The Kroger Co. (KR) 10-Q 13 Dec 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Nov. 05, 2016	Dec. 07, 2016
Document and Entity Information Abstract
Entity Registrant Name	KROGER CO
Entity Central Index Key	56,873
Document Type	10-Q
Document Period End Date	Nov. 5, 2016
Amendment Flag	false
Current Fiscal Year End Date	--01-28
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		938,124,655
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q3

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Nov. 05, 2016	Nov. 07, 2015	Nov. 05, 2016	Nov. 07, 2015
CONSOLIDATED STATEMENTS OF OPERATIONS
Sales	$ 26,557	$ 25,075	$ 87,726	$ 83,665
Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below	20,653	19,478	68,019	65,303
Operating, general and administrative	4,443	4,169	14,695	13,591
Rent	199	172	666	542
Depreciation and amortization	549	484	1,768	1,581
Operating profit	713	772	2,578	2,648
Interest expense	124	107	396	369
Earnings before income tax expense	589	665	2,182	2,279
Income tax expense	206	238	727	795
Net earnings including noncontrolling interests	383	427	1,455	1,484
Net earnings (loss) attributable to noncontrolling interests	(8)	(1)	(14)	4
Net earnings attributable to The Kroger Co.	$ 391	$ 428	$ 1,469	$ 1,480
Net earnings attributable to The Kroger Co. per basic common share	$ 0.41	$ 0.44	$ 1.54	$ 1.52
Average number of common shares used in basic calculation	940	965	946	966
Net earnings attributable to The Kroger Co. per diluted common share	$ 0.41	$ 0.43	$ 1.52	$ 1.50
Average number of common shares used in diluted calculation	953	979	962	980
Dividends declared per common share	$ 0.120	$ 0.105	$ 0.345	$ 0.303

CONSOLIDATED STATEMENTS OF COMP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions		3 Months Ended		9 Months Ended
		Nov. 05, 2016	Nov. 07, 2015	Nov. 05, 2016	Nov. 07, 2015
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net earnings including noncontrolling interests		$ 383	$ 427	$ 1,455	$ 1,484
Other comprehensive income (loss)
Realized and unrealized gains and losses on available for sale securities, net of income tax	[1]		1	(20)	8
Amortization of amounts included in net periodic pension expense, net of income tax	[2]	8	12	23	41
Unrealized gains and losses on cash flow hedging activities, net of income tax	[3]	46	(3)	(52)	14
Amortization of unrealized gains and losses on cash flow hedging activities, net of income tax	[4]			1
Total other comprehensive income (loss)		54	10	(48)	63
Comprehensive income		437	437	1,407	1,547
Comprehensive income (loss) attributable to noncontrolling interests		(8)	(1)	(14)	4
Comprehensive income attributable to The Kroger Co.		$ 445	$ 438	$ 1,421	$ 1,543
[1]	Amount is net of tax of $1 for the third quarter of 2015. Amount is net of tax of $(16) for the first three quarters of 2016 and $5 for the first three quarters of 2015.
[2]	Amount is net of tax of $4 for the third quarter of 2016 and $8 for the third quarter of 2015. Amount is net of tax of $14 for the first three quarters of 2016 and $25 for the first three quarters of 2015.
[3]	Amount is net of tax of $27 for the third quarter of 2016 and $(2) for the third quarter of 2015. Amount is net of tax of $(31) for the first three quarters of 2016 and $8 for the first three quarters of 2015.
[4]	Amount is net of tax of $1 for the third quarter of 2016 and the first three quarters of 2016.

CONSOLIDATED STATEMENTS OF COM4

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Nov. 05, 2016	Nov. 07, 2015	Nov. 05, 2016	Nov. 07, 2015
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Realized and unrealized gain (loss) on available for sale securities, income tax		$ 1	$ (16)	$ 5
Amortization of amounts included in net periodic pension expense, income tax	$ 4	8	14	25
Unrealized gains (losses) on cash flow hedging activities, income tax	27	$ (2)	(31)	$ 8
Amortization of unrealized gains and losses on cash flow hedging activities, income tax	$ 1		$ 1

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Nov. 05, 2016	Jan. 30, 2016
Current assets
Cash and temporary cash investments	$ 374	$ 277
Store deposits in-transit	1,043	923
Receivables	1,488	1,734
FIFO inventory	8,268	7,440
LIFO reserve	(1,292)	(1,272)
Prepaid and other current assets	522	790
Total current assets	10,403	9,892
Property, plant and equipment, net	20,966	19,619
Intangibles, net	1,164	1,053
Goodwill	3,035	2,724
Other assets	939	609
Total Assets	36,507	33,897
Current liabilities
Current portion of long-term debt including obligations under capital leases and financing obligations	3,019	2,370
Trade accounts payable	6,310	5,728
Accrued salaries and wages	1,153	1,426
Deferred income taxes	221	221
Other current liabilities	3,421	3,226
Total current liabilities	14,124	12,971
Long-term debt including obligations under capital leases and financing obligations	10,817	9,709
Deferred income taxes	1,759	1,752
Pension and postretirement benefit obligations	1,381	1,380
Other long-term liabilities	1,796	1,287
Total Liabilities	29,877	27,099
Commitments and contingencies (see Note 8)
SHAREOWNERS' EQUITY
Preferred shares, $100 per share, 5 shares authorized and unissued
Common shares, $1 par per share, 2,000 shares authorized; 1,918 shares issued in 2016 and 2015	1,918	1,918
Additional paid-in capital	3,039	2,980
Accumulated other comprehensive loss	(728)	(680)
Accumulated earnings	15,150	14,011
Common shares in treasury, at cost, 984 shares in 2016 and 951 shares in 2015	(12,767)	(11,409)
Total Shareowners' Equity - The Kroger Co.	6,612	6,820
Noncontrolling interests	18	(22)
Total Equity	6,630	6,798
Total Liabilities and Equity	$ 36,507	$ 33,897

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Millions	Nov. 05, 2016	Jan. 30, 2016
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	2,000	2,000
Common shares, shares issued	1,918	1,918
Common shares in treasury, shares	984	951

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	9 Months Ended
	Nov. 05, 2016	Nov. 07, 2015
Cash Flows from Operating Activities:
Net earnings including noncontrolling interests	$ 1,455	$ 1,484
Adjustments to reconcile net earnings including noncontrolling interests to net cash provided by operating activities:
Depreciation and amortization	1,768	1,581
LIFO charge	19	58
Stock-based employee compensation	110	130
Expense for Company-sponsored pension plans	62	79
Deferred income taxes	5	(149)
Other	(27)	67
Changes in operating assets and liabilities net of effects from mergers of businesses:
Store deposits in-transit	(120)	26
Receivables	48	1
Inventories	(798)	(693)
Prepaid and other current assets	219	242
Trade accounts payable	509	814
Accrued expenses	(144)	240
Income taxes receivable and payable	267	45
Other	83	(80)
Net cash provided by operating activities	3,456	3,845
Cash Flows from Investing Activities:
Payments for property and equipment, including payments for lease buyouts	(3,025)	(2,532)
Proceeds from sale of assets	114	34
Payments for mergers	(401)
Other	39	(82)
Net cash used by investing activities	(3,273)	(2,580)
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt	1,785	58
Payments on long-term debt	(1,332)	(547)
Net borrowings on commercial paper	1,200	100
Dividends paid	(316)	(283)
Excess tax benefits on stock-based awards		83
Proceeds from issuance of capital stock	51	94
Treasury stock purchases	(1,401)	(659)
Investment in the remaining equity of a noncontrolling interest		(26)
Other	(73)	(79)
Net cash used by financing activities	(86)	(1,259)
Net increase in cash and temporary cash investments	97	6
Cash and temporary cash investments:
Beginning of year	277	268
End of quarter	374	274
Reconciliation of capital investments:
Payments for property and equipment, including payments for lease buyouts	(3,025)	(2,532)
Payments for lease buyouts	5	16
Changes in construction-in-progress payables	14	(42)
Total capital investments, excluding lease buyouts	(3,006)	(2,558)
Disclosure of cash flow information:
Cash paid during the year for interest	410	397
Cash paid during the year for income taxes	$ 450	$ 864

CONSOLIDATED STATEMENTS OF CHAN

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY - USD ($) shares in Millions, $ in Millions	Common Stock	Additional Paid-In Capital	Treasury Stock	Accumulated Other Comprehensive Gain (Loss)	Accumulated Earnings	Noncontrolling Interest	Total
Balances at Jan. 31, 2015	$ 1,918	$ 2,748	$ (10,809)	$ (812)	$ 12,367	$ 30	$ 5,442
Balances (in shares) at Jan. 31, 2015	1,918		944
Issuance of common stock:
Stock options exercised			$ 94				94
Stock options exercised (in shares)			(7)
Restricted stock issued		(113)	$ 34				(79)
Restricted stock issued (in shares)			(3)
Treasury stock activity:
Treasury stock purchases, at cost			$ (500)				(500)
Treasury stock purchases, at cost (in shares)			14
Stock options exchanged			$ (159)				(159)
Stock options exchanged (in shares)			4
Share-based employee compensation		130					130
Other comprehensive gain (loss) net of income tax of $(32) and $38 for the first three quarters of 2016 and 2015, respectively				63			63
Investment in the remaining equity of a non-controlling interest		40				(57)	(17)
Other		143	$ (60)			(3)	80
Cash dividends declared ($0.345 and $0.303 per common share for the first three quarters of 2016 and 2015, respectively)					(293)		(293)
Net earnings including noncontrolling interests					1,480	4	1,484
Balances at Nov. 07, 2015	$ 1,918	2,948	$ (11,400)	(749)	13,554	(26)	6,245
Balances (in shares) at Nov. 07, 2015	1,918		952
Balances at Jan. 30, 2016	$ 1,918	2,980	$ (11,409)	(680)	14,011	(22)	6,798
Balances (in shares) at Jan. 30, 2016	1,918		951
Issuance of common stock:
Stock options exercised			$ 51				51
Stock options exercised (in shares)			(4)
Restricted stock issued		(111)	$ 55				(56)
Restricted stock issued (in shares)			(2)
Treasury stock activity:
Treasury stock purchases, at cost			$ (1,319)				(1,319)
Treasury stock purchases, at cost (in shares)			37
Stock options exchanged			$ (82)				(82)
Stock options exchanged (in shares)			2
Share-based employee compensation		110					110
Other comprehensive gain (loss) net of income tax of $(32) and $38 for the first three quarters of 2016 and 2015, respectively				(48)			(48)
Other		60	$ (63)			54	51
Cash dividends declared ($0.345 and $0.303 per common share for the first three quarters of 2016 and 2015, respectively)					(330)		(330)
Net earnings including noncontrolling interests					1,469	(14)	1,455
Balances at Nov. 05, 2016	$ 1,918	$ 3,039	$ (12,767)	$ (728)	$ 15,150	$ 18	$ 6,630
Balances (in shares) at Nov. 05, 2016	1,918		984

CONSOLIDATED STATEMENTS OF CHA9

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY (Parenthetical) - USD ($) $ in Millions	9 Months Ended
	Nov. 05, 2016	Nov. 07, 2015
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY
Other comprehensive gain (loss), income tax	$ (32)	$ 38
Cash dividends declared per common share (in dollars per share)	$ 0.345	$ 0.303

ACCOUNTING POLICIES

ACCOUNTING POLICIES	9 Months Ended
	Nov. 05, 2016
ACCOUNTING POLICIES
ACCOUNTING POLICIES	1. 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 in which the Company is the primary beneficiary. The January 30, 2016 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 Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2016. The unaudited information in the Consolidated Financial Statements for the third quarters and three quarters ended November 5, 2016 and November 7, 2015, includes the results of operations of the Company for the 12 and 40-week periods then ended. Refer to Note 6 for a description of changes to the Consolidated Statements of Operations and Consolidated Statements of Cash Flows for a recently adopted accounting standard regarding the presentation of employee share-based compensation payments. Revenue Recognition The Company changed from the remote method to the proportional method of recognizing gift card and gift certificate revenue, which had an immaterial effect on earnings.

MERGER

MERGER	9 Months Ended
	Nov. 05, 2016
MERGER
MERGER	2. On September 2, 2016, the Company closed its merger with Modern HC Holdings, Inc. (“ModernHEALTH”) by purchasing 100% of the outstanding shares of ModernHEALTH for $407. This merger allows the Company to expand its specialty pharmacy services by significantly increasing geographic reach and patient therapies. The merger was accounted for under the purchase method of accounting and was financed through the issuance of commercial paper. In a business combination, the purchase price is allocated to assets acquired and liabilities assumed based on their fair values, with any excess of purchase price over fair value recognized as goodwill. In addition to recognizing the assets and liabilities on the acquired company’s balance sheet, the Company reviews supply contracts, leases, financial instruments, employment agreements and other significant agreements to identify potential assets or liabilities that require recognition in connection with the application of acquisition accounting under Accounting Standards Codification (“ASC”) 805. Intangible assets are recognized apart from goodwill when the asset arises from contractual or other legal rights, or are separable from the acquired entity such that they may be sold, transferred, licensed, rented or exchanged either on a standalone basis or in combination with a related contract, asset or liability. Pending finalization of the Company’s valuation and other items, the following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as part of the merger with ModernHEALTH: September 2, 2016 ASSETS Total current assets $ Property, plant and equipment Intangibles Total Assets, excluding Goodwill LIABILITIES Total current liabilities Fair-value of long-term debt including obligations under capital leases and financing obligations Deferred income taxes Total Liabilities Total Identifiable Net Assets Goodwill Total Purchase Price $ Of the $136 allocated to intangible assets, the Company recorded $131 and $5 related to pharmacy prescription files and distribution agreements, respectively. The Company will amortize the pharmacy prescription files and distribution agreements, using the straight line method, over 10 years. The goodwill recorded as part of the merger was attributable to the assembled workforce of ModernHEALTH and operational synergies expected from the merger, as well as any intangible assets that did not qualify for separate recognition. The merger was treated as a stock purchase for income tax purposes. The assets acquired and liabilities assumed as part of the merger did not result in a step up of tax basis and goodwill is not expected to be deductible for tax purposes. On December 18, 2015, the Company closed its merger with Roundy’s, Inc. (“Roundy’s”). In the second quarter of 2016, there was a purchase price allocation adjustment to reduce goodwill and other current liabilities by $8. Pro forma results of operations, assuming the Roundy’s merger had taken place at the beginning of 2014 and the ModernHEALTH merger had taken place at the beginning of 2015, are included in the following table. The pro forma information includes historical results of operations of Roundy’s and ModernHEALTH, as well as adjustments for interest expense that would have been incurred due to financing the mergers, depreciation and amortization of the assets acquired and excludes the pre-merger transaction related expenses incurred by Roundy’s, ModernHEALTH and the Company. The pro forma information does not include efficiencies, cost reductions, synergies or investments in our Customer 1 st Strategy expected to result from the mergers. The unaudited pro forma financial information is not necessarily indicative of the results that actually would have occurred had the Roundy’s merger been completed at the beginning of 2014 or the ModernHEALTH merger been completed at the beginning of 2015. The sales and net earnings of ModernHEALTH are not material to the Company’s 2016 results. Third Quarter Ended Three Quarters Ended November 7, 2015 November 7, 2015 Sales $ $ Net earnings including noncontrolling interests Net earnings (loss) attributable to noncontrolling interests Net earnings attributable to The Kroger Co. $ $

DEBT OBLIGATIONS

DEBT OBLIGATIONS	9 Months Ended
	Nov. 05, 2016
DEBT OBLIGATIONS
DEBT OBLIGATIONS	3. Long-term debt consists of: November 5, January 30, 2016 2016 1.14% to 8.00% Senior Notes due through 2046 $ $ 5.00% to 12.75% Mortgages due in varying amounts through 2027 0.63% to 0.67% Commercial paper borrowings due through November 2016 Other Total debt, excluding capital leases and financing obligations Less current portion Total long-term debt, excluding capital leases and financing obligations $ $ In the third quarter of 2016, the Company issued $500 of senior notes due in fiscal year 2019 bearing an interest rate of 1.50%, $750 of senior notes due in fiscal year 2026 bearing an interest rate of 2.65% and $500 of senior notes due in fiscal year 2046 bearing an interest rate of 3.88%. The Company also repaid $450 of senior notes bearing an interest rate of 2.20%, $500 of senior notes bearing an interest rate of 3-month London Inter-Bank Offering Rate plus 53 basis points and $300 of senior notes bearing an interest rate of 1.20%. In connection with the senior note issuances, the Company also terminated forward-starting interest rate swaps with an aggregate notional amount totaling $300. These forward-starting interest rate swap agreements were hedging the variability in future benchmark interest payments attributable to changing interest rates on the forecasted issuance of fixed-rate debt issued during the third quarter of 2016. Since these forward-starting interest rate swap agreements were classified as cash flow hedges, the unamortized loss of $13, $8 net of tax, has been deferred in AOCI and will be amortized to earnings as the interest payments are made. In anticipation of future debt refinancing in fiscal years 2016 through 2019, the Company, in the first and second quarters of 2016, entered into additional forward-starting interest rate swap agreements with an aggregate notional amount totaling $1,500. As of the end of the third quarter of 2016, the Company has a total of $1,600 notional amount of forward-starting interest rate swaps outstanding. The forward-starting interest rate swaps entered into in the first three quarters of 2016 were designated as cash-flow hedges as defined by GAAP.

BENEFIT PLANS

BENEFIT PLANS	9 Months Ended
	Nov. 05, 2016
BENEFIT PLANS
BENEFIT PLANS	4. The following table provides the components of net periodic benefit cost for the Company-sponsored defined benefit pension plans and other post-retirement benefit plans for the third quarters of 2016 and 2015. Third Quarter Ended Pension Benefits Other Benefits November 5, November 7, November 5, November 7, 2016 2015 2016 2015 Components of net periodic benefit cost: Service cost $ $ $ $ Interest cost Expected return on plan assets — — Amortization of: Prior service cost — — Actuarial loss (gain) Net periodic benefit cost $ $ $ — $ The following table provides the components of net periodic benefit cost for the Company-sponsored defined benefit pension plans and other post-retirement benefit plans for the first three quarters of 2016 and 2015. Three Quarters Ended Pension Benefits Other Benefits November 5, November 7, November 5, November 7, 2016 2015 2016 2015 Components of net periodic benefit cost: Service cost $ $ $ $ Interest cost Expected return on plan assets — — Amortization of: Prior service cost — — Actuarial loss (gain) Net periodic benefit cost $ $ $ $ The Company is not required and does not expect to make any contributions to its Company-sponsored defined benefit pension plans in 2016. The Company contributed $5 to its Company-sponsored defined benefit pension plans in the first three quarters of 2015. The Company contributed $167 and $152 to employee 401(k) retirement savings accounts in the first three quarters of 2016 and 2015, 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. During the second quarter of 2016, the Company incurred a charge of $111, $71 net of tax, due to commitments arising from the restructuring of certain multi-employer pension plan obligations during the second quarter of 2016. During the third quarter of 2015, the Company contributed $80 to the United Food and Commercial Workers International Union (“UFCW”) Consolidated Pension Plan, which was recognized as expense.

EARNINGS PER COMMON SHARE

EARNINGS PER COMMON SHARE	9 Months Ended
	Nov. 05, 2016
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE	5. 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 5, 2016 November 7, 2015 Per Per Earnings Shares Share Earnings Shares Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Net earnings attributable to The Kroger Co. per basic common share $ $ $ $ Dilutive effect of stock options Net earnings attributable to The Kroger Co. per diluted common share $ $ $ $ Three Quarters Ended Three Quarters Ended November 5, 2016 November 7, 2015 Per Per Earnings Shares Share Earnings Shares Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Net earnings attributable to The Kroger Co. per basic common share $ $ $ $ Dilutive effect of stock options Net earnings attributable to The Kroger Co. per diluted common share $ $ $ $ The Company had combined undistributed and distributed earnings to participating securities totaling $3 in the third quarter of 2016 and $4 in the third quarter of 2015. For the first three quarters of 2016 and 2015, the Company had combined undistributed and distributed earnings to participating securities of $11 and $14, respectively. The Company had options outstanding for approximately 11 million and 3 million shares during the third quarters of 2016 and 2015, respectively, that were excluded from the computations of net earnings per diluted common share because their inclusion would have had an anti-dilutive effect on net earnings per share. The Company had options outstanding for approximately 7 million shares in the first three quarters of 2016 and 1 million shares in the first three quarters of 2015 that were excluded from the computations of net earnings per diluted common share because their inclusion would have had an anti-dilutive effect on earnings per share.

RECENTLY ADOPTED ACCOUNTING STA

RECENTLY ADOPTED ACCOUNTING STANDARDS	9 Months Ended
	Nov. 05, 2016
RECENTLY ADOPTED ACCOUNTING STANDARDS
RECENTLY ADOPTED ACCOUNTING STANDARDS	6. In September 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-16, “Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments.” This amendment eliminates the requirement to retrospectively account for adjustments made to provisional amounts recognized in a business combination. This amendment became effective for the Company beginning January 31, 2016, and was adopted prospectively in accordance with the standard. The adoption of this amendment did not have an effect on the Company’s Consolidated Balance Sheets or Consolidated Statements of Operations. During the second quarter of 2016, the Company adopted ASU 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” This amendment addresses several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. As a result of the adoption, the Company recognized $3 and $42 of excess tax benefits related to share-based payments in its provision for income taxes for the third quarter and first three quarters ended November 5, 2016. These items were historically recorded in additional paid-in capital. In addition, for the first three quarters of 2016, cash flows related to excess tax benefits are classified as an operating activity. Cash paid on employees' behalf related to shares withheld for tax purposes is classified as a financing activity. Retrospective application of the cash flow presentation requirements resulted in increases to both “Net cash provided by operating activities” and “Net cash used by financing activities” of $56 for the first three quarters of 2016 and $79 for the first three quarters of 2015. The Company’s stock compensation expense continues to reflect estimated forfeitures.

RECENTLY ISSUED ACCOUNTING STAN

RECENTLY ISSUED ACCOUNTING STANDARDS	9 Months Ended
	Nov. 05, 2016
RECENTLY ISSUED ACCOUNTING STANDARDS
RECENTLY ISSUED ACCOUNTING STANDARDS	7. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” as amended by several subsequent ASUs, which provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Per ASU 2015-14, “Deferral of Effective Date,” this guidance will be effective for the Company in the first quarter of its fiscal year ending February 2, 2019. Early adoption is permitted as of the first quarter of the Company’s fiscal year ending February 3, 2018. The Company is currently in the process of evaluating the effect of adoption of this ASU on its Consolidated Financial Statements. In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes.” This amendment requires deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. This guidance will be effective for the fiscal year ending February 3, 2018. Early adoption is permitted. The implementation of this amendment will not have an effect on the Company’s Consolidated Statements of Operations and will not have a significant effect on the Company’s Consolidated Balance Sheets. In February 2016, the FASB issued ASU 2016-02, “Leases”, which provides guidance for the recognition of lease agreements. The standard’s core principle is that a company will now recognize most leases on its balance sheet as lease liabilities with corresponding right-of-use assets. This guidance will be effective in the first quarter of fiscal year ending February 1, 2020. Early adoption is permitted. The adoption of this ASU will result in a significant increase to the Company’s Consolidated Balance Sheets for lease liabilities and right-of-use assets, and the Company is currently evaluating the other effects of adoption of this ASU on its Consolidated Financial Statements.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Nov. 05, 2016
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	8. 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, as well as product liability cases, 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 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.

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	9 Months Ended
	Nov. 05, 2016
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS	9. 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 5, 2016 and January 30, 2016: November 5, 2016 Fair Value Measurements Using Quoted Prices in Active Markets Significant for Identical Significant Other Unobservable Assets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Total Trading Securities $ $ — $ — $ Long-Lived Assets — — Interest Rate Hedges — — Total $ $ $ $ January 30, 2016 Fair Value Measurements Using Quoted Prices in Active Markets Significant for Identical Significant Other Unobservable Assets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Total Trading Securities $ $ — $ — $ Available-For-Sale Securities — — Long-Lived Assets — — Interest Rate Hedges — — Total $ $ $ $ During the first two quarters of 2016, the Company sold all available-for-sale securities for a gain of $27, which was recorded to “Operating, general and administrative” within the Consolidated Statements of Operations. The Company values interest rate hedges using observable forward yield curves. These forward yield curves are classified as Level 2 inputs. During the second quarter of 2016, the Company entered into agreements with a third party. As part of the consideration for entering these agreements, the Company received a financial instrument that derives its value from the third party’s business operations. The Company used the Monte-Carlo simulation method to determine the fair value of this financial instrument. The Monte-Carlo simulation is a generally accepted statistical technique used to generate a defined number of valuation paths in order to develop a reasonable estimate of the fair value of this financial instrument. The assumptions used in the Monte-Carlo simulation are classified as Level 3 inputs. The financial instrument was valued at $335 and recorded in “Other assets” within the Consolidated Balance Sheets. As the financial instrument was obtained in exchange for certain obligations, the Company also recognized offsetting deferred revenue liabilities in “Other current liabilities” and “Other long-term liabilities” within the Consolidated Balance Sheets. The deferred revenue will be amortized to “Sales” within the Consolidated Statements of Operations over the term of the agreements. 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 3 to the Consolidated Financial Statements in the Annual Report on Form 10-K for the fiscal year ended January 30, 2016 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 January 30, 2016 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 2016, long-lived assets with a carrying amount of $19 were written down to their fair value of $3 resulting in an impairment charge of $16. For the first three quarters of 2015, long-lived assets with a carrying amount of $38 were written down to their fair value of $5 resulting in an impairment charge of $33. In fiscal year 2015, long-lived assets with a carrying amount of $53 were written down to their fair value of $7, resulting in an impairment charge of $46. 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 upon the net present value of the future cash flow using the forward interest rate yield curve in effect at November 5, 2016 and January 30, 2016. At November 5, 2016, the fair value of total debt was $14,049 compared to a carrying value of $13,085. At January 30, 2016, the fair value of total debt was $12,344 compared to a carrying value of $11,396. 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 investments were estimated based on quoted market prices for those or similar investments, or estimated cash flows, if appropriate. At November 5, 2016 and January 30, 2016, the carrying and fair value of long-term investments for which fair value is determinable was $131 and $128, respectively. At November 5, 2016 and January 30, 2016, the carrying value of notes receivable for which fair value is determinable was $183 and $145, respectively.

ACCUMULATED OTHER COMPREHENSIVE

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)	9 Months Ended
	Nov. 05, 2016
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)	10. CCUMULATED O THER C OMPREHENSIVE I NCOME (L OSS ) The following table represents the changes in AOCI by component for the first three quarters of 2015 and 2016: Pension and Cash Flow Postretirement Hedging Available for sale Defined Benefit Activities (1) Securities(1) Plans(1) Total (1) Balance at January 31, 2015 $ $ $ $ OCI before reclassifications(2) — Amounts reclassified out of AOCI(3) — — Net current-period OCI Balance at November 7, 2015 $ $ $ $ Balance at January 30, 2016 $ $ $ $ OCI before reclassifications(2) — Amounts reclassified out of AOCI(3) Net current-period OCI Balance at November 5, 2016 $ $ — $ $ (1) All amounts are net of tax. (2) Net of tax of $8 and $5 for cash flow hedging activities and available for sale securities, respectively, for the first three quarters of 2015. Net of tax of $(31) and $(3) for cash flow hedging activities and available for sale securities, respectively, for the first three quarters of 2016. (3) Net of tax of $25 for pension and postretirement defined benefit plans for the first three quarters of 2015. Net of tax of $1 for cash flow hedging activities, $(13) for available for sale securities and $14 for pension and postretirement defined benefit plans for the first three quarters of 2016. The following table represents the items reclassified out of AOCI and the related tax effects for the third quarter and first three quarters of 2016 and 2015: Third Quarter Ended Three Quarters Ended November 5, November 7, November 5, November 7, 2016 2015 2016 2015 Cash flow hedging activity items Amortization of gains and losses on cash flow hedging activities(1) $ $ — $ $ — Tax expense — — Net of tax — — — Available for sale security items Realized gains on available for sale securities(2) — — — Tax expense — — — Net of tax — — — Pension and postretirement defined benefit plan items Amortization of amounts included in net periodic pension expense(3) Tax expense Net of tax Total reclassifications, net of tax $ $ $ $ (1) Reclassified from AOCI into interest expense. (2) Reclassified from AOCI into operating, general and administrative expense. (3) 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. 05, 2016
INCOME TAXES
INCOME TAXES	11. INCOME TAXES The effective income tax rate was 35.0% in the third quarter of 2016, compared to 35.8% for the third quarter of 2015. The effective income tax rate was 33.3% for the first three quarters of 2016, compared to 34.9% for the first three quarters of 2015. The effective income tax rate for the third quarter of 2016 was equal to the federal statutory rate primarily due to the offsetting effect of state income taxes and the benefit of tax credits and deductions. The effective income tax rate for the first three quarters of 2016 differed from the federal statutory rate primarily due to the recognition of excess tax benefits related to share-based payments after the adoption of ASU 2016-09, which caused a reduction in income tax expense of $42 in the first three quarters of 2016, and the benefit from tax credits and deductions, partially offset by the effect of state income taxes. Excess tax benefits related to share-based payments were historically recorded in additional paid-in capital prior to the adoption of ASU 2016-09. The effective income tax rate for the third quarter of 2015 and the first three quarters of 2015 differed from the federal statutory rate primarily due to the benefit from the favorable conclusion of certain tax audits and the benefit from tax credits and deductions, partially offset by the effect of state income taxes.

ACCOUNTING POLICIES (Policies)

ACCOUNTING POLICIES (Policies)	9 Months Ended
	Nov. 05, 2016
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 in which the Company is the primary beneficiary. The January 30, 2016 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 Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2016. The unaudited information in the Consolidated Financial Statements for the third quarters and three quarters ended November 5, 2016 and November 7, 2015, includes the results of operations of the Company for the 12 and 40-week periods then ended. Refer to Note 6 for a description of changes to the Consolidated Statements of Operations and Consolidated Statements of Cash Flows for a recently adopted accounting standard regarding the presentation of employee share-based compensation payments.
Revenue Recognition	Revenue Recognition The Company changed from the remote method to the proportional method of recognizing gift card and gift certificate revenue, which had an immaterial effect on earnings.

MERGER (Tables)

MERGER (Tables)	9 Months Ended
	Nov. 05, 2016
MERGER
Summary of the preliminary fair values of the assets acquired and liabilities assumed	September 2, 2016 ASSETS Total current assets $ Property, plant and equipment Intangibles Total Assets, excluding Goodwill LIABILITIES Total current liabilities Fair-value of long-term debt including obligations under capital leases and financing obligations Deferred income taxes Total Liabilities Total Identifiable Net Assets Goodwill Total Purchase Price $
Schedule of pro forma results of operations	Third Quarter Ended Three Quarters Ended November 7, 2015 November 7, 2015 Sales $ $ Net earnings including noncontrolling interests Net earnings (loss) attributable to noncontrolling interests Net earnings attributable to The Kroger Co. $ $

DEBT OBLIGATIONS (Tables)

DEBT OBLIGATIONS (Tables)	9 Months Ended
	Nov. 05, 2016
DEBT OBLIGATIONS
Schedule of long-term debt	November 5, January 30, 2016 2016 1.14% to 8.00% Senior Notes due through 2046 $ $ 5.00% to 12.75% Mortgages due in varying amounts through 2027 0.63% to 0.67% Commercial paper borrowings due through November 2016 Other Total debt, excluding capital leases and financing obligations Less current portion Total long-term debt, excluding capital leases and financing obligations $ $

BENEFIT PLANS (Tables)

BENEFIT PLANS (Tables)	9 Months Ended
	Nov. 05, 2016
BENEFIT PLANS
Schedule of components of net periodic benefit cost	Third Quarter Ended Pension Benefits Other Benefits November 5, November 7, November 5, November 7, 2016 2015 2016 2015 Components of net periodic benefit cost: Service cost $ $ $ $ Interest cost Expected return on plan assets — — Amortization of: Prior service cost — — Actuarial loss (gain) Net periodic benefit cost $ $ $ — $ The following table provides the components of net periodic benefit cost for the Company-sponsored defined benefit pension plans and other post-retirement benefit plans for the first three quarters of 2016 and 2015. Three Quarters Ended Pension Benefits Other Benefits November 5, November 7, November 5, November 7, 2016 2015 2016 2015 Components of net periodic benefit cost: Service cost $ $ $ $ Interest cost Expected return on plan assets — — Amortization of: Prior service cost — — Actuarial loss (gain) Net periodic benefit cost $ $ $ $

EARNINGS PER COMMON SHARE (Tabl

EARNINGS PER COMMON SHARE (Tables)	9 Months Ended
	Nov. 05, 2016
EARNINGS PER COMMON SHARE
Schedule of earnings per common and diluted shares	Third Quarter Ended Third Quarter Ended November 5, 2016 November 7, 2015 Per Per Earnings Shares Share Earnings Shares Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Net earnings attributable to The Kroger Co. per basic common share $ $ $ $ Dilutive effect of stock options Net earnings attributable to The Kroger Co. per diluted common share $ $ $ $ Three Quarters Ended Three Quarters Ended November 5, 2016 November 7, 2015 Per Per Earnings Shares Share Earnings Shares Share (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Net earnings attributable to The Kroger Co. per basic common share $ $ $ $ Dilutive effect of stock options Net earnings attributable to The Kroger Co. per diluted common share $ $ $ $

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	9 Months Ended
	Nov. 05, 2016
FAIR VALUE MEASUREMENTS
Summary of fair value measurements	November 5, 2016 Fair Value Measurements Using Quoted Prices in Active Markets Significant for Identical Significant Other Unobservable Assets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Total Trading Securities $ $ — $ — $ Long-Lived Assets — — Interest Rate Hedges — — Total $ $ $ $ January 30, 2016 Fair Value Measurements Using Quoted Prices in Active Markets Significant for Identical Significant Other Unobservable Assets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Total Trading Securities $ $ — $ — $ Available-For-Sale Securities — — Long-Lived Assets — — Interest Rate Hedges — — Total $ $ $ $

ACCUMULATED OTHER COMPREHENSI27

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)	9 Months Ended
	Nov. 05, 2016
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Schedule of changes in AOCI by component	Pension and Cash Flow Postretirement Hedging Available for sale Defined Benefit Activities (1) Securities(1) Plans(1) Total (1) Balance at January 31, 2015 $ $ $ $ OCI before reclassifications(2) — Amounts reclassified out of AOCI(3) — — Net current-period OCI Balance at November 7, 2015 $ $ $ $ Balance at January 30, 2016 $ $ $ $ OCI before reclassifications(2) — Amounts reclassified out of AOCI(3) Net current-period OCI Balance at November 5, 2016 $ $ — $ $ (1) All amounts are net of tax. (2) Net of tax of $8 and $5 for cash flow hedging activities and available for sale securities, respectively, for the first three quarters of 2015. Net of tax of $(31) and $(3) for cash flow hedging activities and available for sale securities, respectively, for the first three quarters of 2016. (3) Net of tax of $25 for pension and postretirement defined benefit plans for the first three quarters of 2015. Net of tax of $1 for cash flow hedging activities, $(13) for available for sale securities and $14 for pension and postretirement defined benefit plans for the first three quarters of 2016.
Schedule of items reclassified out of AOCI and the related tax effects	Third Quarter Ended Three Quarters Ended November 5, November 7, November 5, November 7, 2016 2015 2016 2015 Cash flow hedging activity items Amortization of gains and losses on cash flow hedging activities(1) $ $ — $ $ — Tax expense — — Net of tax — — — Available for sale security items Realized gains on available for sale securities(2) — — — Tax expense — — — Net of tax — — — Pension and postretirement defined benefit plan items Amortization of amounts included in net periodic pension expense(3) Tax expense Net of tax Total reclassifications, net of tax $ $ $ $ (1) Reclassified from AOCI into interest expense. (2) Reclassified from AOCI into operating, general and administrative expense. (3) 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).

ACCOUNTING POLICIES (Details)

ACCOUNTING POLICIES (Details)	3 Months Ended		9 Months Ended
	Nov. 05, 2016	Nov. 07, 2015	Nov. 05, 2016	Nov. 07, 2015
Basis of Presentation and Principles of Consolidation
Length of fiscal period	84 days	84 days	280 days	280 days

MERGER (Details)

MERGER (Details) - USD ($) $ in Millions	Sep. 02, 2016	Nov. 07, 2015	Nov. 07, 2015	Nov. 05, 2016	Aug. 13, 2016	Jan. 30, 2016
LIABILITIES
Goodwill				$ 3,035		$ 2,724
Pro forma results of operations
Sales		$ 25,989	$ 87,406
Net earnings including noncontrolling interests		426	1,487
Net earnings (loss) attributable to noncontrolling interests		(1)	4
Net earnings attributable to The Kroger Co.		$ 427	$ 1,483
ModernHEALTH
MERGER
Percentage of outstanding common stock acquired	100.00%
Consideration transferred	$ 407
ASSETS
Total current assets	82
Property, plant and equipment	8
Intangibles	136
Total Assets, excluding Goodwill	226
LIABILITIES
Total current liabilities	(70)
Fair-value of long-term debt including obligations under capital leases and financing obligations	(1)
Deferred income taxes	(33)
Total Liabilities	(104)
Total Identifiable Net Assets/Liabilities	122
Goodwill	285
Total Purchase Price	407
ModernHEALTH | Pharmacy prescription files
ASSETS
Intangibles	$ 131
Additional disclosures
Weighted-average amortizable lives	10 years
ModernHEALTH | Distribution agreements
ASSETS
Intangibles	$ 5
Additional disclosures
Weighted-average amortizable lives	10 years
Roundy’s Inc.
MERGER
Purchase price allocation, decrease to goodwill					$ 8
Purchase price allocation, decrease to other current liabilities					$ 8

DEBT OBLIGATIONS (Details)

DEBT OBLIGATIONS (Details) - USD ($) $ in Millions	3 Months Ended
	Nov. 05, 2016	Aug. 13, 2016	Jan. 30, 2016
Debt
Total debt, excluding capital leases and financing obligations	$ 13,085		$ 11,396
Less current portion	(2,964)		(2,318)
Total long-term debt, excluding capital leases and financing obligations	10,121		9,078
Unamortized loss on cash flow hedging activities, net of income tax	728		680
Forward-starting interest rate swaps | Designated | Cash flow hedges
Debt
Notional amount	1,600
Terminated hedge | Designated | Cash flow hedges
Debt
Notional amount	300
Terminated hedge | Designated | Cash Flow Hedging Activities | Cash flow hedges
Debt
Unamortized loss on cash flow hedging activities, before income tax	13
Unamortized loss on cash flow hedging activities, net of income tax	8
Derivative Contracts entered into during the first and second quarter of 2016 | Designated | Cash flow hedges
Debt
Notional amount		$ 1,500
Senior Notes due through 2046
Debt
Total debt, excluding capital leases and financing obligations	$ 10,319		$ 9,826
Senior Notes due through 2046 | Minimum
Debt
Interest rate (as a percent)	1.14%		1.14%
Senior Notes due through 2046 | Maximum
Debt
Interest rate (as a percent)	8.00%		8.00%
Senior notes due in 2016 | Three-month LIBOR
Debt
Repayment of debt	$ 500
Debt instrument variable basis rate	3-month London Inter-Bank Offering Rate
Interest rate margin (as a percent)	0.53%
Senior notes 1.20% due 2016
Debt
Repayment of debt	$ 300
Interest rate (as a percent)	1.20%
Senior notes 1.50% due 2019
Debt
New issue of senior notes	$ 500
Interest rate (as a percent)	1.50%
Senior notes 2.65% due 2026
Debt
New issue of senior notes	$ 750
Interest rate (as a percent)	2.65%
Senior notes 3.88% due 2046
Debt
New issue of senior notes	$ 500
Interest rate (as a percent)	3.88%
Senior Notes 2.20%
Debt
Repayment of debt	$ 450
Interest rate (as a percent)	2.20%
Mortgages due in varying amounts through 2027
Debt
Total debt, excluding capital leases and financing obligations	$ 49		$ 58
Mortgages due in varying amounts through 2027 | Minimum
Debt
Interest rate (as a percent)	5.00%		5.00%
Mortgages due in varying amounts through 2027 | Maximum
Debt
Interest rate (as a percent)	12.75%		12.75%
Commercial paper borrowings due through November 2016
Debt
Total debt, excluding capital leases and financing obligations	$ 2,190		$ 990
Commercial paper borrowings due through November 2016 | Minimum
Debt
Interest rate (as a percent)	0.63%		0.63%
Commercial paper borrowings due through November 2016 | Maximum
Debt
Interest rate (as a percent)	0.67%		0.67%
Other
Debt
Total debt, excluding capital leases and financing obligations	$ 527		$ 522

BENEFIT PLANS - COMPONENTS OF N

BENEFIT PLANS - COMPONENTS OF NET PERIODIC BENEFIT COSTS (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Nov. 05, 2016	Nov. 07, 2015	Nov. 05, 2016	Nov. 07, 2015
Pension Benefits
Components of net periodic benefit cost:
Service cost	$ 14	$ 15	$ 50	$ 50
Interest cost	44	37	145	127
Expected return on plan assets	(55)	(52)	(183)	(176)
Amortization of:
Actuarial loss (gain)	16	23	50	78
Net periodic benefit cost	19	23	62	79
Contributions into Fund				5
Other Benefits
Components of net periodic benefit cost:
Service cost	2	2	7	8
Interest cost	2	2	8	8
Amortization of:
Prior service cost	(2)	(2)	(6)	(8)
Actuarial loss (gain)	$ (2)	(1)	(7)	(4)
Net periodic benefit cost		$ 1	$ 2	$ 4

BENEFIT PLANS - DEFINED CONTRIB

BENEFIT PLANS - DEFINED CONTRIBUTION PLAN INFORMATION (Details) - USD ($) $ in Millions	9 Months Ended
	Nov. 05, 2016	Nov. 07, 2015
BENEFIT PLANS
Contribution to 401(k) retirement savings accounts	$ 167	$ 152

BENEFIT PLANS - MULTI EMPLOYER

BENEFIT PLANS - MULTI EMPLOYER PENSION PLAN OBLIGATIONS (Details) - USD ($) $ in Millions	3 Months Ended
	Aug. 13, 2016	Nov. 07, 2015
United Food and Commercial Workers International Union (UFCW)
Multiemployer Plans
Employer contribution to multi-employer benefit plans		$ 80
Multi-employer Pension Plan
Multiemployer Plans
Charge (before-tax) related to pension plan agreements	$ 111
Charge (after-tax) related to pension plan agreements	$ 71

EARNINGS PER COMMON SHARE (Deta

EARNINGS PER COMMON SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		9 Months Ended
	Nov. 05, 2016	Nov. 07, 2015	Nov. 05, 2016	Nov. 07, 2015
EARNINGS PER COMMON SHARE
Net earnings attributable to The Kroger Co. per basic common share	$ 388	$ 424	$ 1,458	$ 1,466
Average number of common shares used in basic calculation	940	965	946	966
Net earnings attributable to The Kroger Co. per basic common share	$ 0.41	$ 0.44	$ 1.54	$ 1.52
Dilutive effect of stock options (in shares)	13	14	16	14
Net earnings attributable to The Kroger Co. per diluted common share	$ 388	$ 424	$ 1,458	$ 1,466
Average number of common shares used in diluted calculation	953	979	962	980
Net earnings attributable to The Kroger Co. per diluted common share	$ 0.41	$ 0.43	$ 1.52	$ 1.50
Undistributed and distributed earnings to participating securities	$ 3	$ 4	$ 11	$ 14
Shares excluded from the earnings per share calculation due to anti-dilutive effect on earnings per share	11	3	7	1

RECENTLY ADOPTED ACCOUNTING S35

RECENTLY ADOPTED ACCOUNTING STANDARDS (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Nov. 05, 2016	Nov. 07, 2015	Nov. 05, 2016	Nov. 07, 2015
Recently adopted accounting standards
Tax expense	$ (206)	$ (238)	$ (727)	$ (795)
Net cash provided by operating activities			3,456	3,845
Net cash used by financing activities			86	1,259
Accounting Standards Update 2016-09 | Adjustment
Recently adopted accounting standards
Tax expense	$ 3		42
Net cash provided by operating activities			56	79
Net cash used by financing activities			$ 56	$ 79

FAIR VALUE MEASUREMENTS (Detail

FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Millions	6 Months Ended	9 Months Ended		12 Months Ended
	Aug. 13, 2016	Nov. 05, 2016	Nov. 07, 2015	Jan. 30, 2016
Fair value of financial instruments carried at fair value
Asset impairment charge		$ 16	$ 33	$ 46
Other assets
Fair value of financial instruments carried at fair value
Value of financial instrument	$ 335
Operating, general and administrative
Fair value of financial instruments carried at fair value
Gain on sale of available-for-sale securities	$ 27
Carrying Value
Fair value of financial instruments carried at fair value
Fair value of total debt		13,085		11,396
Long-term investments		131		128
Notes receivable		183		145
Carrying Value | Before impairment
Fair value of financial instruments carried at fair value
Long-Lived Assets, excluding financial instruments		19	38	53
Fair value
Fair value of financial instruments carried at fair value
Total		291		70
Fair value of total debt		14,049		12,344
Long-term investments		131		128
Notes receivable		183		145
Significant Unobservable Inputs (Level 3)
Fair value of financial instruments carried at fair value
Total		338		7
Recurring | Fair value
Fair value of financial instruments carried at fair value
Trading Securities		49		48
Available-For-Sale Securities				41
Recurring | Fair value | Interest Rate Hedges
Fair value of financial instruments carried at fair value
Interest Rate Hedges		(96)		(26)
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair value of financial instruments carried at fair value
Trading Securities		49		48
Available-For-Sale Securities				41
Total		49		89
Recurring | Significant Other Observable Inputs (Level 2)
Fair value of financial instruments carried at fair value
Total		(96)		(26)
Recurring | Significant Other Observable Inputs (Level 2) | Interest Rate Hedges
Fair value of financial instruments carried at fair value
Interest Rate Hedges		(96)		(26)
Nonrecurring | Fair value
Fair value of financial instruments carried at fair value
Long-Lived assets		338		7
Long-Lived Assets, excluding financial instruments		3	$ 5	7
Nonrecurring | Significant Unobservable Inputs (Level 3)
Fair value of financial instruments carried at fair value
Long-Lived assets		$ 338		$ 7

ACCUMULATED OTHER COMPREHENSI37

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - CHANGES IN AOCI BY COMPONENT (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Nov. 05, 2016	Nov. 07, 2015	Nov. 05, 2016	Nov. 07, 2015
Accumulated other comprehensive income (loss)
Balance at the beginning of the period			$ 6,820
Amounts reclassified out of AOCI	$ 8	$ 12	10	$ 41
Total other comprehensive income (loss)	54	10	(48)	63
Balance at the end of the period	6,612		6,612
Accumulated Other Comprehensive Gain (Loss)
Accumulated other comprehensive income (loss)
Balance at the beginning of the period			(680)	(812)
OCI before reclassifications			(58)	22
Amounts reclassified out of AOCI			10	41
Total other comprehensive income (loss)			(48)	63
Balance at the end of the period	(728)	(749)	(728)	(749)
Cash Flow Hedging Activities
Accumulated other comprehensive income (loss)
Balance at the beginning of the period			(51)	(49)
OCI before reclassifications			(52)	14
Amounts reclassified out of AOCI			1
Total other comprehensive income (loss)			(51)	14
Balance at the end of the period	(102)	(35)	(102)	(35)
OCI before reclassifications, tax			(31)	8
Amounts reclassified out of AOCI, tax			1
Available for sale Securities
Accumulated other comprehensive income (loss)
Balance at the beginning of the period			20	17
OCI before reclassifications			(6)	8
Amounts reclassified out of AOCI			(14)
Total other comprehensive income (loss)			(20)	8
Balance at the end of the period		25		25
OCI before reclassifications, tax			(3)	5
Amounts reclassified out of AOCI, tax			(13)
Pension and Postretirement Defined Benefit Plans
Accumulated other comprehensive income (loss)
Balance at the beginning of the period			(649)	(780)
Amounts reclassified out of AOCI	8	12	23	41
Total other comprehensive income (loss)			23	41
Balance at the end of the period	(626)	(739)	(626)	(739)
Amounts reclassified out of AOCI, tax	$ 4	$ 8	$ 14	$ 25

ACCUMULATED OTHER COMPREHENSI38

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - ITEMS RECLASSIFIED OUT OF AOCI (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Nov. 05, 2016	Nov. 07, 2015	Nov. 05, 2016	Nov. 07, 2015
Reclassification out of AOCI and the related tax effects
Interest Expense	$ 124	$ 107	$ 396	$ 369
Operating, General and Administrative Expense	4,443	4,169	14,695	13,591
Tax expense	206	238	727	795
Net of tax	(391)	(428)	(1,469)	(1,480)
Total reclassifications, net of tax	8	12	10	41
Cash Flow Hedging Activities
Reclassification out of AOCI and the related tax effects
Tax expense			(1)
Total reclassifications, net of tax			1
Available for sale Securities
Reclassification out of AOCI and the related tax effects
Tax expense			13
Total reclassifications, net of tax			(14)
Pension and Postretirement Defined Benefit Plans
Reclassification out of AOCI and the related tax effects
Reclassifications before tax	12	20	37	66
Tax expense	(4)	(8)	(14)	(25)
Total reclassifications, net of tax	8	$ 12	23	$ 41
Reclassification out of AOCI | Cash Flow Hedging Activities
Reclassification out of AOCI and the related tax effects
Interest Expense	1		2
Tax expense	$ (1)		(1)
Net of tax			1
Reclassification out of AOCI | Available for sale Securities
Reclassification out of AOCI and the related tax effects
Operating, General and Administrative Expense			(27)
Tax expense			13
Net of tax			$ (14)

INCOME TAXES - EFFECTIVE INCOME

INCOME TAXES - EFFECTIVE INCOME TAX RATE (Details)	3 Months Ended		9 Months Ended
	Nov. 05, 2016	Nov. 07, 2015	Nov. 05, 2016	Nov. 07, 2015
INCOME TAXES
Effective income tax rate (as a percent)	35.00%	35.80%	33.30%	34.90%

INCOME TAXES - IMPACT OF ADOPTI

INCOME TAXES - IMPACT OF ADOPTION OF ASU (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Nov. 05, 2016	Nov. 07, 2015	Nov. 05, 2016	Nov. 07, 2015
Recently adopted accounting standards
Tax expense	$ (206)	$ (238)	$ (727)	$ (795)
Accounting Standards Update 2016-09 | Adjustment
Recently adopted accounting standards
Tax expense	$ 3		$ 42