Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Nov. 09, 2013 | Dec. 11, 2013 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'KROGER CO | ' |
Entity Central Index Key | '0000056873 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 9-Nov-13 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--02-01 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 516,526,256 |
Document Fiscal Year Focus | '2013 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | Nov. 09, 2013 | Nov. 03, 2012 | Nov. 09, 2013 | Nov. 03, 2012 |
CONSOLIDATED STATEMENTS OF OPERATIONS | ' | ' | ' | ' |
Sales | $22,505 | $21,807 | $75,270 | $72,598 |
Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below | 17,889 | 17,383 | 59,832 | 57,757 |
Operating, general and administrative | 3,549 | 3,305 | 11,664 | 11,161 |
Rent | 138 | 141 | 466 | 471 |
Depreciation | 395 | 382 | 1,301 | 1,265 |
Operating profit | 534 | 596 | 2,007 | 1,944 |
Interest expense | 108 | 103 | 336 | 350 |
Earnings before income tax expense | 426 | 493 | 1,671 | 1,594 |
Income tax expense | 125 | 175 | 567 | 555 |
Net earnings including noncontrolling interests | 301 | 318 | 1,104 | 1,039 |
Net earnings attributable to noncontrolling interests | 2 | 1 | 7 | 4 |
Net earnings attributable to The Kroger Co. | $299 | $317 | $1,097 | $1,035 |
Net earnings attributable to The Kroger Co. per basic common share (in dollars per share) | $0.58 | $0.61 | $2.11 | $1.90 |
Average number of common shares used in basic calculation (in shares) | 515 | 518 | 515 | 539 |
Net earnings attributable to The Kroger Co. per diluted common share (in dollars per share) | $0.57 | $0.60 | $2.09 | $1.89 |
Average number of common shares used in diluted calculation (in shares) | 521 | 522 | 521 | 543 |
Dividends declared per common share (in dollars per share) | $0.17 | $0.15 | $0.47 | $0.38 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Millions, unless otherwise specified | Nov. 09, 2013 | Nov. 03, 2012 | Nov. 09, 2013 | Nov. 03, 2012 | ||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ' | ' | ' | ' | ||||
Net earnings including noncontrolling interests | $301 | $318 | $1,104 | $1,039 | ||||
Other comprehensive income | ' | ' | ' | ' | ||||
Unrealized gain (loss) on available for sale securities, net of income tax | -1 | [1] | ' | 3 | [1] | ' | ||
Amortization of amounts included in net periodic pension expense, net of income tax | 14 | [2] | 13 | [2] | 47 | [2] | 44 | [2] |
Unrealized gains and losses on cash flow hedging activities, net of income tax | -2 | [3] | 3 | [3] | -11 | [3] | -11 | [3] |
Amortization of unrealized gains and losses on cash flow hedging activities, net of income tax | ' | 1 | [4] | 1 | [4] | 3 | [4] | |
Total other comprehensive income | 11 | 17 | 40 | 36 | ||||
Comprehensive income | 312 | 335 | 1,144 | 1,075 | ||||
Comprehensive income attributable to noncontrolling interests | 2 | 1 | 7 | 4 | ||||
Comprehensive income attributable to The Kroger Co. | $310 | $334 | $1,137 | $1,071 | ||||
[1] | Amount is net of tax of $2 for the first three quarters of 2013. | |||||||
[2] | Amount is net of tax of $9 for the third quarter of 2013 and $8 for the third quarter of 2012. Amount is net of tax of $29 for the first three quarters of 2013 and $27 for the first three quarters of 2012. | |||||||
[3] | Amount is net of tax of $(3) for the third quarter of 2013 and $2 for the third quarter of 2012. Amount is net of tax of $(8) for the first three quarters of 2013 and $(7) for the first three quarters of 2012. | |||||||
[4] | Amount is net of tax of $1 for the third quarter and the first three quarters of 2013. |
CONSOLIDATED_STATEMENTS_OF_COM1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Nov. 09, 2013 | Nov. 03, 2012 | Nov. 09, 2013 | Nov. 03, 2012 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ' | ' | ' | ' |
Unrealized gain on available for sale securities, income tax | ' | ' | $2 | ' |
Amortization of amounts included in net periodic pension expense, income tax | 9 | 8 | 29 | 27 |
Unrealized loss on cash flow hedging activities, income tax | -3 | 2 | -8 | -7 |
Amortization of unrealized gains and losses on cash flow hedging activities, income tax | $1 | ' | $1 | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Nov. 09, 2013 | Feb. 02, 2013 |
In Millions, unless otherwise specified | ||
Current assets | ' | ' |
Cash and temporary cash investments | $344 | $238 |
Store deposits in-transit | 881 | 955 |
Receivables | 1,044 | 1,051 |
FIFO inventory | 6,768 | 6,244 |
LIFO reserve | -1,140 | -1,098 |
Prepaid and other current assets | 315 | 569 |
Total current assets | 8,212 | 7,959 |
Property, plant and equipment, net | 15,456 | 14,849 |
Goodwill | 1,234 | 1,234 |
Other assets | 578 | 593 |
Total Assets | 25,480 | 24,635 |
Current liabilities | ' | ' |
Current portion of long-term debt including obligations under capital leases and financing obligations | 1,122 | 2,734 |
Trade accounts payable | 4,941 | 4,484 |
Accrued salaries and wages | 1,047 | 1,017 |
Deferred income taxes | 284 | 284 |
Other current liabilities | 2,799 | 2,538 |
Total current liabilities | 10,193 | 11,057 |
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 | 7,148 | 6,141 |
Adjustment to reflect fair-value interest rate hedges | ' | 4 |
Long-term debt including obligations under capital leases and financing obligations | 7,148 | 6,145 |
Deferred income taxes | 816 | 800 |
Pension and postretirement benefit obligations | 1,207 | 1,291 |
Other long-term liabilities | 1,126 | 1,128 |
Total Liabilities | 20,490 | 20,421 |
Commitments and contingencies (see Note 8) | ' | ' |
SHAREOWNERS' EQUITY | ' | ' |
Preferred shares, $100 per share, 5 shares authorized and unissued | ' | ' |
Common shares, $1 par per share, 1,000 shares authorized; 959 shares issued in 2013 and 2012 | 959 | 959 |
Additional paid-in capital | 3,513 | 3,451 |
Accumulated other comprehensive loss | -713 | -753 |
Accumulated earnings | 10,651 | 9,787 |
Common shares in treasury, at cost, 445 shares in 2013 and 2012 | -9,426 | -9,237 |
Total Shareowners' Equity - The Kroger Co. | 4,984 | 4,207 |
Noncontrolling interests | 6 | 7 |
Total Equity | 4,990 | 4,214 |
Total Liabilities and Equity | $25,480 | $24,635 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Nov. 09, 2013 | Feb. 02, 2013 |
In Millions, except Per Share data, unless otherwise specified | ||
CONSOLIDATED BALANCE SHEETS | ' | ' |
Preferred shares, per share (in dollars per share) | $100 | $100 |
Preferred shares, shares authorized | 5 | 5 |
Preferred shares, shares unissued | 5 | 5 |
Common shares, par per share (in dollars per share) | $1 | $1 |
Common shares, shares authorized | 1,000 | 1,000 |
Common shares, shares issued | 959 | 959 |
Common shares in treasury, shares | 445 | 445 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
In Millions, unless otherwise specified | Nov. 09, 2013 | Nov. 03, 2012 |
Cash Flows from Operating Activities: | ' | ' |
Net earnings including noncontrolling interests | $1,104 | $1,039 |
Adjustments to reconcile net earnings including noncontrolling interests to net cash provided by operating activities: | ' | ' |
Depreciation | 1,301 | 1,265 |
LIFO charge | 42 | 96 |
Stock-based employee compensation | 78 | 61 |
Expense for Company-sponsored pension plans | 57 | 68 |
Deferred income taxes | 21 | 130 |
Other | 62 | 37 |
Changes in operating assets and liabilities net of effects from acquisitions of businesses: | ' | ' |
Store deposits in-transit | 74 | -134 |
Receivables | 5 | -131 |
Inventories | -524 | -531 |
Prepaid expenses | 262 | -32 |
Trade accounts payable | 402 | 386 |
Accrued expenses | 142 | 57 |
Income taxes receivable and payable | 11 | 115 |
Other | -120 | -158 |
Net cash provided by operating activities | 2,917 | 2,268 |
Cash Flows from Investing Activities: | ' | ' |
Payments for property and equipment, including payments for lease buyouts | -1,786 | -1,471 |
Proceeds from sale of assets | 15 | 23 |
Payments for acquisitions | ' | -12 |
Other | -47 | -28 |
Net cash used by investing activities | -1,818 | -1,488 |
Cash Flows from Financing Activities: | ' | ' |
Proceeds from issuance of long-term debt | 1,025 | 850 |
Dividends paid | -233 | -189 |
Payments on long-term debt | -431 | -921 |
Net (payments) borrowings on commercial paper | -1,220 | 744 |
Excess tax benefits on stock-based awards | 24 | 5 |
Proceeds from issuance of capital stock | 186 | 72 |
Treasury stock purchases | -384 | -1,204 |
Net increase in book overdrafts | 56 | 115 |
Other | -16 | -5 |
Net cash used by financing activities | -993 | -533 |
Net increase in cash and temporary cash investments | 106 | 247 |
Cash and temporary cash investments: | ' | ' |
Beginning of year | 238 | 188 |
End of quarter | 344 | 435 |
Reconciliation of capital investments: | ' | ' |
Payments for property and equipment, including payments for lease buyouts | -1,786 | -1,471 |
Payments for lease buyouts | 108 | 24 |
Changes in construction-in-progress payables | -110 | -11 |
Total capital investments, excluding lease buyouts | -1,788 | -1,458 |
Disclosure of cash flow information: | ' | ' |
Cash paid during the year for interest | 308 | 320 |
Cash paid during the year for income taxes | $489 | $334 |
CONSOLIDATED_STATEMENTS_OF_CHA
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY (USD $) | Total | Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Gain (Loss) | Accumulated Earnings | Noncontrolling Interest |
In Millions, unless otherwise specified | |||||||
Balances at Jan. 28, 2012 | $3,966 | $959 | $3,427 | ($8,132) | ($844) | $8,571 | ($15) |
Balances (in shares) at Jan. 28, 2012 | ' | 959 | ' | 398 | ' | ' | ' |
Issuance of common stock: | ' | ' | ' | ' | ' | ' | ' |
Stock options exercised | 72 | ' | ' | 72 | ' | ' | ' |
Stock options exercised (in shares) | ' | ' | ' | -4 | ' | ' | ' |
Restricted stock issued | -19 | ' | -57 | 38 | ' | ' | ' |
Restricted stock issued (in shares) | ' | ' | ' | -2 | ' | ' | ' |
Treasury stock activity: | ' | ' | ' | ' | ' | ' | ' |
Treasury stock purchases, at cost | -1,137 | ' | ' | -1,137 | ' | ' | ' |
Treasury stock purchases, at cost (in shares) | ' | ' | ' | 50 | ' | ' | ' |
Stock options exchanged | -67 | ' | ' | -67 | ' | ' | ' |
Stock options exchanged (in shares) | ' | ' | ' | 3 | ' | ' | ' |
Share-based employee compensation | 61 | ' | 61 | ' | ' | ' | ' |
Other comprehensive gain net of income tax of $24 in 2013 and $20 in 2012 | 36 | ' | ' | ' | 36 | ' | ' |
Other | 13 | ' | 3 | -2 | ' | ' | 12 |
Cash dividends declared ($0.465 in 2013 and $0.38 in 2012 per common share) | -202 | ' | ' | ' | ' | -202 | ' |
Net earnings including noncontrolling interests | 1,039 | ' | ' | ' | ' | 1,035 | 4 |
Balances at Nov. 03, 2012 | 3,762 | 959 | 3,434 | -9,228 | -808 | 9,404 | 1 |
Balances (in shares) at Nov. 03, 2012 | ' | 959 | ' | 445 | ' | ' | ' |
Balances at Feb. 02, 2013 | 4,214 | 959 | 3,451 | -9,237 | -753 | 9,787 | 7 |
Balances (in shares) at Feb. 02, 2013 | ' | 959 | ' | 445 | ' | ' | ' |
Issuance of common stock: | ' | ' | ' | ' | ' | ' | ' |
Stock options exercised | 186 | ' | ' | 186 | ' | ' | ' |
Stock options exercised (in shares) | ' | ' | ' | -8 | ' | ' | ' |
Restricted stock issued | -32 | ' | -58 | 26 | ' | ' | ' |
Restricted stock issued (in shares) | ' | ' | ' | -2 | ' | ' | ' |
Treasury stock activity: | ' | ' | ' | ' | ' | ' | ' |
Treasury stock purchases, at cost | -126 | ' | ' | -126 | ' | ' | ' |
Treasury stock purchases, at cost (in shares) | ' | ' | ' | 3 | ' | ' | ' |
Stock options exchanged | -258 | ' | ' | -258 | ' | ' | ' |
Stock options exchanged (in shares) | ' | ' | ' | 7 | ' | ' | ' |
Share-based employee compensation | 78 | ' | 78 | ' | ' | ' | ' |
Other comprehensive gain net of income tax of $24 in 2013 and $20 in 2012 | 40 | ' | ' | ' | 40 | ' | ' |
Other | 17 | ' | 42 | -17 | ' | ' | -8 |
Cash dividends declared ($0.465 in 2013 and $0.38 in 2012 per common share) | -233 | ' | ' | ' | ' | -233 | ' |
Net earnings including noncontrolling interests | 1,104 | ' | ' | ' | ' | 1,097 | 7 |
Balances at Nov. 09, 2013 | $4,990 | $959 | $3,513 | ($9,426) | ($713) | $10,651 | $6 |
Balances (in shares) at Nov. 09, 2013 | ' | 959 | ' | 445 | ' | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CHA1
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY (Parenthetical) (USD $) | 9 Months Ended | |
In Millions, except Per Share data, unless otherwise specified | Nov. 09, 2013 | Nov. 03, 2012 |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY | ' | ' |
Other comprehensive gain, income tax | $24 | $20 |
Cash dividends declared per common share (in dollars per share) | $0.47 | $0.38 |
ACCOUNTING_POLICIES
ACCOUNTING POLICIES | 9 Months Ended |
Nov. 09, 2013 | |
ACCOUNTING POLICIES | ' |
ACCOUNTING POLICIES | ' |
1. ACCOUNTING POLICIES | |
Basis of Presentation and Principles of Consolidation | |
The accompanying financial statements include the consolidated accounts of The Kroger Co., its wholly-owned subsidiaries, and the Variable Interest Entities (“VIEs”) in which the Company is the primary beneficiary. The February 2, 2013 balance sheet was derived from audited financial statements and, due to its summary nature, does not include all disclosures required by generally accepted accounting principles (“GAAP”). Significant intercompany transactions and balances have been eliminated. References to the “Company” in these Consolidated Financial Statements mean the consolidated company. | |
In the opinion of management, the accompanying unaudited Consolidated Financial Statements include all normal, recurring adjustments that are necessary for a fair presentation of results of operations for such periods but should not be considered as indicative of results for a full year. The financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted, pursuant to SEC regulations. Accordingly, the accompanying Consolidated Financial Statements should be read in conjunction with the financial statements in the Annual Report on Form 10-K of The Kroger Co. for the fiscal year ended February 2, 2013. | |
The unaudited information in the Consolidated Financial Statements for the third quarter and the three quarters ended November 9, 2013 and November 3, 2012, includes the results of operations of the Company for the 12 and 40-week periods then ended. |
STOCK_OPTION_PLANS
STOCK OPTION PLANS | 9 Months Ended | ||||||
Nov. 09, 2013 | |||||||
STOCK OPTION PLANS | ' | ||||||
STOCK OPTION PLANS | ' | ||||||
2. STOCK OPTION PLANS | |||||||
The Company recognized total stock-based compensation of $31 and $20 in the third quarters ended November 9, 2013 and November 3, 2012, respectively. The Company recognized total stock-based compensation of $78 and $61 in the first three quarters of 2013 and 2012, respectively. These costs were recognized as operating, general and administrative costs in the Company’s Consolidated Statements of Operations. | |||||||
The Company grants options for common shares (“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 shares at the date of grant. In addition to stock options, the Company awards restricted stock to employees and its non-employee directors under various plans. Beginning in 2013, non-employee directors were awarded incentive shares in lieu of restricted stock and stock options. Equity awards may be made once each quarter on a predetermined date. It has been the Company’s practice to make a general annual grant to employees, which occurred in the second quarter of 2013. Special grants may be made in the other three quarters. Grants to non-employee directors occur on the same date that the general annual grant to employees occurs. | |||||||
Stock options granted in the first three quarters of 2013 expire 10 years from the date of grant and vest between one year and five years from the date of grant. Restricted stock awards granted in the first three quarters of 2013 have restrictions that lapse between one year and five years from the date of the awards. All grants and awards become immediately exercisable, in the case of options, and restrictions lapse, in the case of restricted stock, upon certain changes of control of the Company. | |||||||
Changes in equity awards outstanding under the plans are summarized below. | |||||||
Stock Options | |||||||
Shares subject | Weighted-average | ||||||
to option | exercise price | ||||||
Outstanding, February 2, 2013 | 26.5 | $ | 22.61 | ||||
Granted | 4.2 | $ | 37.65 | ||||
Exercised | (8.4 | ) | $ | 22.25 | |||
Canceled or Expired | (0.2 | ) | $ | 24.81 | |||
Outstanding, November 9, 2013 | 22.1 | $ | 25.55 | ||||
Restricted Stock | |||||||
Restricted shares | Weighted-average | ||||||
outstanding | grant-date fair value | ||||||
Outstanding, February 2, 2013 | 4.3 | $ | 22.67 | ||||
Granted | 2.6 | $ | 37.62 | ||||
Vested | (2.5 | ) | $ | 22.9 | |||
Forfeited | (0.1 | ) | $ | 26.01 | |||
Outstanding, November 9, 2013 | 4.3 | $ | 31.47 | ||||
The weighted-average grant date fair value of stock options granted during the first three quarters of 2013 and 2012, was $8.97 and $4.37, respectively. The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option-pricing model, based on the assumptions shown in the table below. The Black-Scholes model utilizes extensive accounting judgment and financial estimates, including the term option holders are expected to retain their stock options before exercising them, the volatility of the Company’s stock price over that expected term, the dividend yield over the term, and the number of awards expected to be forfeited before they vest. Using alternative assumptions in the calculation of fair value would produce fair values for stock option grants that could be different than those used to record stock-based compensation expense in the Consolidated Statements of Operations. The increase in the fair value of the stock options granted during the first three quarters of 2013, compared to the first three quarters of 2012, resulted primarily from an increase in the Company’s share price, which decreased the expected dividend yield and an increase in the weighted average risk-free interest rate. | |||||||
The following table reflects the weighted average assumptions used for grants awarded to option holders: | |||||||
2013 | 2012 | ||||||
Risk-free interest rate | 1.87% | 0.97% | |||||
Expected dividend yield | 1.82% | 2.49% | |||||
Expected volatility | 26.34% | 26.49% | |||||
Expected term | 6.8 Years | 6.9 Years |
DEBT_OBLIGATIONS
DEBT OBLIGATIONS | 9 Months Ended | |||||||
Nov. 09, 2013 | ||||||||
DEBT OBLIGATIONS | ' | |||||||
DEBT OBLIGATIONS | ' | |||||||
3. DEBT OBLIGATIONS | ||||||||
Long-term debt consists of: | ||||||||
November 9, | February 2, | |||||||
2013 | 2013 | |||||||
2.20% to 8.00% Senior Notes due through 2043 | $ | 7,186 | $ | 6,587 | ||||
5.00% to 12.75% Mortgages due in varying amounts through 2034 | 82 | 60 | ||||||
0.28% to 0.45% Commercial paper borrowings due through November 2013 | 425 | 1,645 | ||||||
Other | 185 | 184 | ||||||
Total debt, excluding capital leases and financing obligations | 7,878 | 8,476 | ||||||
Less current portion | (1,087 | ) | (2,700 | ) | ||||
Total long-term debt, excluding capital leases and financing obligations | $ | 6,791 | $ | 5,776 | ||||
In the first quarter of 2013, the Company repaid $400 of senior notes bearing an interest rate of 5.00% upon their maturity. | ||||||||
In the second quarter of 2013, the Company issued $600 of senior notes due in fiscal year 2023 bearing an interest rate of 3.85% and $400 of senior notes due in fiscal year 2043 bearing an interest rate of 5.15%. | ||||||||
In the first three quarters of 2013, the Company decreased the amount of commercial paper borrowings outstanding by $1,220. |
BENEFIT_PLANS
BENEFIT PLANS | 9 Months Ended | |||||||||||||
Nov. 09, 2013 | ||||||||||||||
BENEFIT PLANS | ' | |||||||||||||
BENEFIT PLANS | ' | |||||||||||||
4. BENEFIT PLANS | ||||||||||||||
The following table provides the components of net periodic benefit costs for the Company-sponsored defined benefit pension plans and other post-retirement benefit plans for the third quarters of 2013 and 2012. | ||||||||||||||
Third Quarter Ended | ||||||||||||||
Pension Benefits | Other Benefits | |||||||||||||
November 9, | November 3, | November 9, | November 3, | |||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Components of net periodic benefit cost: | ||||||||||||||
Service cost | $ | 10 | $ | 11 | $ | 4 | $ | 4 | ||||||
Interest cost | 35 | 36 | 3 | 3 | ||||||||||
Expected return on plan assets | (52 | ) | (49 | ) | — | — | ||||||||
Amortization of: | ||||||||||||||
Prior service cost | — | — | (1 | ) | (1 | ) | ||||||||
Actuarial loss | 24 | 22 | — | — | ||||||||||
Net periodic benefit cost | $ | 17 | $ | 20 | $ | 6 | $ | 6 | ||||||
The following table provides the components of net periodic benefit costs for the Company-sponsored defined benefit pension plans and other post-retirement benefit plans for the first three quarters of 2013 and 2012. | ||||||||||||||
Three Quarters Ended | ||||||||||||||
Pension Benefits | Other Benefits | |||||||||||||
November 9, | November 3, | November 9, | November 3, | |||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Components of net periodic benefit cost: | ||||||||||||||
Service cost | $ | 33 | $ | 36 | $ | 13 | $ | 13 | ||||||
Interest cost | 118 | 120 | 12 | 12 | ||||||||||
Expected return on plan assets | (173 | ) | (162 | ) | — | — | ||||||||
Amortization of: | ||||||||||||||
Prior service cost | — | — | (3 | ) | (3 | ) | ||||||||
Actuarial loss | 79 | 74 | — | — | ||||||||||
Net periodic benefit cost | $ | 57 | $ | 68 | $ | 22 | $ | 22 | ||||||
The Company contributed $100 to its Company-sponsored defined benefit pension plans in the first quarter of 2013. The Company did not make any contributions in the second and third quarters of 2013 and does not expect to make any additional contributions in 2013. | ||||||||||||||
The Company contributed $115 and $110 to employee 401(k) retirement savings accounts in the first three quarters of 2013 and 2012, respectively. | ||||||||||||||
The Company also contributes to various multi-employer pension plans based on obligations arising from most of its collective bargaining agreements. These plans provide retirement benefits to participants based on their service to contributing employers. The Company recognizes expense in connection with these plans as contributions are funded. |
EARNINGS_PER_COMMON_SHARE
EARNINGS PER COMMON SHARE | 9 Months Ended | |||||||||||||||||
Nov. 09, 2013 | ||||||||||||||||||
EARNINGS PER COMMON SHARE | ' | |||||||||||||||||
EARNINGS PER COMMON SHARE | ' | |||||||||||||||||
5. EARNINGS PER COMMON SHARE | ||||||||||||||||||
Net earnings attributable to The Kroger Co. per basic common share equal 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 equal 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: | ||||||||||||||||||
Third Quarter Ended | Third Quarter Ended | |||||||||||||||||
November 9, 2013 | November 3, 2012 | |||||||||||||||||
Earnings | Shares | Per Share | Earnings | Shares | Per Share | |||||||||||||
(Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | |||||||||||||
Net earnings attributable to The Kroger Co. per basic common share | $ | 297 | 515 | $ | 0.58 | $ | 314 | 518 | $ | 0.61 | ||||||||
Dilutive effect of stock options | 6 | 4 | ||||||||||||||||
Net earnings attributable to The Kroger Co. per diluted common share | $ | 297 | 521 | $ | 0.57 | $ | 314 | 522 | $ | 0.6 | ||||||||
Three Quarters Ended | Three Quarters Ended | |||||||||||||||||
November 9, 2013 | November 3, 2012 | |||||||||||||||||
Earnings | Shares | Per Share | Earnings | Shares | Per Share | |||||||||||||
(Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | |||||||||||||
Net earnings attributable to The Kroger Co. per basic common share | $ | 1,088 | 515 | $ | 2.11 | $ | 1,027 | 539 | $ | 1.9 | ||||||||
Dilutive effect of stock options | 6 | 4 | ||||||||||||||||
Net earnings attributable to The Kroger Co. per diluted common share | $ | 1,088 | 521 | $ | 2.09 | $ | 1,027 | 543 | $ | 1.89 | ||||||||
The Company had combined undistributed and distributed earnings to participating securities totaling $2 in the third quarter of 2013 and $3 in the third quarter of 2012. For the first three quarters of 2013 and 2012, the Company had combined undistributed and distributed earnings to participating securities of $9 and $8, respectively. | ||||||||||||||||||
The Company had options outstanding for approximately 4 and 14 shares during the third quarters of 2013 and 2012, respectively, which were excluded from the computations of earnings per diluted common share because their inclusion would have had an anti-dilutive effect on earnings per share. The Company had options outstanding for approximately 2 shares in the first three quarters of 2013 and 12 shares in the first three quarters of 2012 that were excluded from the computations of earnings per diluted common share because their inclusion would have had an anti-dilutive effect on earnings per share. |
RECENTLY_ADOPTED_ACCOUNTING_ST
RECENTLY ADOPTED ACCOUNTING STANDARDS | 9 Months Ended |
Nov. 09, 2013 | |
RECENTLY ADOPTED ACCOUNTING STANDARDS | ' |
RECENTLY ADOPTED ACCOUNTING STANDARDS | ' |
6. RECENTLY ADOPTED ACCOUNTING STANDARDS | |
In February 2013, the Financial Accounting Standards Board (“FASB”) amended its standards on comprehensive income by requiring disclosure of information about amounts reclassified out of accumulated other comprehensive income (“AOCI”) by component. Specifically, the amendment requires disclosure of the effect of significant reclassifications out of AOCI on the respective line items in net income in which the item was reclassified if the amount being reclassified is required to be reclassified to net income in its entirety in the same reporting period. It requires cross reference to other disclosures that provide additional detail for amounts that are not required to be reclassified in their entirety in the same reporting period. This new disclosure became effective for the Company beginning February 3, 2013, and is being adopted prospectively in accordance with the standard. See Note 11 to the Company’s Consolidated Financial Statements for the Company’s new disclosures related to this amended standard. | |
In December 2011, the FASB amended its standards related to offsetting assets and liabilities. This amendment requires entities to disclose both gross and net information about certain instruments and transactions eligible for offset in the statement of financial position and certain instruments and transactions subject to an agreement similar to a master netting agreement. This information is intended to enable users of the financial statements to understand the effect of these arrangements on the Company’s financial position. The new rules became effective for the Company on February 3, 2013. In January 2013, the FASB further amended this standard to limit its scope to derivatives, repurchase and reverse repurchase agreements, securities borrowings and lending transactions. See Note 9 to the Company’s Consolidated Financial Statements for the Company’s new disclosures related to this amended standard. |
RECENTLY_ISSUED_ACCOUNTING_STA
RECENTLY ISSUED ACCOUNTING STANDARDS | 9 Months Ended |
Nov. 09, 2013 | |
RECENTLY ISSUED ACCOUNTING STANDARDS | ' |
RECENTLY ISSUED ACCOUNTING STANDARDS | ' |
7. RECENTLY ISSUED ACCOUNTING STANDARDS | |
In July 2013, the FASB amended Accounting Standards Codification (“ASC”) 740, “Income Taxes.” The amendment provides guidance on the financial statement presentation of an unrecognized tax benefit, as either a reduction of a deferred tax asset or as a liability, when a net operating loss carryforward, similar tax loss, or a tax credit carryforward exists. The amendment will be effective for interim and annual periods beginning after December 15, 2013 and may be applied on a retrospective basis. Early adoption is permitted. The Company does not expect the adoption of this amendment to have a significant effect on the Company’s consolidated financial position or results of operations. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Nov. 09, 2013 | |
COMMITMENTS AND CONTINGENCIES | ' |
COMMITMENTS AND CONTINGENCIES | ' |
8. 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 Company’s estimates, future earnings will be charged or credited. | |
Litigation — Various claims and lawsuits arising in the normal course of business, including suits charging violations of certain antitrust, wage and hour, or civil rights laws, are pending against the Company. Some of these suits purport or have been determined to be class actions and/or seek substantial damages. Any damages that may be awarded in antitrust cases will be automatically trebled. Although it is not possible at this time to evaluate the merits of all of these claims and lawsuits, nor their likelihood of success, the Company is of the belief that any resulting liability will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows. | |
The Company continually evaluates its exposure to loss contingencies arising from pending or threatened litigation and believes it has made provisions where it is reasonably possible to estimate and where an adverse outcome is probable. Nonetheless, assessing and predicting the outcomes of these matters involve substantial uncertainties. Management currently believes that the aggregate range of loss for the Company’s exposure is not material to the Company. It remains possible that despite management’s current belief, material differences in actual outcomes or changes in management’s evaluation or predictions could arise that could have a material adverse effect on the Company’s financial condition, results of operations, or cash flows. |
DERIVATIVE_FINANCIAL_INSTRUMEN
DERIVATIVE FINANCIAL INSTRUMENTS | 9 Months Ended | |||||||||||||||||||
Nov. 09, 2013 | ||||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS | ' | |||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS | ' | |||||||||||||||||||
9. 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 Company’s 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 value 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 Company’s 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 leveraged 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 Company’s needs dictate. | ||||||||||||||||||||
Fair Value Interest Rate Swaps | ||||||||||||||||||||
The table below summarizes the outstanding interest rate swaps designated as fair value hedges as of November 9, 2013 and February 2, 2013. | ||||||||||||||||||||
November 9, 2013 | February 2, 2013 | |||||||||||||||||||
Pay | Pay | Pay | Pay | |||||||||||||||||
Floating | Fixed | Floating | Fixed | |||||||||||||||||
Notional amount | $ | 100 | $ | — | $ | 475 | $ | — | ||||||||||||
Number of contracts | 2 | — | 6 | — | ||||||||||||||||
Duration in years | 5.17 | — | 1.41 | — | ||||||||||||||||
Average variable rate | 5.84 | % | — | 3.29 | % | — | ||||||||||||||
Average fixed rate | 6.8 | % | — | 5.38 | % | — | ||||||||||||||
Maturity | December 2018 | Between April 2013 and December 2018 | ||||||||||||||||||
During the first quarter of 2013, four of the Company’s fair value swaps, with a notional amount aggregating $375, matured. | ||||||||||||||||||||
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 is recognized in current income as “Interest expense.” These gains and losses for the third quarters and first three quarters of 2013 and 2012 were as follows: | ||||||||||||||||||||
Third Quarter Ended | ||||||||||||||||||||
November 9, 2013 | November 3, 2012 | |||||||||||||||||||
Income Statement Classification | Gain/(Loss) on | Gain/(Loss) on | Gain/(Loss) on | Gain/(Loss) on | ||||||||||||||||
Swaps | Borrowings | Swaps | Borrowings | |||||||||||||||||
Interest Expense | $ | 1 | $ | (2 | ) | $ | (4 | ) | $ | 4 | ||||||||||
Three Quarters Ended | ||||||||||||||||||||
November 9, 2013 | November 3, 2012 | |||||||||||||||||||
Income Statement Classification | Gain/(Loss) on | Gain/(Loss) on | Gain/(Loss) on | Gain/(Loss) on | ||||||||||||||||
Swaps | Borrowings | Swaps | Borrowings | |||||||||||||||||
Interest Expense | $ | (4 | ) | $ | 3 | $ | (18 | ) | $ | 14 | ||||||||||
The following table summarizes the location and fair value of derivative instruments designated as fair value hedges on the Company’s Consolidated Balance Sheets: | ||||||||||||||||||||
Asset Derivatives | ||||||||||||||||||||
Fair Value | ||||||||||||||||||||
Derivatives Designated as Fair Value Hedging Instruments | November 9, | February 2, | Balance Sheet Location | |||||||||||||||||
2013 | 2013 | |||||||||||||||||||
Interest Rate Hedges | $ | (3 | ) | $ | 1 | (Other Long-Term Liabilities)/Other Assets | ||||||||||||||
Cash Flow Forward-Starting Interest Rate Swaps | ||||||||||||||||||||
As of November 9, 2013, the Company had 5 forward-starting interest rate swap agreements with maturity dates of January 2014 with an aggregate notional amount totaling $250. A forward-starting interest rate swap is an agreement that effectively hedges the variability in future benchmark interest payments attributable to changes in interest rates on the forecasted issuance of fixed-rate debt. The Company entered into these forward-starting interest rate swaps in order to lock in fixed interest rates on its forecasted issuances of debt in fiscal year 2013. Accordingly, the forward-starting interest rate swaps were designated as cash-flow hedges as defined by GAAP. As of November 9, 2013, the fair value of the interest rate swaps was recorded in other assets for $18 and accumulated other comprehensive income (“AOCI”) for $11 net of tax. | ||||||||||||||||||||
As of February 2, 2013, the Company had 17 forward-starting interest rate swap agreements with maturity dates between April 2013 and January 2014 with an aggregate notional amount totaling $850. In 2012, the Company entered into 7 of these forward-starting interest rate swap agreements with an aggregate notional amount totaling $350. The Company entered into the forward-starting interest rate swaps in order to lock in fixed interest rates on its forecasted issuances of debt in fiscal year 2013. Accordingly, the forward-starting interest rate swaps were designated as cash-flow hedges as defined by GAAP. As of February 2, 2013, the fair value of the interest rate swaps was recorded in other assets and other long-term liabilities for $14 and $9, respectively, and AOCI and accumulated other comprehensive loss for $9 net of tax and $6 net of tax, respectively. | ||||||||||||||||||||
During the first quarter of 2013, the Company terminated 12 forward-starting interest rate swap agreements with maturity dates of April 2013 with an aggregate notional amount totaling $600. In addition, in the first quarter of 2013, the Company entered into and terminated 7 forward-starting interest rate swap agreements with an aggregate notional amount totaling $600. These 19 forward-starting interest rate swap agreements were hedging the variability in future benchmark interest payments attributable to changing interest rates on $600 of fixed-rate debt that the Company anticipated issuing at the time. As discussed in Note 3, the Company issued $1,000 of senior notes in the second quarter of 2013. Since these forward-starting interest rate swap agreements were classified as cash flow hedges, the unamortized loss of $32, $20 net of tax, is deferred in accumulated other comprehensive loss and will be amortized to earnings as interest payments are made on the related debt. | ||||||||||||||||||||
The following tables summarize the effect of the Company’s derivative instruments designated as cash flow hedges for the third quarters and first three quarters of 2013 and 2012: | ||||||||||||||||||||
Third Quarter Ended | ||||||||||||||||||||
Amount of Gain/(Loss) in | Amount of Gain/(Loss) | Location of Gain/(Loss) | ||||||||||||||||||
AOCI on Derivatives | Reclassified from AOCI into | |||||||||||||||||||
(Effective Portion) | Income (Effective Portion) | |||||||||||||||||||
Derivatives in Cash Flow Hedging | November 9, | November 3, | November 9, | November 3, | Reclassified into Income | |||||||||||||||
Relationships | 2013 | 2012 | 2013 | 2012 | (Effective Portion) | |||||||||||||||
Forward-Starting Interest Rate Swaps, net of tax* | $ | (24 | ) | $ | (39 | ) | $ | — | $ | (1 | ) | Interest expense | ||||||||
*The amounts of Gain/(Loss) in AOCI on derivatives include unamortized proceeds and payments from forward-starting interest rate swaps once classified as cash flow hedges. | ||||||||||||||||||||
Three Quarters Ended | ||||||||||||||||||||
Amount of Gain/(Loss) in | Amount of Gain/(Loss) | Location of Gain/(Loss) | ||||||||||||||||||
AOCI on Derivatives | Reclassified from AOCI into | |||||||||||||||||||
(Effective Portion) | Income (Effective Portion) | |||||||||||||||||||
Derivatives in Cash Flow Hedging | November 9, | November 3, | November 9, | November 3, | Reclassified into Income | |||||||||||||||
Relationships | 2013 | 2012 | 2013 | 2012 | (Effective Portion) | |||||||||||||||
Forward-Starting Interest Rate Swaps, net of tax* | $ | (24 | ) | $ | (39 | ) | $ | (1 | ) | $ | (3 | ) | Interest expense | |||||||
*The amounts of Gain/(Loss) in AOCI on derivatives include unamortized proceeds and payments from forward-starting interest rate swaps once classified as cash flow hedges. | ||||||||||||||||||||
For the above fair value and cash flow interest rate swaps, the Company has entered into International Swaps and Derivatives Association master netting agreements that permit the net settlement of amounts owed under their respective derivative contracts. Under these master netting agreements, net settlement generally permits the Company or the counterparty to determine the net amount payable for contracts due on the same date and in the same currency for similar types of derivative transactions. These master netting agreements generally also provide for net settlement of all outstanding contracts with a counterparty in the case of an event of default or a termination event. | ||||||||||||||||||||
Collateral is generally not required of the counterparties or of the Company under these master netting agreements. As of November 9, 2013 and February 2, 2013, no cash collateral was received or pledged under the master netting agreements. | ||||||||||||||||||||
The effect of the net settlement provisions of these master netting agreements on the Company’s derivative balances upon an event of default or termination event is as follows as of November 9, 2013 and February 2, 2013: | ||||||||||||||||||||
Gross Amounts Offset | Net Amount | Gross Amounts Not Offset in the | ||||||||||||||||||
Presented in the | Statement of Financial Position | |||||||||||||||||||
November 9, 2013 | Gross Amount | in the Statement of | Statement of | Financial | Cash Collateral | Net Amount | ||||||||||||||
Recognized | Financial Position | Financial Position | Instruments | |||||||||||||||||
Assets | ||||||||||||||||||||
Cash Flow Forward-Starting Interest Rate Swaps | $ | 18 | $ | — | $ | 18 | $ | — | $ | — | $ | 18 | ||||||||
Liabilities | ||||||||||||||||||||
Fair Value Interest Rate Swaps | $ | 3 | $ | — | $ | 3 | $ | — | $ | — | $ | 3 | ||||||||
Gross Amounts Offset | Net Amount | Gross Amounts Not Offset in the | ||||||||||||||||||
Presented in the | Statement of Financial Position | |||||||||||||||||||
February 2, 2013 | Gross Amount | in the Statement of | Statement of | Financial | Cash Collateral | Net Amount | ||||||||||||||
Recognized | Financial Position | Financial Position | Instruments | |||||||||||||||||
Assets | ||||||||||||||||||||
Cash Flow Forward-Starting Interest Rate Swaps | $ | 16 | $ | (2 | ) | $ | 14 | $ | — | $ | — | $ | 14 | |||||||
Fair Value Interest Rate Swaps | 1 | — | 1 | — | — | 1 | ||||||||||||||
Total | $ | 17 | $ | (2 | ) | $ | 15 | $ | — | $ | — | $ | 15 | |||||||
Liabilities | ||||||||||||||||||||
Cash Flow Forward-Starting Interest Rate Swaps | $ | 11 | $ | (2 | ) | $ | 9 | $ | — | $ | — | $ | 9 | |||||||
Commodity Price Protection | ||||||||||||||||||||
The Company enters into purchase commitments for various resources, including raw materials utilized in its manufacturing facilities and energy to be used in its stores, warehouses, manufacturing facilities and administrative offices. The Company enters into commitments expecting to take delivery of and to utilize those resources in the conduct of normal business. Those commitments for which the Company expects to utilize or take delivery in a reasonable amount of time in the normal course of business qualify as normal purchases and normal sales. |
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended | |||||||||||||
Nov. 09, 2013 | ||||||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||||
10. FAIR VALUE MEASUREMENTS | ||||||||||||||
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 (or adjusted to) fair value in the Consolidated Financial Statements, the following tables summarize the fair value of these instruments at November 9, 2013 and February 2, 2013: | ||||||||||||||
November 9, 2013 Fair Value Measurements Using | ||||||||||||||
Quoted Prices in | Significant Other | Significant | Total | |||||||||||
Active Markets | Observable Inputs | Unobservable | ||||||||||||
for Identical | (Level 2) | Inputs | ||||||||||||
Assets | (Level 3) | |||||||||||||
(Level 1) | ||||||||||||||
Available-for-Sale Securities | $ | 33 | $ | — | $ | — | $ | 33 | ||||||
Warrants | — | 13 | — | 13 | ||||||||||
Long-Lived Assets | — | — | 18 | 18 | ||||||||||
Interest Rate Hedges | — | 15 | — | 15 | ||||||||||
Total | $ | 33 | $ | 28 | $ | 18 | $ | 79 | ||||||
February 2, 2013 Fair Value Measurements Using | ||||||||||||||
Quoted Prices in | Significant Other | Significant | Total | |||||||||||
Active Markets | Observable Inputs | Unobservable | ||||||||||||
for Identical | (Level 2) | Inputs | ||||||||||||
Assets | (Level 3) | |||||||||||||
(Level 1) | ||||||||||||||
Available-for-Sale Securities | $ | 8 | $ | — | $ | 20 | $ | 28 | ||||||
Long-Lived Assets | — | — | 8 | 8 | ||||||||||
Interest Rate Hedges | — | 6 | — | 6 | ||||||||||
Total | $ | 8 | $ | 6 | $ | 28 | $ | 42 | ||||||
In the first quarter of 2013, one of the Company’s available-for-sale securities began trading in an active market. Because of this, the Company transferred the $20 fair value of securities from a Level 3 asset to a Level 1 asset in the first quarter of 2013. In the first three quarters of 2013, unrealized gains on the Level 1 available-for-sale securities totaled $5. | ||||||||||||||
The Company values warrants using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model is classified as a Level 2 input. | ||||||||||||||
The Company values interest rate hedges using observable forward yield curves. These forward yield curves are classified as Level 2 inputs. | ||||||||||||||
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 to the Consolidated Financial Statements in the Annual Report on Form 10-K for the fiscal year ended February 2, 2013 for further discussion related to the Company’s carrying value of goodwill. Long-lived assets and store lease exit costs were measured at fair value on a nonrecurring basis using Level 3 inputs as defined in the fair value hierarchy. See Note 1 to the Consolidated Financial Statements in the Annual Report on Form 10-K for the fiscal year ended February 2, 2013 for further discussion of the Company’s policies regarding the valuation of long-lived assets and store lease exit costs. For the first three quarters of 2013, long-lived assets with a carrying amount of $48 were written down to their fair value of $18 resulting in an impairment charge of $30. For the first three quarters of 2012, long-lived assets with a carrying amount of $14 were written down to their fair value of $4 resulting in an impairment charge of $10. | ||||||||||||||
Fair Value of Other Financial Instruments | ||||||||||||||
Current and Long-term Debt | ||||||||||||||
The fair value of the Company’s long-term debt, including current maturities, was estimated based on the quoted market prices for the same or similar issues adjusted for illiquidity based on available market evidence. If quoted market prices were not available, the fair value was based on the net present value of the future cash flow using the forward interest rate yield curve in effect at November 9, 2013, and February 2, 2013, which is a Level 3 measurement technique. At November 9, 2013, the fair value of total debt was $8,440 compared to a carrying value of $7,878. At February 2, 2013, the fair value of total debt was $9,339 compared to a carrying value of $8,476. | ||||||||||||||
Cash and Temporary Cash Investments, Store Deposits In-Transit, Receivables, Prepaid and Other Current Assets, Trade Accounts Payable, Accrued Salaries and Wages and Other Current Liabilities | ||||||||||||||
The carrying amounts of these items approximated fair value. | ||||||||||||||
Other Assets | ||||||||||||||
The fair values of these other assets were estimated based on quoted market prices for those or similar assets, or estimated cash flows, if appropriate. At November 9, 2013, and February 2, 2013, the carrying and fair value of other assets for which fair value is determinable was $52 and $44, respectively. |
OTHER_COMPREHENSIVE_INCOME_LOS
OTHER COMPREHENSIVE INCOME (LOSS) | 9 Months Ended | |||||||||||||
Nov. 09, 2013 | ||||||||||||||
OTHER COMPREHENSIVE INCOME (LOSS) | ' | |||||||||||||
OTHER COMPREHENSIVE INCOME (LOSS) | ' | |||||||||||||
11. OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||||
The following table represents the changes in AOCI by component for the first three quarters of 2013: | ||||||||||||||
Cash Flow | Available for sale | Pension and | Total(1) | |||||||||||
Hedging | Securities(1) | Postretirement | ||||||||||||
Activities(1) | Defined Benefit | |||||||||||||
Plans(1) | ||||||||||||||
Balance at February 2, 2013 | $ | (14 | ) | $ | 7 | $ | (746 | ) | $ | (753 | ) | |||
OCI before reclassifications(2) | (11 | ) | 3 | — | (8 | ) | ||||||||
Amounts reclassified out of AOCI | 1 | — | 47 | 48 | ||||||||||
Net current-period OCI | (10 | ) | 3 | 47 | 40 | |||||||||
Balance at November 9, 2013 | $ | (24 | ) | $ | 10 | $ | (699 | ) | $ | (713 | ) | |||
(1) All amounts are net of tax. | ||||||||||||||
(2) Net of tax of $(8) and $2 for cash flow hedging activities and available for sale securities, respectively. | ||||||||||||||
The following table represents the items reclassified out of AOCI and the related tax effects for the third quarter and first three quarters of 2013: | ||||||||||||||
Third Quarter Ended | Three Quarters Ended | |||||||||||||
November 9, 2013 | November 9, 2013 | |||||||||||||
Gains on cash flow hedging activities | ||||||||||||||
Amortization of unrealized gains and losses on cash flow hedging activities(1) | $ | 1 | $ | 2 | ||||||||||
Tax expense | (1 | ) | (1 | ) | ||||||||||
Net of tax | — | 1 | ||||||||||||
Pension and postretirement defined benefit plan items | ||||||||||||||
Amortization of amounts included in net periodic pension expense(2) | 23 | 76 | ||||||||||||
Tax expense | (9 | ) | (29 | ) | ||||||||||
Net of tax | 14 | 47 | ||||||||||||
Total reclassifications, net of tax | $ | 14 | $ | 48 | ||||||||||
(1) Reclassified from AOCI into interest expense. | ||||||||||||||
(2) Reclassified from AOCI into merchandise costs and operating, general and administrative expense. These components are included in the computation of net periodic pension expense (see Note 4 to the Company’s Consolidated Financial Statements for additional details). |
INCOME_TAXES
INCOME TAXES | 9 Months Ended |
Nov. 09, 2013 | |
INCOME TAXES | ' |
INCOME TAXES | ' |
12. INCOME TAXES | |
The effective income tax rate was 29.3% and 35.5% for the third quarters of 2013 and 2012, respectively. The effective income tax rate was 33.9% and 34.8% for the first three quarters of 2013 and 2012, respectively. The effective income tax rates for the third quarter and first three quarters of 2013 differed from the federal statutory rate primarily due to the benefit of certain tax items, offset partially by the effect of state income taxes. The effective tax rate for the third quarter of 2012 approximates the federal statutory rate. The effective income tax rate for the first three quarters of 2012 differed from the federal statutory rate primarily due to the favorable resolution of certain tax issues, partially offset by the effect of state income taxes. | |
On September 13, 2013, the U.S. Department of the Treasury and Internal Revenue Service released final tangible property regulations that provide guidance on the tax treatment regarding the deduction and capitalization of expenditures related to tangible property. These regulations are effective for tax years beginning on or after January 1, 2014. The Company is currently assessing these rules and their effect to its financial statements, and believes adoption of these regulations will not have an effect on net income and will not have a material effect on the reclassification between long-term deferred tax liabilities and current income tax liabilities. |
POTENTIAL_MERGER
POTENTIAL MERGER (Potential Merger) | 9 Months Ended |
Nov. 09, 2013 | |
Potential Merger | ' |
Potential merger | ' |
POTENTIAL MERGER | ' |
13. POTENTIAL MERGER | |
During the second quarter, the Company announced that it had entered into a merger agreement with Harris Teeter Supermarkets, Inc. under which the Company will purchase all outstanding shares of Harris Teeter Supermarkets, Inc. for approximately $2,500 in cash. In the second quarter of 2013, the Company also entered into an unsecured bridge loan agreement (the “Bridge Loan Agreement”) to provide an additional source of financing, if necessary, to fund a portion of the merger with Harris Teeter. The Bridge Loan Agreement provides the Company the ability to borrow, based on certain conditions, including the consummation of the Harris Teeter merger, up to $850, and matures 364 days after closing. The Company expects to fund the merger through a combination of cash on hand and the issuance of short-term and long-term debt. | |
Borrowings under the Bridge Loan Agreement would bear interest at the three-month LIBOR rate plus an applicable margin determined by the Company’s credit ratings, as determined by S&P and Moody’s. The applicable margin will also increase by 25 basis points every 90 days after funding. The Company will also pay a funding fee to each lender equal to 0.5% of such lender’s loan advance on the closing date of the financing, and duration fees on any loan amounts still outstanding of 0.5%, 0.75% and 1.0% on each of the 90th, 180th and 270th day, respectively, following the closing of the Harris Teeter merger. The Company also will pay an annual ticking fee of 0.15% of the amount the lenders have committed, regardless of whether any borrowings are made under the Bridge Loan Agreement. The Bridge Loan Agreement contains covenants, which, among other things, require the maintenance of a leverage ratio of not greater than 3.50:1.00 and a fixed charge coverage ratio of not less than 1.70:1.00. The covenants and representations and warranties in the Bridge Loan Agreement are substantially the same as those contained in the existing $2,000 unsecured revolving credit facility. | |
The Company may repay borrowings under the Bridge Loan Agreement in whole or in part at any time without premium or penalty. The Bridge Loan Agreement is not guaranteed by the Company’s subsidiaries. | |
The pending merger is expected to close during the fourth quarter of fiscal year 2013, subject to Federal Trade Commission review and certain customary closing conditions. |
ACCOUNTING_POLICIES_Policies
ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Nov. 09, 2013 | |
ACCOUNTING POLICIES | ' |
Basis of Presentation and Principles of Consolidation | ' |
Basis of Presentation and Principles of Consolidation | |
The accompanying financial statements include the consolidated accounts of The Kroger Co., its wholly-owned subsidiaries, and the Variable Interest Entities (“VIEs”) in which the Company is the primary beneficiary. The February 2, 2013 balance sheet was derived from audited financial statements and, due to its summary nature, does not include all disclosures required by generally accepted accounting principles (“GAAP”). Significant intercompany transactions and balances have been eliminated. References to the “Company” in these Consolidated Financial Statements mean the consolidated company. | |
In the opinion of management, the accompanying unaudited Consolidated Financial Statements include all normal, recurring adjustments that are necessary for a fair presentation of results of operations for such periods but should not be considered as indicative of results for a full year. The financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted, pursuant to SEC regulations. Accordingly, the accompanying Consolidated Financial Statements should be read in conjunction with the financial statements in the Annual Report on Form 10-K of The Kroger Co. for the fiscal year ended February 2, 2013. | |
The unaudited information in the Consolidated Financial Statements for the third quarter and the three quarters ended November 9, 2013 and November 3, 2012, includes the results of operations of the Company for the 12 and 40-week periods then ended. |
STOCK_OPTION_PLANS_Tables
STOCK OPTION PLANS (Tables) | 9 Months Ended | ||||||
Nov. 09, 2013 | |||||||
STOCK OPTION PLANS | ' | ||||||
Summary of changes in stock options outstanding | ' | ||||||
Shares subject | Weighted-average | ||||||
to option | exercise price | ||||||
Outstanding, February 2, 2013 | 26.5 | $ | 22.61 | ||||
Granted | 4.2 | $ | 37.65 | ||||
Exercised | (8.4 | ) | $ | 22.25 | |||
Canceled or Expired | (0.2 | ) | $ | 24.81 | |||
Outstanding, November 9, 2013 | 22.1 | $ | 25.55 | ||||
Summary of changes in restricted stock outstanding | ' | ||||||
Restricted shares | Weighted-average | ||||||
outstanding | grant-date fair value | ||||||
Outstanding, February 2, 2013 | 4.3 | $ | 22.67 | ||||
Granted | 2.6 | $ | 37.62 | ||||
Vested | (2.5 | ) | $ | 22.9 | |||
Forfeited | (0.1 | ) | $ | 26.01 | |||
Outstanding, November 9, 2013 | 4.3 | $ | 31.47 | ||||
Summary of weighted average assumptions used for grants awarded to option holders | ' | ||||||
2013 | 2012 | ||||||
Risk-free interest rate | 1.87% | 0.97% | |||||
Expected dividend yield | 1.82% | 2.49% | |||||
Expected volatility | 26.34% | 26.49% | |||||
Expected term | 6.8 Years | 6.9 Years |
DEBT_OBLIGATIONS_Tables
DEBT OBLIGATIONS (Tables) | 9 Months Ended | |||||||
Nov. 09, 2013 | ||||||||
DEBT OBLIGATIONS | ' | |||||||
Schedule of long-term debt | ' | |||||||
November 9, | February 2, | |||||||
2013 | 2013 | |||||||
2.20% to 8.00% Senior Notes due through 2043 | $ | 7,186 | $ | 6,587 | ||||
5.00% to 12.75% Mortgages due in varying amounts through 2034 | 82 | 60 | ||||||
0.28% to 0.45% Commercial paper borrowings due through November 2013 | 425 | 1,645 | ||||||
Other | 185 | 184 | ||||||
Total debt, excluding capital leases and financing obligations | 7,878 | 8,476 | ||||||
Less current portion | (1,087 | ) | (2,700 | ) | ||||
Total long-term debt, excluding capital leases and financing obligations | $ | 6,791 | $ | 5,776 |
BENEFIT_PLANS_Tables
BENEFIT PLANS (Tables) | 9 Months Ended | |||||||||||||
Nov. 09, 2013 | ||||||||||||||
BENEFIT PLANS | ' | |||||||||||||
Schedule of components of net periodic benefit cost | ' | |||||||||||||
Third Quarter Ended | ||||||||||||||
Pension Benefits | Other Benefits | |||||||||||||
November 9, | November 3, | November 9, | November 3, | |||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Components of net periodic benefit cost: | ||||||||||||||
Service cost | $ | 10 | $ | 11 | $ | 4 | $ | 4 | ||||||
Interest cost | 35 | 36 | 3 | 3 | ||||||||||
Expected return on plan assets | (52 | ) | (49 | ) | — | — | ||||||||
Amortization of: | ||||||||||||||
Prior service cost | — | — | (1 | ) | (1 | ) | ||||||||
Actuarial loss | 24 | 22 | — | — | ||||||||||
Net periodic benefit cost | $ | 17 | $ | 20 | $ | 6 | $ | 6 | ||||||
Three Quarters Ended | ||||||||||||||
Pension Benefits | Other Benefits | |||||||||||||
November 9, | November 3, | November 9, | November 3, | |||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||
Components of net periodic benefit cost: | ||||||||||||||
Service cost | $ | 33 | $ | 36 | $ | 13 | $ | 13 | ||||||
Interest cost | 118 | 120 | 12 | 12 | ||||||||||
Expected return on plan assets | (173 | ) | (162 | ) | — | — | ||||||||
Amortization of: | ||||||||||||||
Prior service cost | — | — | (3 | ) | (3 | ) | ||||||||
Actuarial loss | 79 | 74 | — | — | ||||||||||
Net periodic benefit cost | $ | 57 | $ | 68 | $ | 22 | $ | 22 |
EARNINGS_PER_COMMON_SHARE_Tabl
EARNINGS PER COMMON SHARE (Tables) | 9 Months Ended | |||||||||||||||||
Nov. 09, 2013 | ||||||||||||||||||
EARNINGS PER COMMON SHARE | ' | |||||||||||||||||
Schedule of earnings per common and diluted shares | ' | |||||||||||||||||
Third Quarter Ended | Third Quarter Ended | |||||||||||||||||
November 9, 2013 | November 3, 2012 | |||||||||||||||||
Earnings | Shares | Per Share | Earnings | Shares | Per Share | |||||||||||||
(Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | |||||||||||||
Net earnings attributable to The Kroger Co. per basic common share | $ | 297 | 515 | $ | 0.58 | $ | 314 | 518 | $ | 0.61 | ||||||||
Dilutive effect of stock options | 6 | 4 | ||||||||||||||||
Net earnings attributable to The Kroger Co. per diluted common share | $ | 297 | 521 | $ | 0.57 | $ | 314 | 522 | $ | 0.6 | ||||||||
Three Quarters Ended | Three Quarters Ended | |||||||||||||||||
November 9, 2013 | November 3, 2012 | |||||||||||||||||
Earnings | Shares | Per Share | Earnings | Shares | Per Share | |||||||||||||
(Numerator) | (Denominator) | Amount | (Numerator) | (Denominator) | Amount | |||||||||||||
Net earnings attributable to The Kroger Co. per basic common share | $ | 1,088 | 515 | $ | 2.11 | $ | 1,027 | 539 | $ | 1.9 | ||||||||
Dilutive effect of stock options | 6 | 4 | ||||||||||||||||
Net earnings attributable to The Kroger Co. per diluted common share | $ | 1,088 | 521 | $ | 2.09 | $ | 1,027 | 543 | $ | 1.89 |
DERIVATIVE_FINANCIAL_INSTRUMEN1
DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 9 Months Ended | |||||||||||||||||||
Nov. 09, 2013 | ||||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS | ' | |||||||||||||||||||
Summary of outstanding interest rate swaps designated as fair value hedges | ' | |||||||||||||||||||
November 9, 2013 | February 2, 2013 | |||||||||||||||||||
Pay | Pay | Pay | Pay | |||||||||||||||||
Floating | Fixed | Floating | Fixed | |||||||||||||||||
Notional amount | $ | 100 | $ | — | $ | 475 | $ | — | ||||||||||||
Number of contracts | 2 | — | 6 | — | ||||||||||||||||
Duration in years | 5.17 | — | 1.41 | — | ||||||||||||||||
Average variable rate | 5.84 | % | — | 3.29 | % | — | ||||||||||||||
Average fixed rate | 6.8 | % | — | 5.38 | % | — | ||||||||||||||
Maturity | December 2018 | Between April 2013 and December 2018 | ||||||||||||||||||
Schedule of gains or losses on fair value hedges and hedged items and the fair value of derivative instruments designated as fair value hedges | ' | |||||||||||||||||||
Third Quarter Ended | ||||||||||||||||||||
November 9, 2013 | November 3, 2012 | |||||||||||||||||||
Income Statement Classification | Gain/(Loss) on | Gain/(Loss) on | Gain/(Loss) on | Gain/(Loss) on | ||||||||||||||||
Swaps | Borrowings | Swaps | Borrowings | |||||||||||||||||
Interest Expense | $ | 1 | $ | (2 | ) | $ | (4 | ) | $ | 4 | ||||||||||
Three Quarters Ended | ||||||||||||||||||||
November 9, 2013 | November 3, 2012 | |||||||||||||||||||
Income Statement Classification | Gain/(Loss) on | Gain/(Loss) on | Gain/(Loss) on | Gain/(Loss) on | ||||||||||||||||
Swaps | Borrowings | Swaps | Borrowings | |||||||||||||||||
Interest Expense | $ | (4 | ) | $ | 3 | $ | (18 | ) | $ | 14 | ||||||||||
Asset Derivatives | ||||||||||||||||||||
Fair Value | ||||||||||||||||||||
Derivatives Designated as Fair Value Hedging Instruments | November 9, | February 2, | Balance Sheet Location | |||||||||||||||||
2013 | 2013 | |||||||||||||||||||
Interest Rate Hedges | $ | (3 | ) | $ | 1 | (Other Long-Term Liabilities)/Other Assets | ||||||||||||||
Schedule of effect of derivative instruments designated as cash flow hedges | ' | |||||||||||||||||||
Third Quarter Ended | ||||||||||||||||||||
Amount of Gain/(Loss) in | Amount of Gain/(Loss) | Location of Gain/(Loss) | ||||||||||||||||||
AOCI on Derivatives | Reclassified from AOCI into | |||||||||||||||||||
(Effective Portion) | Income (Effective Portion) | |||||||||||||||||||
Derivatives in Cash Flow Hedging | November 9, | November 3, | November 9, | November 3, | Reclassified into Income | |||||||||||||||
Relationships | 2013 | 2012 | 2013 | 2012 | (Effective Portion) | |||||||||||||||
Forward-Starting Interest Rate Swaps, net of tax* | $ | (24 | ) | $ | (39 | ) | $ | — | $ | (1 | ) | Interest expense | ||||||||
*The amounts of Gain/(Loss) in AOCI on derivatives include unamortized proceeds and payments from forward-starting interest rate swaps once classified as cash flow hedges. | ||||||||||||||||||||
Three Quarters Ended | ||||||||||||||||||||
Amount of Gain/(Loss) in | Amount of Gain/(Loss) | Location of Gain/(Loss) | ||||||||||||||||||
AOCI on Derivatives | Reclassified from AOCI into | |||||||||||||||||||
(Effective Portion) | Income (Effective Portion) | |||||||||||||||||||
Derivatives in Cash Flow Hedging | November 9, | November 3, | November 9, | November 3, | Reclassified into Income | |||||||||||||||
Relationships | 2013 | 2012 | 2013 | 2012 | (Effective Portion) | |||||||||||||||
Forward-Starting Interest Rate Swaps, net of tax* | $ | (24 | ) | $ | (39 | ) | $ | (1 | ) | $ | (3 | ) | Interest expense | |||||||
*The amounts of Gain/(Loss) in AOCI on derivatives include unamortized proceeds and payments from forward-starting interest rate swaps once classified as cash flow hedges. | ||||||||||||||||||||
Schedule of effects of master-netting agreements | ' | |||||||||||||||||||
Gross Amounts Offset | Net Amount | Gross Amounts Not Offset in the | ||||||||||||||||||
Presented in the | Statement of Financial Position | |||||||||||||||||||
November 9, 2013 | Gross Amount | in the Statement of | Statement of | Financial | Cash Collateral | Net Amount | ||||||||||||||
Recognized | Financial Position | Financial Position | Instruments | |||||||||||||||||
Assets | ||||||||||||||||||||
Cash Flow Forward-Starting Interest Rate Swaps | $ | 18 | $ | — | $ | 18 | $ | — | $ | — | $ | 18 | ||||||||
Liabilities | ||||||||||||||||||||
Fair Value Interest Rate Swaps | $ | 3 | $ | — | $ | 3 | $ | — | $ | — | $ | 3 | ||||||||
Gross Amounts Offset | Net Amount | Gross Amounts Not Offset in the | ||||||||||||||||||
Presented in the | Statement of Financial Position | |||||||||||||||||||
February 2, 2013 | Gross Amount | in the Statement of | Statement of | Financial | Cash Collateral | Net Amount | ||||||||||||||
Recognized | Financial Position | Financial Position | Instruments | |||||||||||||||||
Assets | ||||||||||||||||||||
Cash Flow Forward-Starting Interest Rate Swaps | $ | 16 | $ | (2 | ) | $ | 14 | $ | — | $ | — | $ | 14 | |||||||
Fair Value Interest Rate Swaps | 1 | — | 1 | — | — | 1 | ||||||||||||||
Total | $ | 17 | $ | (2 | ) | $ | 15 | $ | — | $ | — | $ | 15 | |||||||
Liabilities | ||||||||||||||||||||
Cash Flow Forward-Starting Interest Rate Swaps | $ | 11 | $ | (2 | ) | $ | 9 | $ | — | $ | — | $ | 9 |
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended | |||||||||||||
Nov. 09, 2013 | ||||||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||||
Summary of fair value measurements | ' | |||||||||||||
November 9, 2013 Fair Value Measurements Using | ||||||||||||||
Quoted Prices in | Significant Other | Significant | Total | |||||||||||
Active Markets | Observable Inputs | Unobservable | ||||||||||||
for Identical | (Level 2) | Inputs | ||||||||||||
Assets | (Level 3) | |||||||||||||
(Level 1) | ||||||||||||||
Available-for-Sale Securities | $ | 33 | $ | — | $ | — | $ | 33 | ||||||
Warrants | — | 13 | — | 13 | ||||||||||
Long-Lived Assets | — | — | 18 | 18 | ||||||||||
Interest Rate Hedges | — | 15 | — | 15 | ||||||||||
Total | $ | 33 | $ | 28 | $ | 18 | $ | 79 | ||||||
February 2, 2013 Fair Value Measurements Using | ||||||||||||||
Quoted Prices in | Significant Other | Significant | Total | |||||||||||
Active Markets | Observable Inputs | Unobservable | ||||||||||||
for Identical | (Level 2) | Inputs | ||||||||||||
Assets | (Level 3) | |||||||||||||
(Level 1) | ||||||||||||||
Available-for-Sale Securities | $ | 8 | $ | — | $ | 20 | $ | 28 | ||||||
Long-Lived Assets | — | — | 8 | 8 | ||||||||||
Interest Rate Hedges | — | 6 | — | 6 | ||||||||||
Total | $ | 8 | $ | 6 | $ | 28 | $ | 42 |
OTHER_COMPREHENSIVE_INCOME_LOS1
OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 9 Months Ended | |||||||||||||
Nov. 09, 2013 | ||||||||||||||
OTHER COMPREHENSIVE INCOME (LOSS) | ' | |||||||||||||
Schedule of changes in AOCI by component | ' | |||||||||||||
Cash Flow | Available for sale | Pension and | Total(1) | |||||||||||
Hedging | Securities(1) | Postretirement | ||||||||||||
Activities(1) | Defined Benefit | |||||||||||||
Plans(1) | ||||||||||||||
Balance at February 2, 2013 | $ | (14 | ) | $ | 7 | $ | (746 | ) | $ | (753 | ) | |||
OCI before reclassifications(2) | (11 | ) | 3 | — | (8 | ) | ||||||||
Amounts reclassified out of AOCI | 1 | — | 47 | 48 | ||||||||||
Net current-period OCI | (10 | ) | 3 | 47 | 40 | |||||||||
Balance at November 9, 2013 | $ | (24 | ) | $ | 10 | $ | (699 | ) | $ | (713 | ) | |||
(1) All amounts are net of tax. | ||||||||||||||
(2) Net of tax of $(8) and $2 for cash flow hedging activities and available for sale securities, respectively. | ||||||||||||||
Schedule of items reclassified out of AOCI and the related tax effects | ' | |||||||||||||
Third Quarter Ended | Three Quarters Ended | |||||||||||||
November 9, 2013 | November 9, 2013 | |||||||||||||
Gains on cash flow hedging activities | ||||||||||||||
Amortization of unrealized gains and losses on cash flow hedging activities(1) | $ | 1 | $ | 2 | ||||||||||
Tax expense | (1 | ) | (1 | ) | ||||||||||
Net of tax | — | 1 | ||||||||||||
Pension and postretirement defined benefit plan items | ||||||||||||||
Amortization of amounts included in net periodic pension expense(2) | 23 | 76 | ||||||||||||
Tax expense | (9 | ) | (29 | ) | ||||||||||
Net of tax | 14 | 47 | ||||||||||||
Total reclassifications, net of tax | $ | 14 | $ | 48 | ||||||||||
(1) Reclassified from AOCI into interest expense. | ||||||||||||||
(2) Reclassified from AOCI into merchandise costs and operating, general and administrative expense. These components are included in the computation of net periodic pension expense (see Note 4 to the Company’s Consolidated Financial Statements for additional details). |
STOCK_OPTION_PLANS_Details
STOCK OPTION PLANS (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | Nov. 09, 2013 | Nov. 03, 2012 | Nov. 09, 2013 | Nov. 03, 2012 |
STOCK OPTION PLANS | ' | ' | ' | ' |
Stock-based employee compensation | $31 | $20 | $78 | $61 |
Stock options | ' | ' | ' | ' |
Stock-based compensation, expiration, vesting and number of shares available | ' | ' | ' | ' |
Stock options, expiration period from date of grant | ' | ' | '10 years | ' |
Stock Options | ' | ' | ' | ' |
Stock options outstanding at the beginning of the period (in shares) | ' | ' | 26.5 | ' |
Stock options granted (in shares) | ' | ' | 4.2 | ' |
Stock options exercised (in shares) | ' | ' | -8.4 | ' |
Stock options canceled or expired (in shares) | ' | ' | -0.2 | ' |
Stock options outstanding at the end of the period (in shares) | 22.1 | ' | 22.1 | ' |
Weighted-average exercise price | ' | ' | ' | ' |
Weighted-average exercise price outstanding options at the beginning of the period (in dollars per share) | ' | ' | $22.61 | ' |
Weighted-average exercise price options granted (in dollars per share) | ' | ' | $37.65 | ' |
Weighted-average exercise price options exercised (in dollars per share) | ' | ' | $22.25 | ' |
Weighted-average exercise price options canceled or expired (in dollars per share) | ' | ' | $24.81 | ' |
Weighted-average exercise price outstanding options at the end of the period (in dollars per share) | $25.55 | ' | $25.55 | ' |
Weighted-average grant-date fair value | ' | ' | ' | ' |
Weighted-average grant date fair value of stock options granted in period (in dollars per share) | ' | ' | $8.97 | $4.37 |
Weighted average assumptions for grants awarded to option holders | ' | ' | ' | ' |
Risk-free interest rate (as a percent) | ' | ' | 1.87% | 0.97% |
Expected dividend yield (as a percent) | ' | ' | 1.82% | 2.49% |
Expected volatility (as a percent) | ' | ' | 26.34% | 26.49% |
Expected term | ' | ' | '6 years 9 months 18 days | '6 years 10 months 24 days |
Stock options | Minimum | ' | ' | ' | ' |
Stock-based compensation, expiration, vesting and number of shares available | ' | ' | ' | ' |
Vesting period from date of grant | ' | ' | '1 year | ' |
Stock options | Maximum | ' | ' | ' | ' |
Stock-based compensation, expiration, vesting and number of shares available | ' | ' | ' | ' |
Vesting period from date of grant | ' | ' | '5 years | ' |
Restricted stock | ' | ' | ' | ' |
Restricted Stock | ' | ' | ' | ' |
Restricted shares outstanding at the beginning of the period (in shares) | ' | ' | 4.3 | ' |
Restricted shares granted (in shares) | ' | ' | 2.6 | ' |
Restricted shares vested (in shares) | ' | ' | -2.5 | ' |
Restricted shares forfeited (in shares) | ' | ' | -0.1 | ' |
Restricted shares outstanding at the end of the period (in shares) | 4.3 | ' | 4.3 | ' |
Weighted-average grant-date fair value | ' | ' | ' | ' |
Weighted-average grant-date fair value, restricted shares outstanding at beginning of the period (in dollars per share) | ' | ' | $22.67 | ' |
Weighted-average grant-date fair value, restricted shares granted (in dollars per share) | ' | ' | $37.62 | ' |
Weighted-average grant-date fair value, restricted shares vested (in dollars per share) | ' | ' | $22.90 | ' |
Weighted-average grant-date fair value, restricted shares forfeited (in dollars per share) | ' | ' | $26.01 | ' |
Weighted-average grant-date fair value, restricted shares outstanding at the end of the period (in dollars per share) | $31.47 | ' | $31.47 | ' |
Restricted stock | Minimum | ' | ' | ' | ' |
Stock-based compensation, expiration, vesting and number of shares available | ' | ' | ' | ' |
Vesting period from date of grant | ' | ' | '1 year | ' |
Restricted stock | Maximum | ' | ' | ' | ' |
Stock-based compensation, expiration, vesting and number of shares available | ' | ' | ' | ' |
Vesting period from date of grant | ' | ' | '5 years | ' |
DEBT_OBLIGATIONS_Details
DEBT OBLIGATIONS (Details) (USD $) | Nov. 09, 2013 | Aug. 17, 2013 | Feb. 02, 2013 | Nov. 09, 2013 | Feb. 02, 2013 | Nov. 09, 2013 | Feb. 02, 2013 | 25-May-13 | Aug. 17, 2013 | Aug. 17, 2013 | Nov. 09, 2013 | Feb. 02, 2013 | Nov. 09, 2013 | Feb. 02, 2013 |
In Millions, unless otherwise specified | Commercial paper borrowings due through November 2013 | Commercial paper borrowings due through November 2013 | Senior notes due through 2043 | Senior notes due through 2043 | Senior notes 5.00% | Senior notes 3.85% due 2023 | Senior notes 5.15% due 2043 | Mortgages due in varying amounts through 2034 | Mortgages due in varying amounts through 2034 | Other | Other | |||
Debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total debt, excluding capital leases and financing obligations | $7,878 | ' | $8,476 | $425 | $1,645 | $7,186 | $6,587 | ' | ' | ' | $82 | $60 | $185 | $184 |
Less current portion | -1,087 | ' | -2,700 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total long-term debt, excluding capital leases and financing obligations | 6,791 | ' | 5,776 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest rate, minimum range (as a percent) | ' | ' | ' | 0.28% | 0.28% | 2.20% | 2.20% | ' | ' | ' | 5.00% | 5.00% | ' | ' |
Interest rate, maximum range (as a percent) | ' | ' | ' | 0.45% | 0.45% | 8.00% | 8.00% | ' | ' | ' | 12.75% | 12.75% | ' | ' |
Repayment of debt | ' | ' | ' | 1,220 | ' | ' | ' | 400 | ' | ' | ' | ' | ' | ' |
Interest rate of debt repaid (as a percent) | ' | ' | ' | ' | ' | ' | ' | 5.00% | ' | ' | ' | ' | ' | ' |
Issuance of senior notes | ' | $1,000 | ' | ' | ' | ' | ' | ' | $600 | $400 | ' | ' | ' | ' |
Interest rate of additional borrowings (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | 3.85% | 5.15% | ' | ' | ' | ' |
BENEFIT_PLANS_Details
BENEFIT PLANS (Details) (USD $) | 3 Months Ended | 4 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Nov. 09, 2013 | Nov. 03, 2012 | 25-May-13 | Nov. 09, 2013 | Nov. 03, 2012 |
Amortization of: | ' | ' | ' | ' | ' |
Contribution to employee 401(k) retirement savings accounts | ' | ' | ' | $115 | $110 |
Pension Benefits | ' | ' | ' | ' | ' |
Components of net periodic benefit cost: | ' | ' | ' | ' | ' |
Service cost | 10 | 11 | ' | 33 | 36 |
Interest cost | 35 | 36 | ' | 118 | 120 |
Expected return on plan assets | -52 | -49 | ' | -173 | -162 |
Amortization of: | ' | ' | ' | ' | ' |
Actuarial loss | 24 | 22 | ' | 79 | 74 |
Net periodic benefit cost | 17 | 20 | ' | 57 | 68 |
Contribution to defined benefit pension plans | ' | ' | 100 | ' | ' |
Other Benefits | ' | ' | ' | ' | ' |
Components of net periodic benefit cost: | ' | ' | ' | ' | ' |
Service cost | 4 | 4 | ' | 13 | 13 |
Interest cost | 3 | 3 | ' | 12 | 12 |
Amortization of: | ' | ' | ' | ' | ' |
Prior service cost | -1 | -1 | ' | -3 | -3 |
Net periodic benefit cost | $6 | $6 | ' | $22 | $22 |
EARNINGS_PER_COMMON_SHARE_Deta
EARNINGS PER COMMON SHARE (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | Nov. 09, 2013 | Nov. 03, 2012 | Nov. 09, 2013 | Nov. 03, 2012 |
EARNINGS PER COMMON SHARE | ' | ' | ' | ' |
Net earnings attributable to The Kroger Co. per basic common share | $297 | $314 | $1,088 | $1,027 |
Average number of common shares used in basic calculation | 515 | 518 | 515 | 539 |
Net earnings attributable to The Kroger Co. per basic common share (in dollars per share) | $0.58 | $0.61 | $2.11 | $1.90 |
Dilutive effect of stock options (in shares) | 6 | 4 | 6 | 4 |
Net earnings attributable to The Kroger Co. per diluted common share | 297 | 314 | 1,088 | 1,027 |
Average number of common shares used in diluted calculation | 521 | 522 | 521 | 543 |
Net earnings attributable to The Kroger Co. per diluted common share (in dollars per share) | $0.57 | $0.60 | $2.09 | $1.89 |
Undistributed and distributed earnings to participating securities | $2 | $3 | $9 | $8 |
Shares excluded from the earnings per share calculation due to anti-dilutive effect on earnings per share | 4 | 14 | 2 | 12 |
DERIVATIVE_FINANCIAL_INSTRUMEN2
DERIVATIVE FINANCIAL INSTRUMENTS (Details) (USD $) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 9 Months Ended | 12 Months Ended | 3 Months Ended | 9 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||||||||||||||||
In Millions, unless otherwise specified | Nov. 09, 2013 | Nov. 03, 2012 | Nov. 09, 2013 | Nov. 03, 2012 | Aug. 17, 2013 | Feb. 02, 2013 | Nov. 09, 2013 | Feb. 02, 2013 | Nov. 09, 2013 | Feb. 02, 2013 | Nov. 03, 2012 | Nov. 03, 2012 | Nov. 09, 2013 | Nov. 03, 2012 | 25-May-13 | 25-May-13 | 25-May-13 | Nov. 09, 2013 | Feb. 02, 2013 | 25-May-13 | Nov. 09, 2013 | Nov. 03, 2012 | Nov. 09, 2013 | Nov. 03, 2012 | Feb. 02, 2013 | Nov. 09, 2013 | Nov. 09, 2013 | Feb. 02, 2013 | Nov. 09, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | ||||
item | Fair value hedges | Fair value hedges | Cash flow hedges | Cash flow hedges | Cash flow hedges | Cash flow hedges | Cash flow hedges | Cash flow hedges | Cash flow hedges | Cash flow hedges | Cash flow hedges | Designated | Designated | Designated | Designated | Designated | Designated | Designated | Designated | Designated | Designated | Designated | Designated | Designated | Designated | ||||||||||
Interest rate swaps | Interest rate swaps | Forward-starting interest rate swaps | Forward-starting interest rate swaps | Forward-starting interest rate swaps | Forward-starting interest rate swaps | Forward-starting interest rate swaps | Forward-starting interest rate swaps | Forward-starting interest rate swaps | Forward-starting interest rate swaps | Forward-starting interest rate swaps | Fair value hedges | Fair value hedges | Fair value hedges | Fair value hedges | Fair value hedges | Fair value hedges | Fair value hedges | Fair value hedges | Fair value hedges | Cash flow hedges | Cash flow hedges | Cash flow hedges | Cash flow hedges | Cash flow hedges | |||||||||||
Interest expense | Interest expense | Interest expense | Terminated hedge | Terminated with maturity dates of April 2013 | Entered into during period and terminated | Interest rate swaps | Interest rate swaps | Interest rate swaps | Interest rate swaps | Interest rate swaps | Interest rate swaps | Interest rate swaps | Interest rate swaps | Interest rate swaps | Forward-starting interest rate swaps | Forward-starting interest rate swaps | Forward-starting interest rate swaps | Forward-starting interest rate swaps | Forward-starting interest rate swaps | ||||||||||||||||
instrument | instrument | instrument | instrument | instrument | instrument | Interest expense | Interest expense | Interest expense | Interest expense | Other assets | Other long-term liabilities | instrument | instrument | Other assets | Other assets | Other long-term liabilities | |||||||||||||||||||
Interest Rate Risk Management | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Combined average annual limit of aggregate amount of debt subject to interest rate reset and floating rate debt, to reduce interest rate risk | $2,500 | ' | $2,500 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Number of leveraged products | ' | ' | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Notional amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 600 | 600 | 100 | 475 | ' | ' | ' | ' | ' | ' | ' | 250 | 850 | ' | ' | ' | ||||
Number of contracts | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 19 | 12 | 7 | 2 | 6 | ' | ' | ' | ' | ' | ' | ' | 5 | 17 | ' | ' | ' | ||||
Duration | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '5 years 2 months 1 day | '1 year 4 months 28 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Average variable rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5.84% | 3.29% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Average fixed rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 6.80% | 5.38% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Number of matured contracts | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Interest rate swap agreements, notional matured amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 375 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Number of new contracts | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7 | ' | ' | ' | ||||
Interest rate swap agreements, notional entered amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 350 | ' | ' | ' | ||||
Gain/(loss) on interest rate swaps, fair value hedges | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1 | -4 | -4 | -18 | ' | ' | ' | ' | ' | ' | ' | ||||
Gain/(loss) on hedged borrowings, fair value hedges | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -2 | 4 | 3 | 14 | ' | ' | ' | ' | ' | ' | ' | ||||
Fair value of asset derivatives | ' | ' | ' | ' | ' | 15 | ' | 1 | 18 | 14 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1 | ' | ' | ' | 18 | 14 | ' | ||||
Fair value of liability derivatives | ' | ' | ' | ' | ' | ' | 3 | ' | ' | 9 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -3 | ' | ' | ' | ' | 9 | ||||
Fixed-rate debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 600 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Gain/(Loss) in AOCI on Derivatives (Effective Portion) | -2 | [1] | 3 | [1] | -11 | [1] | -11 | [1] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 11 | -9 | -6 |
New issue of senior notes | ' | ' | ' | ' | 1,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Unamortized gain (loss) on terminated cash flow forward-starting interest rate swaps, net of tax | ' | ' | ' | ' | ' | ' | ' | ' | -24 | ' | -39 | ' | ' | ' | -20 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Unamortized (gain) loss on terminated cash flow forward-starting interest rate swaps, before tax | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 32 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
Gain/(Loss) Reclassified from AOCI into Income (Effective Portion) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ($1) | ($1) | ($3) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ||||
[1] | Amount is net of tax of $(3) for the third quarter of 2013 and $2 for the third quarter of 2012. Amount is net of tax of $(8) for the first three quarters of 2013 and $(7) for the first three quarters of 2012. |
DERIVATIVE_FINANCIAL_INSTRUMEN3
DERIVATIVE FINANCIAL INSTRUMENTS (Details 2) (USD $) | Nov. 09, 2013 | Feb. 02, 2013 |
In Millions, unless otherwise specified | ||
Derivative Assets | ' | ' |
Gross Amount Recognized | ' | $17 |
Gross Amounts Offset in the Statement of Financial Position | ' | -2 |
Net Amount Presented in the Statement of Financial Position | ' | 15 |
Net Amount | ' | 15 |
Cash Collateral | 0 | 0 |
Derivative Liabilities | ' | ' |
Cash Collateral | 0 | 0 |
Cash flow hedges | Cash Flow Forward-Starting Interest Rate Swaps | ' | ' |
Derivative Assets | ' | ' |
Gross Amount Recognized | 18 | 16 |
Gross Amounts Offset in the Statement of Financial Position | ' | -2 |
Net Amount Presented in the Statement of Financial Position | 18 | 14 |
Net Amount | 18 | 14 |
Derivative Liabilities | ' | ' |
Gross Amount Recognized | ' | 11 |
Gross Amounts Offset in the Statement of Financial Position | ' | -2 |
Net Amount Presented in the Statement of Financial Position | ' | 9 |
Net Amount | ' | 9 |
Fair value hedges | Fair Value Interest Rate Swaps | ' | ' |
Derivative Assets | ' | ' |
Gross Amount Recognized | ' | 1 |
Net Amount Presented in the Statement of Financial Position | ' | 1 |
Net Amount | ' | 1 |
Derivative Liabilities | ' | ' |
Gross Amount Recognized | 3 | ' |
Net Amount Presented in the Statement of Financial Position | 3 | ' |
Net Amount | $3 | ' |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) (USD $) | 9 Months Ended | ||||||||||||||||||||||||
In Millions, unless otherwise specified | Nov. 09, 2013 | Nov. 03, 2012 | Nov. 09, 2013 | Feb. 02, 2013 | Nov. 09, 2013 | Nov. 03, 2012 | Nov. 09, 2013 | Feb. 02, 2013 | Nov. 09, 2013 | Feb. 02, 2013 | Nov. 03, 2012 | 25-May-13 | Nov. 09, 2013 | Feb. 02, 2013 | Nov. 09, 2013 | Feb. 02, 2013 | Nov. 09, 2013 | Feb. 02, 2013 | Feb. 02, 2013 | Nov. 09, 2013 | Feb. 02, 2013 | Nov. 09, 2013 | Feb. 02, 2013 | Nov. 09, 2013 | Feb. 02, 2013 |
Carrying Value | Carrying Value | Carrying Value | Carrying Value | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Fair value | Fair value | Fair value | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Recurring | Nonrecurring | Nonrecurring | |||
Before impairment | Before impairment | Quoted Prices in Active Markets for Identical Assets (Level 1) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Observable Inputs (Level 2) | Significant Other Observable Inputs (Level 2) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Fair value | Fair value | Fair value | Fair value | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | |||||||||||
Interest Rate Hedges | Interest Rate Hedges | Interest Rate Hedges | Interest Rate Hedges | ||||||||||||||||||||||
Fair value of financial instruments carried at fair value | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Available-for-Sale Securities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $33 | $8 | ' | ' | ' | ' | $20 | $33 | $28 | ' | ' | ' | ' |
Warrants | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 13 | ' | ' | ' | ' | 13 | ' | ' | ' | ' | ' |
Long-Lived Assets | ' | ' | ' | ' | 48 | 14 | ' | ' | 18 | 8 | 4 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 18 | 8 |
Interest Rate Hedges | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 15 | 6 | ' | ' | ' | 15 | 6 | ' | ' |
Total | ' | ' | ' | ' | ' | ' | 18 | 28 | 79 | 42 | ' | ' | 33 | 8 | 28 | 6 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Assets transferred from Level 3 to Level 1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 20 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unrealized gains on available-for-sale securities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total debt | ' | ' | 7,878 | 8,476 | ' | ' | ' | ' | 8,440 | 9,339 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Other assets | ' | ' | 52 | 44 | ' | ' | ' | ' | 52 | 44 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Asset impairment charge | $30 | $10 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
OTHER_COMPREHENSIVE_INCOME_LOS2
OTHER COMPREHENSIVE INCOME (LOSS) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Nov. 09, 2013 | Nov. 03, 2012 | Nov. 09, 2013 | Nov. 03, 2012 |
Other comprehensive income (loss) | ' | ' | ' | ' |
Balance at the beginning of the period | ' | ' | ($753) | ' |
OCI before reclassifications | ' | ' | -8 | ' |
Amounts reclassified out of AOCI | ' | ' | 48 | ' |
Total other comprehensive income | 11 | 17 | 40 | 36 |
Balance at the end of the period | -713 | ' | -713 | ' |
OCI before reclassifications, tax | -3 | 2 | -8 | -7 |
Cash Flow Hedging Activities | ' | ' | ' | ' |
Other comprehensive income (loss) | ' | ' | ' | ' |
Balance at the beginning of the period | ' | ' | -14 | ' |
OCI before reclassifications | ' | ' | -11 | ' |
Amounts reclassified out of AOCI | ' | ' | 1 | ' |
Total other comprehensive income | ' | ' | -10 | ' |
Balance at the end of the period | -24 | ' | -24 | ' |
OCI before reclassifications, tax | ' | ' | -8 | ' |
Available for sale Securities | ' | ' | ' | ' |
Other comprehensive income (loss) | ' | ' | ' | ' |
Balance at the beginning of the period | ' | ' | 7 | ' |
OCI before reclassifications | ' | ' | 3 | ' |
Total other comprehensive income | ' | ' | 3 | ' |
Balance at the end of the period | 10 | ' | 10 | ' |
OCI before reclassifications, tax | ' | ' | 2 | ' |
Pension and Postretirement Defined Benefit Plans | ' | ' | ' | ' |
Other comprehensive income (loss) | ' | ' | ' | ' |
Balance at the beginning of the period | ' | ' | -746 | ' |
Amounts reclassified out of AOCI | ' | ' | 47 | ' |
Total other comprehensive income | ' | ' | 47 | ' |
Balance at the end of the period | ($699) | ' | ($699) | ' |
OTHER_COMPREHENSIVE_INCOME_LOS3
OTHER COMPREHENSIVE INCOME (LOSS) (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Nov. 09, 2013 | Nov. 03, 2012 | Nov. 09, 2013 | Nov. 03, 2012 |
Reclassification out of AOCI and the related tax effects | ' | ' | ' | ' |
Amortization of unrealized gains and losses on cash flow hedging activities | ($108) | ($103) | ($336) | ($350) |
Tax expense | -125 | -175 | -567 | -555 |
Net earnings attributable to The Kroger Co. | 299 | 317 | 1,097 | 1,035 |
Reclassification out of AOCI | ' | ' | ' | ' |
Reclassification out of AOCI and the related tax effects | ' | ' | ' | ' |
Net earnings attributable to The Kroger Co. | 14 | ' | 48 | ' |
Reclassification out of AOCI | Gains on cash flow hedging activities | ' | ' | ' | ' |
Reclassification out of AOCI and the related tax effects | ' | ' | ' | ' |
Amortization of unrealized gains and losses on cash flow hedging activities | 1 | ' | 2 | ' |
Tax expense | -1 | ' | -1 | ' |
Net earnings attributable to The Kroger Co. | ' | ' | 1 | ' |
Reclassification out of AOCI | Pension and postretirement defined benefit plan items | ' | ' | ' | ' |
Reclassification out of AOCI and the related tax effects | ' | ' | ' | ' |
Amortization of amounts included in net periodic pension expense | 23 | ' | 76 | ' |
Tax expense | -9 | ' | -29 | ' |
Net earnings attributable to The Kroger Co. | $14 | ' | $47 | ' |
INCOME_TAXES_Details
INCOME TAXES (Details) | 3 Months Ended | 9 Months Ended | ||
Nov. 09, 2013 | Nov. 03, 2012 | Nov. 09, 2013 | Nov. 03, 2012 | |
INCOME TAXES | ' | ' | ' | ' |
Effective income tax rate (as a percent) | 29.30% | 35.50% | 33.90% | 34.80% |
POTENTIAL_MERGER_Details
POTENTIAL MERGER (Details) (Potential Merger, USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Aug. 17, 2013 |
Unsecured revolving credit facility | ' |
Potential merger | ' |
Existing unsecured revolving credit facility | $2,000 |
Bridge Loan Agreement | ' |
Potential merger | ' |
Maximum borrowing capacity | 850 |
Maturity period of bridge loan after closing | '364 days |
Percentage of funding fee paid to each lender of such lender's loan advance on the closing date of the financing | 0.50% |
Annual ticking fee (as a percent) | 0.15% |
Maximum leverage ratio | 3.5 |
Minimum fixed charge coverage ratio | 1.7 |
Bridge Loan Agreement | LIBOR | ' |
Potential merger | ' |
Debt instrument variable basis rate | 'three-month LIBOR |
Increase in applicable margin of interest rate (as a percent) | 0.25% |
Period of increase in applicable margin in interest rate after funding | '90 days |
Harris Teeter Supermarkets, Inc. | ' |
Potential merger | ' |
Merger cost | $2,500 |
Harris Teeter Supermarkets, Inc. | Bridge Loan Agreement | ' |
Potential merger | ' |
Duration fees on loan amounts outstanding on 90th day following the closing (as a percent) | 0.50% |
Duration fees on loan amounts outstanding on 180th day following the closing (as a percent) | 0.75% |
Duration fees on loan amounts outstanding on 270th day following the closing (as a percent) | 1.00% |