | |
Amortization of unrealized gains and losses on hedging activities, net of income tax of $1 in 2009 and $1 in 2008 | 2 | 1 | |
Change in pension and other postretirement defined benefit plans, net of income tax of $(59) in 2009, $(227) in 2008 and $95 in 2007 | (100) | (377) | 158 |
Comprehensive income (loss) | (41) | 877 | 1,361 |
Comprehensive income (loss) attributable to noncontrolling interests | (13) | 1 | 15 |
Comprehensive income (loss) attributable to The Kroger Co. | ($28) | $876 | $1,346 |
3_CONSOLIDATED STATEMENT OF CHA
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (Comprehensive income Parenthetical) (USD $) | |||
In Millions | 12 Months Ended
Jan. 30, 2010 | 12 Months Ended
Jan. 31, 2009 | 12 Months Ended
Feb. 02, 2008 |
Comprehensive income: | |||
Unrealized gain (loss) on hedging activities, income tax | $2 | ($13) | |
Amortization of unrealized gains and losses on hedging activities, income tax | 1 | 1 | |
Change in pension and other postretirement defined benefit plans, income tax | ($59) | ($227) | $95 |
ACCOUNTING POLICIES
ACCOUNTING POLICIES | |
12 Months Ended
Jan. 30, 2010 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
ACCOUNTING POLICIES | 1. ACCOUNTING POLICIES The following is a summary of the significant accounting policies followed in preparing these financial statements. Description of Business, Basis of Presentation and Principles of Consolidation The Kroger Co. (the Company) was founded in 1883 and incorporated in 1902. As of January30, 2010, the Company was one of the largest retailers in the United States based on annual sales. The Company also manufactures and processes food for sale by its supermarkets. The accompanying financial statements include the consolidated accounts of the Company, its wholly-owned subsidiaries and the Variable Interest Entities (VIE) in which the Company is the primary beneficiary. Significant intercompany transactions and balances have been eliminated. As of February1, 2009, the Company adopted the new standards for a parents noncontrolling interests in a subsidiary and applied it retrospectively. As a result, the Company reclassified noncontrolling interests in an amount of $95 from the mezzanine section to equity on the January31, 2009 Consolidated Balance Sheet and Consolidated Statement of Changes in Shareowners Equity. In addition, the Company reclassified noncontrolling interests from the mezzanine section to equity on the February3, 2007 and February2, 2008 Consolidated Statements of Changes in Shareowners Equity in the amount of $4 and $7, respectively. All activity related to the noncontrolling interests has also been reclassified and shown in the Consolidated Statements of Changes in Shareowners Equity and net earnings (loss) attributable to noncontrolling interests has been reclassified in the Consolidated Statements of Operations for all prior periods. Certain reclassifications to the Consolidated Statements of Operations have been made to prior period amounts to conform to the presentation of the current period under the new standards. Recorded amounts for prior periods previously presented as Net Earnings, which are now presented as Net Earnings Attributable to The Kroger Co., have not changed as a result of the adoption of the new standards. During 2008, the Company started reflecting certain promotional allowances in its LIFO charge and continued accounting for these promotional allowances in its evaluation of LIFO in 2009. During its 2009 LIFO analysis, it was determined that these promotional allowances should be reflected in all prior year LIFO indices. By not including these promotional allowances in all LIFO indices, the Company overstated its LIFO reserve in its 2008 and 2007 Consolidated Balance Sheets and its LIFO charge in its 2007 Consolidated Statement of Operations. The Company believes these adjustments are not material to any individual year or any quarterly period within such years presented. As a result, the Company has revised its Consolidated Financial Statements for 2008 and 2007 to correct this item. The revised 2007 Consolidated Financial Statements were adjusted by reducing the Companys LIFO charge by $46 ($29 after-tax). Fiscal Year The Companys fiscal year ends on the Saturday nearest January31. The last three fiscal years consist of the 52-week periods ended January30, 2010, |
GOODWILL
GOODWILL | |
12 Months Ended
Jan. 30, 2010 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
GOODWILL | 2. GOODWILL The following table summarizes the changes in the Companys net goodwill balance through January30, 2010. 2009 2008 Balance beginning of the year Goodwill $ 3,672 $ 3,545 Accumulated impairment losses (1,401 ) (1,401 ) 2,271 2,144 Activity during the year Goodwill impairment charge (1,113 ) Goodwill recorded 127 (1,113 ) 127 Balance end of year Goodwill 3,672 3,672 Accumulated impairment losses (2,514 ) (1,401 ) $ 1,158 $ 2,271 Testing for impairment must be performed annually, or on an interim basis upon the occurrence of a triggering event or a change in circumstances that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The annual evaluation of goodwill performed during the fourth quarter of 2009, 2008 and 2007 did not result in impairment. In the third quarter of 2009, the Companys operating performance suffered due to deflation and intense competition. During the third quarter of 2009, based on revised forecasts for 2009 and the initial results of the Companys 2010 annual budget process of the supermarket reporting units, management believed that there were circumstances evident to warrant impairment testing of these reporting units. In the third quarter of 2009, the Company did not test the variable interest entities with recorded goodwill for impairment as no triggering event occurred. Based on the results of the Companys step 1 analysis in the third quarter of 2009, the Ralphs reporting unit in Southern California was the only reporting unit for which there was a potential impairment. The operating performance of the Ralphs reporting unit was significantly affected by the current economic conditions and responses to competitive actions in Southern California. As a result of this decline in current and future expected cash flows, along with comparable fair value information, management concluded that the carrying value of goodwill for the Ralphs reporting unit exceeded its implied fair value, resulting in a pre-tax impairment charge of $1,113 ($1,036 after-tax). Subsequent to the impairment, no goodwill remains at the Ralphs reporting unit. Based on current and future expected cash flows, the Company believes additional goodwill impairments are not reasonably possible. A 10% reduction in fair value of the Companys reporting units would not indicate a potential for impairment of the Companys remaining goodwill balance, except for one supermarket and one variable interest entity reporting unit with recorded goodwill of $19 and $102, respectively. In 2008, the Company had additions to goodwill in the amount of $127. The recorded goodwill was due to investments made in The Little Clinic LLC and becoming the primary beneficiary of i-wireless, LLC in 2008. |
PROPERTY, PLANT AND EQUIPMENT,
PROPERTY, PLANT AND EQUIPMENT, NET | |
12 Months Ended
Jan. 30, 2010 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
PROPERTY, PLANT AND EQUIPMENT, NET | 3. PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consists of: 2009 2008 Land $ 2,058 $ 1,944 Buildings and land improvements 6,999 6,457 Equipment 9,553 8,993 Leasehold improvements 5,483 5,076 Construction-in-progress 1,010 880 Leased property under capital leases and financing obligations 570 550 Total property, plant and equipment 25,673 23,900 Accumulated depreciation and amortization (11,744 ) (10,739 ) Property, plant and equipment, net $ 13,929 $ 13,161 Accumulated depreciation for leased property under capital leases was $299 at January30, 2010, and $283 at January31, 2009. Approximately $382 and $396, original cost, of Property, Plant and Equipment collateralized certain mortgages at January30, 2010 and January31, 2009, respectively. |
TAXES BASED ON INCOME
TAXES BASED ON INCOME | |
12 Months Ended
Jan. 30, 2010 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
TAXES BASED ON INCOME | 4. TAXES BASED ON INCOME The provision for taxes based on income consists of: 2009 2008 2007 Federal Current $ 193 $ 304 $ 758 Deferred 275 331 (143 ) 468 635 615 State and local Current 41 46 71 Deferred 23 36 (22 ) 64 82 49 Total $ 532 $ 717 $ 664 A reconciliation of the statutory federal rate and the effective rate follows: 2009 2008 2007 Statutory rate 35.0 % 35.0 % 35.0 % State income taxes, net of federal tax benefit 7.1 % 2.7 % 1.7 % Credits (3.4 )% (1.0 )% (0.9 )% Favorable resolution of issues (2.5 )% (1.8 )% Goodwill impairment 53.9 % Other changes, net 0.3 % (0.2 )% 1.2 % 90.4 % 36.5 % 35.2 % The tax effects of significant temporary differences that comprise tax balances were as follows: 2009 2008 Current deferred tax assets: Net operating loss and credit carryforwards $ 2 $ 2 Compensation related costs 58 43 Total current deferred tax assets 60 45 Current deferred tax liabilities: Insurance related costs (119 ) (104 ) Inventory related costs (228 ) (259 ) Other (54 ) (43 ) Total current deferred tax liabilities (401 ) (406 ) Current deferred taxes $ (341 ) $ (361 ) Long-term deferred tax assets: Compensation related costs $ 487 $ 461 Lease accounting 100 100 Closed store reserves 69 65 Insurance related costs 85 64 Net operating loss and credit carryforwards 38 51 Other 3 13 Long-term deferred tax assets, net 782 754 Long-term deferred tax liabilities: Depreciation (1,337 ) (1,138 ) Other (13 ) Total long-term deferred tax liabilities (1,350 ) (1,138 ) Long-term deferred taxes $ (568 ) $ (384 ) At January30, 2010, the Company had net operating loss carryforwards for state income tax purposes of $337 that expire from 2010 through 2029. The utilization of certain of the Companys net operating loss carryforwards may be limited in a given year. At January30, 2010, the Company had State credits of $26, some of which expire from 2010 through 2027. The utilization of certain of the Companys credits may be limited in a given year. Effective February4, 2007, the Company adopted new standards for accounting for uncertainty in income taxes. As of adoption, the total amount of gross unrecognized tax benefits for uncertain tax positions, including positions impacting only the timing of tax benefits, was $694. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: 2009 2008 2007 Beginning balance $ 492 $ 469 $ 694 Additions based on tax positions related to the current year 111 53 49 Reductions based on tax positions related to the current year (4 |
DEBT OBLIGATIONS
DEBT OBLIGATIONS | |
12 Months Ended
Jan. 30, 2010 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
DEBT OBLIGATIONS | 5. DEBT OBLIGATIONS Long-term debt consists of: 2009 2008 Credit facility, commercial paper and money market borrowings $ $ 129 4.95% to 9.20% Senior notes and debentures due through 2038 7,308 7,186 5.00% to 9.95% Mortgages due in varying amounts through 2034 105 119 Other 163 163 Total debt 7,576 7,597 Less current portion (549 ) (528 ) Total long-term debt $ 7,027 $ 7,069 In 2008, the Company issued $400 of senior notes bearing an interest rate of 5.0% due in 2013, $375 of senior notes bearing an interest rate of 6.9% due in 2038 and $600 of senior notes bearing an interest rate of 7.5% due in 2014. In 2009, the Company issued $500 of senior notes bearing an interest rate of 3.9% due in 2015, the proceeds of which will be used to repay $500 of senior notes bearing an interest rate of 8.05% maturing in the first quarter of 2010. In 2009, the Company repaid $350 of senior notes bearing an interest rate of 7.25%. As of January30, 2010, the Company had a $2,500 Five-Year Credit Agreement maturing in 2011, unless earlier terminated by the Company. Borrowings under the credit agreement bear interest at the option of the Company at a rate equal to either (i)the highest, from time to time of (A)the base rate of JP Morgan Chase Bank, N.A., (B)% over a moving average of secondary market morning offering rates for three-month certificates of deposit adjusted for reserve requirements, and (C)% over the federal funds rate or (ii)an adjusted Eurodollar rate based upon the London Interbank Offered Rate (Eurodollar Rate) plus an applicable margin. In addition, the Company pays a facility fee in connection with the credit agreement. Both the applicable margin and the facility fee vary based upon the Companys achievement of a financial ratio or credit rating. At January30, 2010, the applicable margin was 0.19%, and the facility fee was 0.06%. The credit facility contains covenants, which, among other things, require the maintenance of certain financial ratios, including fixed charge coverage and leverage ratios. The Company may prepay the credit agreement in whole or in part, at any time, without a prepayment penalty. In addition to the credit agreement, the Company maintained three uncommitted money market lines totaling $100 in the aggregate. The money market lines allow the Company to borrow from banks at mutually agreed upon rates, usually at rates below the rates offered under the credit agreement. As of January30, 2010, the Company had no borrowings under its credit agreement, money market lines or outstanding commercial paper. The outstanding letters of credit that reduce funds available under the Companys credit agreement totaled $313 as of January30, 2010. Most of the Companys outstanding public debt is subject to early redemption at varying times and premiums, at the option of the Company. In addition, subject to certain conditions, some of the Companys publicly issued debt will be subject to redemption, in whole or in part, at the option of the holder upon the occurrence of a redemption event, upon not less than five days notice p |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | |
12 Months Ended
Jan. 30, 2010 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
DERIVATIVE FINANCIAL INSTRUMENTS | 6. DERIVATIVE FINANCIAL INSTRUMENTS GAAP defines derivatives, requires that derivatives be carried at fair value on the balance sheet, and provides for hedge accounting when certain conditions are met. The Companys derivative financial instruments are recognized on the balance sheet at fair value. Changes in the fair value of derivative instruments designated as cash flow hedges, to the extent the hedges are highly effective, are recorded in other comprehensive income, net of tax effects. Ineffective portions of cash flow hedges, if any, are recognized in current period earnings. Other comprehensive income or loss is reclassified into current period earnings when the hedged transaction affects earnings. Changes in the fair value of derivative instruments designated as fair value hedges, along with corresponding changes in the fair values of the hedged assets or liabilities, are recorded in current period earnings. Ineffective portions of fair value hedges, if any, are recognized in current period earnings. The Company assesses, both at the inception of the hedge and on an ongoing basis, whether derivatives used as hedging instruments are highly effective in offsetting the changes in the fair value or cash flow of the hedged items. If it is determined that a derivative is not highly effective as a hedge or ceases to be highly effective, the Company discontinues hedge accounting prospectively. Interest Rate Risk Management The Company is exposed to market risk from fluctuations in interest rates. The Company manages its exposure to interest rate fluctuations through the use of interest rate swaps (fair value hedges) and forward-starting interest rate swaps (cash flow hedges). The Companys current program relative to interest rate protection contemplates hedging the exposure to changes in the fair value of fixed-rate debt attributable to changes in interest rates. To do this, the Company uses the following guidelines: (i)use average daily outstanding borrowings to determine annual debt amounts subject to interest rate exposure, (ii)limit the average annual amount subject to interest rate reset and the amount of floating rate debt to a combined total of $2,500 or less, (iii)include no leverage products, and (iv)hedge without regard to profit motive or sensitivity to current mark-to-market status. Annually, the Company reviews with the Financial Policy Committee of the Board of Directors compliance with these guidelines. These guidelines may change as the Companys needs dictate. Fair Value Interest Rate Swaps The table below summarizes the outstanding interest rate swaps designated as fair value hedges as of January30, 2010, and January31, 2009. 2009 2008 PayFloating PayFixed PayFloating PayFixed Notional amount $ 1,625 $ $ $ Number of contracts 18 Duration in years 2.74 Average variable rate 3.80 % Average fixed rate 5.87 % Maturity Between April2012 and April2013 The gain or loss on these derivative instruments as well as the offsetting gain or loss on the hedged items attributable to the hedged risk are r |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | |
12 Months Ended
Jan. 30, 2010 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
FAIR VALUE MEASUREMENTS | 7. FAIR VALUE MEASUREMENTS In September2006, the FASB issued new standards defining fair value, establishing a market-based framework for measuring fair value and expanding disclosures about fair value measurements. The new standards did not expand or require any new fair value measurements. The standards are effective for financial assets and financial liabilities for fiscal years beginning after November15, 2007. In February2008, the FASB issued new standards deferring the effective date for most non-financial assets and non-financial liabilities to fiscal years beginning after November15, 2008. The Company adopted the new standards issued in September2006 for financial assets and financial liabilities effective February3, 2008 and adopted the remaining provisions of the new standards for nonfinancial assets and nonfinancial liabilities on February1, 2009. GAAP establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The three levels of the fair value hierarchy defined in the standards are as follows: Level 1 Quoted prices are available in active markets for identical assets or liabilities; Level 2 Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable; Level 3 Unobservable pricing inputs in which little or no market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing an asset or liability. For items carried at fair value in the consolidated financial statements, the following tables summarize the fair value of these instruments at January30, 2010 and January31, 2009: January30, 2010 Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets(Level 1) Significant Other Observable Inputs(Level 2) Significant Unobservable Inputs(Level 3) Total Available-for-Sale Securities $ 10 $ $ $ 10 Long-Lived Assets 44 44 Interest Rate Hedges 26 26 Total $ 10 $ 26 $ 44 $ 80 January31, 2009 Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets(Level 1) Significant Other Observable Inputs(Level 2) Significant Unobservable Inputs(Level 3) Total Available-for-Sale Securities $ 11 $ $ $ 11 Long-Lived Assets 15 15 Total $ 11 $ $ 15 $ 26 Fair value measurements of non-financial assets and non-financial liabilities are primarily used in the impairment analysis of goodwill, other intangible assets, and long-lived assets and in the valuation of store lease exit costs. The Company reviews goodwill and other intangible assets for impairment annually, during the fourth quarter of each fiscal year, and as circumstances indicate the possibility of impairment. See Note 2 for further discussion related to the Companys carrying value of goodwill and its goodwill impairment charge in 2009. Long-lived assets and store lease exit costs were measured at fair value on a nonrecurring basis using Level 3 inputs as de |
LEASES AND LEASE-FINANCED TRANS
LEASES AND LEASE-FINANCED TRANSACTIONS | |
12 Months Ended
Jan. 30, 2010 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
LEASES AND LEASE-FINANCED TRANSACTIONS | 8. LEASES AND LEASE-FINANCED TRANSACTIONS While the Companys current strategy emphasizes ownership of store real estate, the Company operates primarily in leased facilities. Lease terms generally range from 10 to 20 years with options to renew for varying terms. Terms of certain leases include escalation clauses, percentage rent based on sales or payment of executory costs such as property taxes, utilities or insurance and maintenance. Rent expense for leases with escalation clauses or other lease concessions are accounted for on a straight-line basis beginning with the earlier of the lease commencement date or the date the Company takes possession. Portions of certain properties are subleased to others for periods generally ranging from one to 20 years. Rent expense (under operating leases) consists of: 2009 2008 2007 Minimum rentals $ 748 $ 762 $ 746 Contingent payments 11 12 11 Tenant income (111 ) (115 ) (114 ) Total rent expense $ 648 $ 659 $ 643 Minimum annual rentals and payments under capital leases and lease-financed transactions for the five years subsequent to 2009 and in the aggregate are: CapitalLeases OperatingLeases Lease-FinancedTransactions 2010 $ 54 $ 764 $ 5 2011 59 705 5 2012 49 652 5 2013 47 600 6 2014 43 546 6 Thereafter 221 3,692 109 473 $ 6,959 $ 136 Less estimated executory costs included in capital leases (1 ) Net minimum lease payments under capital leases 472 Less amount representing interest (185 ) Present value of net minimum lease payments under capital leases $ 287 Total future minimum rentals under noncancellable subleases at January30, 2010, were $280. |
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE | |
12 Months Ended
Jan. 30, 2010 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
EARNINGS PER COMMON SHARE | 9. EARNINGS PER COMMON SHARE Net earnings attributable to The Kroger Co. per basic common share equals net earnings attributable to The Kroger Co. less income allocated to participating securities divided by the weighted average number of common shares outstanding. Net earnings attributable to The Kroger Co. per diluted common share equals net earnings attributable to The Kroger Co. less income allocated to participating securities divided by the weighted average number of common shares outstanding, after giving effect to dilutive stock options. The following table provides a reconciliation of net earnings attributable to The Kroger Co. and shares used in calculating net earnings attributable to The Kroger Co. per basic common share to those used in calculating net earnings attributable to The Kroger Co. per diluted common share: FortheyearendedJanuary30,2010 FortheyearendedJanuary31,2009 FortheyearendedFebruary2,2008 (inmillions,exceptpershareamounts) Earnings(Numer-ator) Shares(Denomi-nator) PerShareAmount Earnings(Numer-ator) Shares(Denomi-nator) PerShareAmount Earnings(Numer-ator) Shares(Denomi-nator) PerShareAmount Net earnings attributable to The Kroger Co. per basic common share $ 69 647 $ 0.11 $ 1,242 652 $ 1.91 $ 1,204 690 $ 1.75 Dilutive effect of stock options 3 6 7 Net earnings attributable to The Kroger Co. per diluted common share $ 69 650 $ 0.11 $ 1,242 658 $ 1.89 $ 1,204 697 $ 1.73 The Company had undistributed and distributed earnings to participating securities totaling $1, $7 and $5 in 2009, 2008 and 2007, respectively. For the years ended January30, 2010, January31, 2009 and February2, 2008, there were options outstanding for approximately 20.2 million, 11.8 million and 2.0 million shares of common stock, respectively, that were excluded from the computation of net earnings attributable to The Kroger Co. per diluted common share. These shares were excluded because their inclusion would have had an anti-dilutive effect on EPS. The share amounts above for 2008 and 2007 differ from those previously reported due to adopting the new standards that clarify that share-based payment awards that entitle their holders to receive nonforfeitable dividends before vesting should be considered participating securities and included in the calculation of basic EPS. The Company adopted the new standards effective February1, 2009. |
STOCK OPTION PLANS
STOCK OPTION PLANS | |
12 Months Ended
Jan. 30, 2010 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
STOCK OPTION PLANS | 10. STOCK OPTION PLANS The Company grants options for common stock (stock options) to employees, as well as to its non-employee directors, under various plans at an option price equal to the fair market value of the stock at the date of grant. The Company accounts for stock options under the fair value recognition provisions. Under this method, the Company recognizes compensation expense for all share-based payments granted after January29, 2006, as well as all share-based payments granted prior to, but not yet vested as of, January29, 2006. The Company recognizes share-based compensation expense, net of an estimated forfeiture rate, over the requisite service period of the award. Equity awards may be made at one of four meetings of its Board of Directors occurring shortly after the Companys release of quarterly earnings. The 2009 primary grant was made in conjunction with the Junemeeting of the Companys Board of Directors. Stock options typically expire 10 years from the date of grant. Stock options vest between one and five years from the date of grant, or for certain stock options, the earlier of the Companys stock reaching certain pre-determined and appreciated market prices or nine years and six months from the date of grant. At January30, 2010, approximately 18 million shares of common stock were available for future option grants under these plans. In addition to the stock options described above, the Company awards restricted stock to employees under various plans. The restrictions on these awards generally lapse between one and five years from the date of the awards. The Company records expense for restricted stock awards in an amount equal to the fair market value of the underlying stock on the grant date of the award, over the period the awards lapse. As of January30, 2010, approximately seven million shares of common stock were available for future restricted stock awards under the 2005 and 2008 Long-Term Incentive Plans (the Plans). The Company has the ability to convert shares available for stock options under the Plans to shares available for restricted stock awards. Four shares available for common stock option awards can be converted into one share available for restricted stock awards. All awards become immediately exercisable upon certain changes of control of the Company. Stock Options Changes in options outstanding under the stock option plans are summarized below: Sharessubjectto option(in millions) Weighted-averageexerciseprice Outstanding, year-end 2006 51.9 $ 20.09 Granted 3.4 $ 28.21 Exercised (10.1 ) $ 19.05 Canceled or Expired (0.4 ) $ 20.79 Outstanding, year-end 2007 44.8 $ 20.94 Granted 3.5 $ 28.49 Exercised (8.3 ) $ 21.04 Canceled or Expired (0.3 ) $ 23.08 Outstanding, year-end 2008 39.7 $ 21.58 Granted 3.6 $ 22.25 Exercised (3.4 ) $ 16.57 Canceled or Expired (5.2 ) $ 27.12 Outstanding, year-end 2009 34.7 $ 21.30 A summary of options outstanding and exercisable at January30, 2010 fo |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | |
12 Months Ended
Jan. 30, 2010 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
COMMITMENTS AND CONTINGENCIES | 11. COMMITMENTS AND CONTINGENCIES The Company continuously evaluates contingencies based upon the best available evidence. The Company believes that allowances for loss have been provided to the extent necessary and that its assessment of contingencies is reasonable. To the extent that resolution of contingencies results in amounts that vary from the Companys estimates, future earnings will be charged or credited. The principal contingencies are described below: Insurance The Companys workers compensation risks are self-insured in certain states. In addition, other workers compensation risks and certain levels of insured general liability risks are based on retrospective premium plans, deductible plans, and self-insured retention plans. The liability for workers compensation risks is accounted for on a present value basis. Actual claim settlements and expenses incident thereto may differ from the provisions for loss. Property risks have been underwritten by a subsidiary and are reinsured with unrelated insurance companies. Operating divisions and subsidiaries have paid premiums, and the insurance subsidiary has provided loss allowances, based upon actuarially determined estimates. Litigation On October6, 2006, the Company petitioned the Tax Court (In Re: Ralphs Grocery Company and Subsidiaries, formerly known as Ralphs Supermarkets,Inc., Docket No.20364-06) for a redetermination of deficiencies set by the Commissioner of Internal Revenue. The dispute at issue involves a 1992 transaction in which Ralphs Holding Company acquired the stock of Ralphs Grocery Company and made an election under Section338(h)(10)of the Internal Revenue Code. The Commissioner has determined that the acquisition of the stock was not a purchase as defined by Section338(h)(3)of the Internal Revenue Code and that the acquisition does not qualify as a purchase. The Company believes that it has strong arguments in favor of its position and believes it is more likely than not that its position will be sustained. However, due to the inherent uncertainty involved in the litigation process, there can be no assurances that the Tax Court will rulein favor of the Company. A decision on this case is expected within the next 12 months. As of January30, 2010, an adverse decision would require a cash payment up to approximately $488, including interest. Any accounting implications of an adverse decision in this case would be charged through the statement of operations. On February2, 2004, the Attorney General for the State of California filed an action in Los Angeles federal court (California, ex rel Lockyer v. Safeway,Inc. dba Vons, a Safeway Company; Albertsons,Inc. and Ralphs Grocery Company, a division of The Kroger Co., United States District Court Central District of California, Case No.CV04-0687) alleging that the Mutual Strike Assistance Agreement (the Agreement) between the Company, Albertsons,Inc. and Safeway Inc. (collectively, the Retailers), which was designed to prevent the union from placing disproportionate pressure on one or more of the Retailers by picketing such Retailer(s)but not the other Retailer(s)during the labor dispute in southern Cal |
STOCK
STOCK | |
12 Months Ended
Jan. 30, 2010 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
STOCK | 12. STOCK Preferred Stock The Company has authorized five million shares of voting cumulative preferred stock; two million were available for issuance at January30, 2010. The stock has a par value of $100 per share and is issuable in series. Common Stock The Company has authorized one billion shares of common stock, $1 par value per share. On May20, 1999, the shareholders authorized an amendment to the Amended Articles of Incorporation to increase the authorized shares of common stock from one billion to two billion when the Board of Directors determines it to be in the best interest of the Company. Common Stock Repurchase Program The Company maintains stock repurchase programs that comply with Securities Exchange Act Rule10b5-1 to allow for the orderly repurchase of The Kroger Co. stock, from time to time. The Company made open market purchases totaling $156, $448 and $1,151 under these repurchase programs in 2009, 2008 and 2007, respectively. In addition to these repurchase programs, in December1999, the Company began a program to repurchase common stock to reduce dilution resulting from its employee stock option plans. This program is solely funded by proceeds from stock option exercises, and the related tax benefit. The Company repurchased approximately $62, $189 and $270 under the stock option program during 2009, 2008 and 2007, respectively. |
BENEFIT PLANS
BENEFIT PLANS | |
12 Months Ended
Jan. 30, 2010 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
BENEFIT PLANS | 13. BENEFIT PLANS Company-Sponsored Plans The Company administers non-contributory defined benefit retirement plans for substantially all non-union employees and some union-represented employees as determined by the terms and conditions of collective bargaining agreements. These include several qualified pension plans (the Qualified Plans) and a non-qualified plan (the Non-Qualified Plan). The Non-Qualified Plan pays benefits to any employee that earns in excess of the maximum allowed for the Qualified Plans by Section415 of the Internal Revenue Code. The Company only funds obligations under the Qualified Plans. Funding for the pension plans is based on a review of the specific requirements and on evaluation of the assets and liabilities of each plan. In addition to providing pension benefits, the Company provides certain health care benefits for retired employees. The majority of the Companys employees may become eligible for these benefits if they reach normal retirement age while employed by the Company. Funding of retiree health care benefits occurs as claims or premiums are paid. Effective February3, 2007, the Company adopted the new standards for recognition and disclosure provisions (except for the measurement date change) for defined benefit pension and other postretirement plans, which requires the recognition of the funded status of its retirement plans on the Consolidated Balance Sheet. Actuarial gains or losses, prior service costs or credits and transition obligations that have not yet been recognized are required to be recorded as a component of AOCI. The Company adopted the measurement date provisions of these new standards effective February3, 2008. The majority of our pension and postretirement plans previously used a December31 measurement date. All plans are now measured as of the Companys fiscal year end. In 2008, the non-cash effect of the adoption of the measurement date provisions decreased shareowners equity by approximately $5 ($3 after-tax) and increased long-term liabilities by approximately $5. There was no effect on the Companys results of operations. Amounts recognized in AOCI as of January30, 2010 consist of the following (pre-tax): January30, 2010 Pension Benefits Other Benefits Total Unrecognized net actuarial loss (gain) $ 1,011 $ (62 ) $ 949 Unrecognized prior service cost (credit) 4 (22 ) (18 ) Unrecognized transition obligation 1 1 Total $ 1,016 $ (84 ) $ 932 Amounts in AOCI expected to be recognized as components of net periodic pension or postretirement benefit costs in 2010 are as follows (pre-tax): January30, 2010 Pension Benefits Other Benefits Total Net actuarial loss (gain) $ 52 $ (2 ) $ 50 Prior service cost (credit) 1 (5 ) (4 ) Total $ 53 $ (7 ) $ 46 Other changes recognized in other comprehensive income in 2009 are as follows (pre-tax): January30, 2010 Pension Benefits Other Benefits Total Incurred net actuarial loss $ 142 $ 21 $ 163 Amortization of |
RECENTLY ADOPTED ACCOUNTING STA
RECENTLY ADOPTED ACCOUNTING STANDARDS | |
12 Months Ended
Jan. 30, 2010 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
RECENTLY ADOPTED ACCOUNTING STANDARDS | 14. RECENTLY ADOPTED ACCOUNTING STANDARDS In December2008, the FASB amended its existing standards to provide additional guidance on employers disclosures about the plan assets of defined benefit pension or other postretirement plans. The new standards require disclosures about how investment allocation decisions are made, the fair value of each major category of plan assets, valuation techniques used to develop fair value measurements of plan assets, the effect of measurements on changes in plan assets when using significant unobservable inputs and significant concentrations of risk in the plan assets. The new standards become effective for fiscal years ending after December15, 2009. The Company adopted the amended standards effective January30, 2010. See Note 13 to the Consolidated Financial Statements for the new required disclosures. Effective May24, 2009, the Company adopted new standards for subsequent events. The purpose of the new standards is to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. See Note 17 to the Consolidated Financial Statements for the new required disclosures. Effective May24, 2009, the Company adopted new standards that effect the accounting and disclosures related to certain financial instruments including: (a)providing additional guidance for estimating fair value when the volume and level of activity for the asset or liability have significantly decreased; (b)identifying circumstances that indicate a transaction is not orderly; (c)amending the other-than-temporary impairment guidance for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements; and (d)requiring disclosures about the fair value of financial instruments on an interim basis in addition to the annual disclosure requirements. The new disclosures are included in Note 7 to the Consolidated Financial Statements. The adoption of these new standards did not have a material effect on the Companys Consolidated Financial Statements. Effective February1, 2009, the Company adopted the new standards that require enhanced disclosures on an entitys derivative and hedging activities. The new disclosures are included in Note 6 to the Consolidated Financial Statements. Effective February1, 2009, the Company adopted the new standards that clarify that share-based payment awards that entitle their holders to receive nonforfeitable dividends before vesting should be considered participating securities and included in the computation of EPS pursuant to the two-class method. See Note 9 to the Consolidated Financial Statements for further discussion of its adoption. Effective February1, 2009, the Company adopted new standards related to business combinations. The new standards expand the definitions of a business and the fair value measurement and reporting in a business combination. All business combinations completed after February1, 2009, will be accounted for under the new st |
RECENTLY ISSUED ACCOUNTING STAN
RECENTLY ISSUED ACCOUNTING STANDARDS | |
12 Months Ended
Jan. 30, 2010 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
RECENTLY ISSUED ACCOUNTING STANDARDS | 15. RECENTLY ISSUED ACCOUNTING STANDARDS In June2009, the FASB amended its existing standards to change how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The new standards will become effective for the Companys fiscal year beginning January31, 2010. While the Company is still finalizing its evaluation of the impact of these amended standards on its Consolidated Financial Statements, the Company believes these new standards will not have a material impact on its Consolidated Financial Statements. In January2010, the FASB issued guidance which amends and clarifies existing guidance related to fair value measurements and disclosures. This guidance requires new disclosures for (1)transfers in and out of Level 1 and Level 2 and reasons for such transfers; and (2)the separate presentation of purchases, sales, issuances and settlement in the Level 3 reconciliation. It also clarifies guidance around disaggregation and disclosures of inputs and valuation techniques for Level 2 and Level 3 fair value measurements. This guidance is effective for the Company for the first quarter of 2010, except for the new disclosures in the Level 3 reconciliation. The Level 3 disclosures are effective for the Company for the first quarter of 2011. The Company does not expect that this guidance will have a material impact on its Consolidated Financial Statements. |
GUARANTOR SUBSIDIARIES
GUARANTOR SUBSIDIARIES | |
12 Months Ended
Jan. 30, 2010 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
GUARANTOR SUBSIDIARIES | 16. GUARANTOR SUBSIDIARIES The Companys outstanding public debt (the Guaranteed Notes) is jointly and severally, fully and unconditionally guaranteed by The Kroger Co. and some of its subsidiaries (the Guarantor Subsidiaries). At January30, 2010, a total of approximately $7,308 of Guaranteed Notes was outstanding. The Guarantor Subsidiaries and non-guarantor subsidiaries are wholly-owned subsidiaries of The Kroger Co. Separate financial statements of The Kroger Co. and each of the Guarantor Subsidiaries are not presented because the guarantees are full and unconditional and the Guarantor Subsidiaries are jointly and severally liable. The Company believes that separate financial statements and other disclosures concerning the Guarantor Subsidiaries would not be material to investors. The non-guaranteeing subsidiaries represent less than 3% on an individual and aggregate basis of consolidated assets, pre-tax earnings, cash flow, and equity. Therefore, the non-guarantor subsidiaries information is not separately presented in the tables below. There are no current restrictions on the ability of the Guarantor Subsidiaries to make payments under the guarantees referred to above, except, however, the obligations of each guarantor under its guarantee are limited to the maximum amount as will result in obligations of such guarantor under its guarantee not constituting a fraudulent conveyance or fraudulent transfer for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act, or any similar Federal or state law (e.g., adequate capital to pay dividends under corporate laws). The following tables present summarized financial information as of January30, 2010 and January31, 2009 and for the three years ended January30, 2010. Condensed Consolidating Balance Sheets As of January30, 2010 TheKroger Co. GuarantorSubsidiaries Eliminations Consolidated Current assets Cash and temporary cash investments $ 29 $ 395 $ $ 424 Deposits in-transit 76 578 654 Receivables 2,173 734 (1,998 ) 909 Net inventories 460 4,442 4,902 Prepaid and other current assets 405 156 561 Total current assets 3,143 6,305 (1,998 ) 7,450 Property, plant and equipment, net 1,823 12,106 13,929 Goodwill 5 1,153 1,158 Other assets 814 1,771 (2,029 ) 556 Investment in and advances to subsidiaries 9,999 (9,999 ) Total Assets $ 15,784 $ 21,335 $ (14,026 ) $ 23,093 Current liabilities Current portion of long-term debt including obligations under capital leases and financing obligations $ 579 $ $ $ 579 Trade accounts payable 372 3,518 3,890 Other current liabilities 1,135 6,137 (4,027 ) 3,245 Total current liabilities 2,086 9,655 (4,027 ) 7,714 Long-term debt including obligations under capital leases and financing obligations Face value of long-term debt including obligations under capital leases |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | |
12 Months Ended
Jan. 30, 2010 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
SUBSEQUENT EVENTS | 17. SUBSEQUENT EVENTS In February2010, the Company purchased the remaining outstanding shares of The Little Clinic LLC for $86. At year-end 2009, The Little Clinic LLC was a consolidated VIE. On March9, 2010, the Company filed an action (The Kroger Co., et al. v. Excentus Corporation, Case No.1:10-cv-00161-SSB, in the United States District Court for the Southern District of Ohio, Western Division at Cincinnati) seeking a declaration that the Companys actions related to fuel rewards programs do not infringe certain patents allegedly held by Excentus Corporation and that certain patents allegedly held by Excentus Corporation are invalid. Shortly after the Company filed the action, on March9, 2010, Excentus Corporation filed an action against the Company (Excentus Corporation v. The Kroger Co., Case No.3:10-cv-00483, in the United States District Court for the Northern District of Texas, Dallas Division) seeking to recover damages from the Company for its alleged infringement of patents claimed to be held by Excentus Corporation, along with injunctive relief enjoining the Company from infringing the patents by reason of its actions related to fuel reward programs. Although these lawsuits are subject to uncertainties inherent in the litigation process and have only recently been filed, based on the information available to the Company, management does not expect that the ultimate resolution of these matters will have a material adverse effect on the Companys financial condition, results of operations, or cash flows. |
QUARTERLY DATA
QUARTERLY DATA (UNAUDITED) | |
12 Months Ended
Jan. 30, 2010 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | |
QUARTERLY DATA (UNAUDITED) | 18. QUARTERLY DATA (UNAUDITED) Quarter 2009 First(16Weeks) Second(12Weeks) Third(12Weeks) Fourth(12Weeks) TotalYear(52Weeks) Sales $ 22,789 $ 17,728 $ 17,662 $ 18,554 $ 76,733 Net earnings (loss) attributable to The Kroger Co. $ 435 $ 255 $ (875 $ 255 $ 70 Net earnings (loss) attributable to The Kroger Co. per basic common share $ 0.67 $ 0.39 $ (1.35 ) $ 0.39 $ 0.11 Average number of shares used in basic calculation 648 648 646 644 647 Net earnings (loss) attributable to The Kroger Co. per diluted common share $ 0.66 $ 0.39 $ (1.35 ) $ 0.39 $ 0.11 Average number of shares used in diluted calculation 651 651 646 648 650 Quarter 2008 First(16Weeks) Second(12Weeks) Third(12Weeks) Fourth(12Weeks) TotalYear(52Weeks) Sales $ 23,137 $ 18,088 $ 17,615 $ 17,308 $ 76,148 Net earnings attributable to The Kroger Co. $ 386 $ 277 $ 237 $ 349 $ 1,249 Net earnings attributable to The Kroger Co. per basic common share $ 0.58 $ 0.42 $ 0.36 $ 0.54 $ 1.91 Average number of shares used in basic calculation 657 651 649 648 652 Net earnings attributable to The Kroger Co. per diluted common share $ 0.58 $ 0.42 $ 0.36 $ 0.53 $ 1.89 Average number of shares used in diluted calculation 663 658 655 654 658 Annual amounts may not sum due to rounding. |
Document And Entity Information
Document And Entity Information (USD $) | |||
In Billions, except Share data | 12 Months Ended
Jan. 30, 2010 | Mar. 26, 2010
| Aug. 15, 2009
|
Document and Entity Information | |||
Entity Registrant Name | KROGER CO | ||
Entity Central Index Key | 0000056873 | ||
Document Type | 10-K | ||
Document Period End Date | 2010-01-30 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --01-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | 13.7 | ||
Entity Common Stock, Shares Outstanding | 646,221,726 | ||
Document Fiscal Year Focus | 2,009 | ||
Document Fiscal Period Focus | FY |