Document and Entity Information
Document and Entity Information - $ / shares | 9 Months Ended | |
Nov. 09, 2019 | Dec. 11, 2019 | |
Document and Entity Information Abstract | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Nov. 9, 2019 | |
Entity File Number | 1-303 | |
Entity Registrant Name | The Kroger Co. | |
Entity Incorporation, State or Country Code | OH | |
Entity Tax Identification Number | 31-0345740 | |
Entity Address, Address Line One | 1014 Vine Street | |
Entity Address, City or Town | Cincinnati | |
Entity Address, State or Province | OH | |
Entity Address, Postal Zip Code | 45202 | |
City Area Code | 513 | |
Local Phone Number | 762-4000 | |
Title of 12(b) Security | Common, $1.00 Par Value | |
Trading Symbol | KR | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 800,587,313 | |
Entity Listing, Par Value Per Share | $ 1 | |
Current Fiscal Year End Date | --02-01 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0000056873 | |
Amendment Flag | false |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 09, 2019 | Nov. 10, 2018 | Nov. 09, 2019 | Nov. 10, 2018 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Sales | $ 27,974 | $ 27,831 | $ 93,393 | $ 93,566 |
Operating expenses | ||||
Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below | 21,798 | 21,753 | 72,787 | 73,147 |
Operating, general and administrative | 5,097 | 4,661 | 16,223 | 15,630 |
Rent | 201 | 675 | ||
Rent | 200 | 680 | ||
Depreciation and amortization | 624 | 570 | 1,994 | 1,884 |
Operating profit | 254 | 647 | 1,714 | 2,225 |
Other income (expense) | ||||
Interest expense | (137) | (142) | (463) | (479) |
Non-service component of company-sponsored pension plan costs | (1) | (6) | (2) | (19) |
Mark to market gain (loss) on Ocado securities | 106 | (100) | 166 | 152 |
Gain on sale of businesses | 176 | 1,782 | ||
Net earnings before income tax expense | 222 | 399 | 1,591 | 3,661 |
Income tax expense | 79 | 91 | 398 | 834 |
Net earnings including noncontrolling interests | 143 | 308 | 1,193 | 2,827 |
Net loss attributable to noncontrolling interests | (120) | (9) | (139) | (24) |
Net earnings attributable to The Kroger Co. | $ 263 | $ 317 | $ 1,332 | $ 2,851 |
Net earnings attributable to The Kroger Co. per basic common share | $ 0.32 | $ 0.39 | $ 1.65 | $ 3.46 |
Average number of common shares used in basic calculation | 802 | 797 | 800 | 814 |
Net earnings attributable to The Kroger Co. per diluted common share | $ 0.32 | $ 0.39 | $ 1.64 | $ 3.43 |
Average number of common shares used in diluted calculation | 807 | 807 | 805 | 822 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Nov. 09, 2019 | Nov. 10, 2018 | Nov. 09, 2019 | Nov. 10, 2018 | ||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||
Net earnings including noncontrolling interests | $ 143 | $ 308 | $ 1,193 | $ 2,827 | |
Other comprehensive income (loss) | |||||
Realized gains on available for sale securities, net of income tax | [1] | (4) | |||
Change in pension and other postretirement defined benefit plans, net of income tax | [2] | 7 | 10 | 23 | 33 |
Unrealized gains and losses on cash flow hedging activities, net of income tax | [3] | 34 | 37 | (29) | 37 |
Amortization of unrealized gains and losses on cash flow hedging activities, net of income tax | [4] | 1 | 1 | 3 | 3 |
Cumulative effect of accounting change | [5] | (146) | |||
Total other comprehensive income (loss) | 42 | 48 | (149) | 69 | |
Comprehensive income | 185 | 356 | 1,044 | 2,896 | |
Comprehensive loss attributable to noncontrolling interests | (120) | (9) | (139) | (24) | |
Comprehensive income attributable to The Kroger Co. | $ 305 | $ 365 | $ 1,183 | $ 2,920 | |
[1] | Amount is net of tax of ($1) for the first three quarters of 2018. | ||||
[2] | Amount is net of tax of $3 for the third quarter of 2019 and 2018. Amount is net of tax of $8 for the first three quarters of 2019 and $10 for the first three quarters of 2018. | ||||
[3] | Amount is net of tax of $10 for the third quarter of 2019 and $11 for the third quarter of 2018. Amount is net of tax of ($16) for the first three quarters of 2019 and $10 for the first three quarters of 2018. | ||||
[4] | Amount is net of tax of $1 for the third quarter of 2019 and $1 for the third quarter of 2018. Amount is net of tax of $3 for the first three quarters of 2019 and $3 for the first three quarters of 2018. | ||||
[5] | Related to the adoption of Accounting Standards Update (“ASU”) 2018-02, "Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income," (see Note 5 for additional details) |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 09, 2019 | Nov. 10, 2018 | Nov. 09, 2019 | Nov. 10, 2018 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Realized gains and losses on available for sale securities, income tax | $ (1) | |||
Change in pension and other postretirement defined benefit plans, income tax | $ 3 | $ 3 | $ 8 | 10 |
Unrealized gains and losses on cash flow hedging activities, income tax | 10 | 11 | (16) | 10 |
Amortization of unrealized gains and losses on cash flow hedging activities, income tax | $ 1 | $ 1 | $ 3 | $ 3 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Nov. 09, 2019 | Feb. 02, 2019 |
Current assets | ||
Cash and temporary cash investments | $ 545 | $ 429 |
Store deposits in-transit | 1,034 | 1,181 |
Receivables | 1,600 | 1,589 |
FIFO inventory | 8,757 | 8,123 |
LIFO reserve | (1,345) | (1,277) |
Assets held for sale | 166 | |
Prepaid and other current assets | 434 | 592 |
Total current assets | 11,025 | 10,803 |
Property, plant and equipment, net | 21,801 | 21,635 |
Operating lease assets | 6,847 | |
Intangibles, net | 1,086 | 1,258 |
Goodwill | 3,076 | 3,087 |
Other assets | 1,558 | 1,335 |
Total Assets | 45,393 | 38,118 |
Current liabilities | ||
Current portion of long-term debt including obligations under finance leases | 1,417 | |
Current portion of long-term debt including obligations under finance leases | 3,157 | |
Current portion of operating lease liabilities | 673 | |
Trade accounts payable | 6,867 | 6,059 |
Accrued salaries and wages | 1,087 | 1,227 |
Liabilities held for sale | 51 | |
Other current liabilities | 4,074 | 3,780 |
Total current liabilities | 14,118 | 14,274 |
Long-term debt including obligations under finance leases | 12,227 | |
Long-term debt including obligations under finance leases | 12,072 | |
Noncurrent operating lease liabilities | 6,449 | |
Deferred income taxes | 1,517 | 1,562 |
Pension and postretirement benefit obligations | 471 | 494 |
Other long-term liabilities | 1,883 | 1,881 |
Total Liabilities | 36,665 | 30,283 |
Commitments and contingencies see Note 8 | ||
SHAREHOLDERS' EQUITY | ||
Preferred shares, $100 par per share, 5 shares authorized and unissued | ||
Common shares, $1 par per share, 2,000 shares authorized; 1,918 shares issued in 2019 and 2018 | 1,918 | 1,918 |
Additional paid-in capital | 3,296 | 3,245 |
Accumulated other comprehensive loss | (495) | (346) |
Accumulated earnings | 20,781 | 19,681 |
Common shares in treasury, at cost, 1,116 shares in 2019 and 1,120 shares in 2018 | (16,585) | (16,612) |
Total Shareholders' Equity - The Kroger Co. | 8,915 | 7,886 |
Noncontrolling interests | (187) | (51) |
Total Equity | 8,728 | 7,835 |
Total Liabilities and Equity | $ 45,393 | $ 38,118 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Millions | Nov. 09, 2019 | Feb. 02, 2019 |
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 | 1,116 | 1,120 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Nov. 09, 2019 | Nov. 10, 2018 | |
Cash Flows from Operating Activities: | ||
Net earnings including noncontrolling interests | $ 1,193 | $ 2,827 |
Adjustments to reconcile net earnings including noncontrolling interests to net cash provided by operating activities: | ||
Depreciation and amortization | 1,994 | 1,884 |
Non-cash operating lease cost | 494 | |
LIFO charge | 69 | 39 |
Stock-based employee compensation | 117 | 115 |
Expense for company-sponsored pension plans | 32 | 54 |
Deferred income taxes | (46) | 148 |
Gain on sale of businesses | (176) | (1,782) |
Gain on the sale of assets | (150) | |
Mark to market gain on Ocado securities | (166) | (152) |
Impairment of Lucky's Market | 238 | |
Other | (1) | 29 |
Changes in operating assets and liabilities net of effects from mergers and disposals of businesses: | ||
Store deposits in-transit | 148 | 63 |
Receivables | 93 | (95) |
Inventories | (636) | (601) |
Prepaid and other current assets | 66 | 380 |
Trade accounts payable | 808 | 666 |
Accrued expenses | 299 | 270 |
Income taxes receivable and payable | (145) | 259 |
Contribution to company-sponsored pension plan | (185) | |
Operating lease liabilities | (477) | |
Proceeds from contract associated with sale of business | 295 | |
Other | (1) | (186) |
Net cash provided by operating activities | 4,048 | 3,733 |
Cash Flows from Investing Activities: | ||
Payments for property and equipment, including payments for lease buyouts | (2,363) | (2,257) |
Proceeds from sale of assets | 257 | 76 |
Payments for acquisitions, net of cash acquired | (197) | |
Purchases of stores | (44) | |
Net proceeds from sale of businesses | 327 | 2,169 |
Purchases of Ocado securities | (392) | |
Other | (45) | 15 |
Net cash used by investing activities | (1,824) | (630) |
Cash Flows from Financing Activities: | ||
Proceeds from issuance of long-term debt | 61 | 1,033 |
Payments on long-term debt including obligations under finance leases | (1,540) | (258) |
Net payments on commercial paper | (235) | (1,486) |
Dividends paid | (356) | (324) |
Proceeds from issuance of capital stock | 32 | 55 |
Treasury stock purchases | (34) | (1,996) |
Other | (36) | (45) |
Net cash used by financing activities | (2,108) | (3,021) |
Net increase in cash and temporary cash investments | 116 | 82 |
Cash and temporary cash investments: | ||
Beginning of year | 429 | 347 |
End of period | 545 | 429 |
Reconciliation of capital investments: | ||
Payments for property and equipment, including payments for lease buyouts | (2,363) | (2,257) |
Payments for lease buyouts | 24 | |
Changes in construction-in-progress payables | 96 | (49) |
Total capital investments, excluding lease buyouts | (2,243) | (2,306) |
Disclosure of cash flow information: | ||
Cash paid during the year for interest | 407 | 424 |
Cash paid during the year for income taxes | $ 633 | $ 376 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY - USD ($) $ in Millions | Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Accumulated Earnings | Noncontrolling Interest | Total |
Balances at Feb. 03, 2018 | $ 1,918 | $ 3,161 | $ (14,684) | $ (471) | $ 17,007 | $ (26) | $ 6,905 |
Balances (in shares) at Feb. 03, 2018 | 1,918 | 1,048 | |||||
Issuance of common stock: | |||||||
Stock options exercised | $ 10 | 10 | |||||
Stock options exercised (in shares) | (1) | ||||||
Restricted stock issued | (6) | $ 5 | (1) | ||||
Treasury stock activity: | |||||||
Treasury stock purchases, at cost | (134) | $ (1,792) | (1,926) | ||||
Treasury stock purchases, at cost (in shares) | 74 | ||||||
Stock options exchanged | $ (17) | (17) | |||||
Stock options exchanged (in shares) | 1 | ||||||
Share-based employee compensation | 45 | 45 | |||||
Other comprehensive income (loss) net of income tax | 16 | 16 | |||||
Other | (7) | $ 2 | 5 | ||||
Cash dividends declared per common share | (109) | (109) | |||||
Net earnings (loss) including non-controlling interests | 2,026 | (8) | 2,018 | ||||
Balances at May. 26, 2018 | $ 1,918 | 3,059 | $ (16,476) | (455) | 18,924 | (29) | 6,941 |
Balances (in shares) at May. 26, 2018 | 1,918 | 1,122 | |||||
Balances at Feb. 03, 2018 | $ 1,918 | 3,161 | $ (14,684) | (471) | 17,007 | (26) | 6,905 |
Balances (in shares) at Feb. 03, 2018 | 1,918 | 1,048 | |||||
Treasury stock activity: | |||||||
Other comprehensive income (loss) net of income tax | 69 | 69 | |||||
Net earnings (loss) including non-controlling interests | 2,827 | ||||||
Balances at Nov. 10, 2018 | $ 1,918 | 3,209 | $ (16,608) | (402) | 19,535 | (42) | 7,610 |
Balances (in shares) at Nov. 10, 2018 | 1,918 | 1,120 | |||||
Balances at May. 26, 2018 | $ 1,918 | 3,059 | $ (16,476) | (455) | 18,924 | (29) | 6,941 |
Balances (in shares) at May. 26, 2018 | 1,918 | 1,122 | |||||
Issuance of common stock: | |||||||
Stock options exercised | $ 30 | 30 | |||||
Stock options exercised (in shares) | (2) | ||||||
Restricted stock issued | (104) | $ 64 | (40) | ||||
Restricted stock issued (in shares) | (2) | ||||||
Treasury stock activity: | |||||||
Treasury stock purchases, at cost | 134 | $ (135) | (1) | ||||
Treasury stock purchases, at cost (in shares) | 2 | ||||||
Stock options exchanged | $ (35) | (35) | |||||
Stock options exchanged (in shares) | 1 | ||||||
Share-based employee compensation | 36 | 36 | |||||
Other comprehensive income (loss) net of income tax | 5 | 5 | |||||
Other | 55 | $ (53) | 2 | ||||
Cash dividends declared per common share | (101) | (101) | |||||
Net earnings (loss) including non-controlling interests | 508 | (7) | 501 | ||||
Balances at Aug. 18, 2018 | $ 1,918 | 3,180 | $ (16,605) | (450) | 19,331 | (36) | 7,338 |
Balances (in shares) at Aug. 18, 2018 | 1,918 | 1,121 | |||||
Issuance of common stock: | |||||||
Stock options exercised | $ 15 | 15 | |||||
Stock options exercised (in shares) | (1) | ||||||
Restricted stock issued | (4) | $ 3 | (1) | ||||
Treasury stock activity: | |||||||
Stock options exchanged | (17) | (17) | |||||
Share-based employee compensation | 34 | 34 | |||||
Other comprehensive income (loss) net of income tax | 48 | 48 | |||||
Other | (1) | (4) | 3 | (2) | |||
Cash dividends declared per common share | (113) | (113) | |||||
Net earnings (loss) including non-controlling interests | 317 | (9) | 308 | ||||
Balances at Nov. 10, 2018 | $ 1,918 | 3,209 | $ (16,608) | (402) | 19,535 | (42) | 7,610 |
Balances (in shares) at Nov. 10, 2018 | 1,918 | 1,120 | |||||
Issuance of common stock: | |||||||
Stock options exercised | $ 10 | 10 | |||||
Restricted stock issued | (5) | $ 2 | (3) | ||||
Restricted stock issued (in shares) | (1) | ||||||
Treasury stock activity: | |||||||
Stock options exchanged | $ (14) | (14) | |||||
Stock options exchanged (in shares) | 1 | ||||||
Share-based employee compensation | 39 | 39 | |||||
Other comprehensive income (loss) net of income tax | 56 | 56 | |||||
Other | 2 | $ (2) | (1) | (1) | |||
Cash dividends declared per common share | (113) | (113) | |||||
Net earnings (loss) including non-controlling interests | 259 | (8) | 251 | ||||
Balances at Feb. 02, 2019 | $ 1,918 | 3,245 | $ (16,612) | (346) | 19,681 | (51) | 7,835 |
Balances (in shares) at Feb. 02, 2019 | 1,918 | 1,120 | |||||
Treasury stock activity: | |||||||
Cumulative effect of accounting change | 146 | 146 | |||||
Stock options exercised | $ 12 | 12 | |||||
Stock options exercised (in shares) | (1) | ||||||
Restricted stock issued | (14) | $ 10 | (4) | ||||
Stock options exchanged | (15) | (15) | |||||
Share-based employee compensation | 48 | 48 | |||||
Other comprehensive income (loss) net of income tax | (146) | (146) | |||||
Other | 8 | (8) | (5) | 11 | 6 | ||
Cash dividends declared per common share | (113) | (113) | |||||
Net earnings (loss) including non-controlling interests | 772 | (9) | 763 | ||||
Balances at May. 25, 2019 | $ 1,918 | 3,287 | $ (16,613) | (492) | 20,481 | (49) | 8,532 |
Balances (in shares) at May. 25, 2019 | 1,918 | 1,119 | |||||
Balances at Feb. 02, 2019 | $ 1,918 | 3,245 | $ (16,612) | (346) | 19,681 | (51) | 7,835 |
Balances (in shares) at Feb. 02, 2019 | 1,918 | 1,120 | |||||
Treasury stock activity: | |||||||
Other comprehensive income (loss) net of income tax | (149) | (149) | |||||
Net earnings (loss) including non-controlling interests | 1,193 | ||||||
Balances at Nov. 09, 2019 | $ 1,918 | 3,296 | $ (16,585) | (495) | 20,781 | (187) | 8,728 |
Balances (in shares) at Nov. 09, 2019 | 1,918 | 1,116 | |||||
Balances at May. 25, 2019 | $ 1,918 | 3,287 | $ (16,613) | (492) | 20,481 | (49) | 8,532 |
Balances (in shares) at May. 25, 2019 | 1,918 | 1,119 | |||||
Issuance of common stock: | |||||||
Stock options exercised | $ 6 | 6 | |||||
Stock options exercised (in shares) | (1) | ||||||
Restricted stock issued | (109) | $ 79 | (30) | ||||
Restricted stock issued (in shares) | (2) | ||||||
Treasury stock activity: | |||||||
Stock options exchanged | $ (8) | (8) | |||||
Share-based employee compensation | 41 | 41 | |||||
Other comprehensive income (loss) net of income tax | (45) | (45) | |||||
Other | 51 | (51) | 1 | 1 | |||
Cash dividends declared per common share | (131) | (131) | |||||
Net earnings (loss) including non-controlling interests | 297 | (10) | 287 | ||||
Balances at Aug. 17, 2019 | $ 1,918 | 3,270 | $ (16,587) | (537) | 20,647 | (58) | 8,653 |
Balances (in shares) at Aug. 17, 2019 | 1,918 | 1,116 | |||||
Issuance of common stock: | |||||||
Stock options exercised | $ 14 | 14 | |||||
Restricted stock issued | (3) | $ 1 | (2) | ||||
Restricted stock issued (in shares) | (1) | ||||||
Treasury stock activity: | |||||||
Stock options exchanged | $ (11) | (11) | |||||
Stock options exchanged (in shares) | 1 | ||||||
Share-based employee compensation | 28 | 28 | |||||
Other comprehensive income (loss) net of income tax | 42 | 42 | |||||
Other | 1 | $ (2) | (9) | (10) | |||
Cash dividends declared per common share | (129) | (129) | |||||
Net earnings (loss) including non-controlling interests | 263 | (120) | 143 | ||||
Balances at Nov. 09, 2019 | $ 1,918 | $ 3,296 | $ (16,585) | $ (495) | $ 20,781 | $ (187) | $ 8,728 |
Balances (in shares) at Nov. 09, 2019 | 1,918 | 1,116 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 4 Months Ended | |||||
Nov. 09, 2019 | Aug. 17, 2019 | Feb. 02, 2019 | Nov. 10, 2018 | Aug. 18, 2018 | May 25, 2019 | May 26, 2018 | |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY | |||||||
Other comprehensive gain (loss), income tax expense (benefit) | $ 14 | $ (14) | $ 17 | $ 15 | $ 2 | $ (5) | $ 5 |
Cash dividends declared per common share (in dollars per share) | $ 0.16 | $ 0.16 | $ 0.14 | $ 0.14 | $ 0.14 | $ 0.14 | $ 0.125 |
ACCOUNTING POLICIES
ACCOUNTING POLICIES | 9 Months Ended |
Nov. 09, 2019 | |
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 other consolidated entities. The February 2, 2019 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 adjustments, all of which are of a normal, recurring nature that are necessary for a fair statement 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 February 2, 2019. The unaudited information in the Consolidated Financial Statements for the third quarters and three quarters ended November 9, 2019 and November 10, 2018, includes the results of operations of the Company for the 12 and 40-week periods then ended. Products and services related primarily to Kroger Personal Finance and Media, which were historically accounted for as an offset to operating, general and administrative expenses (“OG&A”), are classified as a component of sales as of the beginning of fiscal year 2019, except for certain amounts in Media, which are netted against merchandise costs. These prior-year amounts have been reclassified to conform to current-year presentation. Refer to Note 5 for a description of changes to the Consolidated Balance Sheet for recently adopted accounting standards regarding the recognition of lease agreements and reclassification of stranded tax effects. In the third quarter of 2019, the Company recorded an out of period adjustment that decreased sales by $29 with a corresponding increase to other current liabilities related to a provision in a pharmacy contract that should have been recognized over the previous six quarters. The Company evaluated the impact of the adjustment and concluded it is not material, individually and in the aggregate, to the current or any prior period financial statements. Fair Value Measurements Fair value measurements are classified and disclosed in one of the following three categories: 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. The Company records 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 at approximated fair value. Certain other investments and derivatives are recorded as Level 1, 2 or 3 instruments. Refer to Note 2 for the disclosure of debt instrument fair values. |
DEBT OBLIGATIONS
DEBT OBLIGATIONS | 9 Months Ended |
Nov. 09, 2019 | |
DEBT OBLIGATIONS | |
DEBT OBLIGATIONS | 2. DEBT OBLIGATIONS Long-term debt consists of: November 9, February 2, 2019 2019 1.50% to 8.00% Senior Notes due through 2048 $ 11,606 $ 12,097 5.63% to 12.75% Mortgages due through 2027 12 14 1.83% to 2.63% Commercial paper borrowings 565 800 3.37% Term Loan — 1,000 Other 495 440 Total debt, excluding obligations under finance leases 12,678 14,351 Less current portion (1,367) (3,103) Total long-term debt, excluding obligations under finance leases $ 11,311 $ 11,248 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 9, 2019 and February 2, 2019. At November 9, 2019, the fair value of total debt was $13,540 compared to a carrying value of $ . At February 2, 2019, the fair value of total debt was $14,190 compared to a carrying value of $14,351 . During the first three quarters of 2019, the Company repaid a $1,000 term loan bearing an interest rate of 3.37 %. Additionally, in the third quarter of 2019, the Company repaid, upon maturity, $500 of senior notes bearing an interest rate of 1.5%, with proceeds from commercial paper borrowings. In anticipation of future debt refinancing, the Company, in the first three quarters of 2019, entered into six forward-starting interest rate swap agreements with a maturity date of January 2021 with an aggregate notional amount totaling $300 and one forward-starting interest rate swap agreement with a maturity date of January 2020 with a notional amount of $50 . As of the end of the third quarter of 2019, the Company had a total of $600 notional amount of forward-starting interest rate swaps outstanding. The forward-starting interest rate swaps entered into in the first three quarters of 2019 were designated as cash-flow hedges. |
BENEFIT PLANS
BENEFIT PLANS | 9 Months Ended |
Nov. 09, 2019 | |
BENEFIT PLANS | |
BENEFIT PLANS | 3. BENEFIT PLANS 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 2019 and 2018. Third Quarter Ended Pension Benefits Other Benefits November 9, November 10, November 9, November 10, 2019 2018 2019 2018 Components of net periodic benefit cost: Service cost $ 6 $ 8 $ 2 $ 2 Interest cost 32 31 2 2 Expected return on plan assets (43) (40) — — Amortization of: Prior service cost — — (3) (3) Actuarial loss (gain) 16 18 (3) (2) Net periodic benefit cost $ 11 $ 17 $ (2) $ (1) 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 2019 and 2018. Three Quarters Ended Pension Benefits Other Benefits November 9, November 10, November 9, November 10, 2019 2018 2019 2018 Components of net periodic benefit cost: Service cost $ 24 $ 29 $ 6 $ 6 Interest cost 105 104 6 6 Expected return on plan assets (140) (134) — — Amortization of: Prior service cost — — (8) (9) Actuarial loss (gain) 47 59 (8) (7) Net periodic benefit cost $ 36 $ 58 $ (4) $ (4) The Company is not required to make any contributions to its company-sponsored pension plans in 2019, but may make contributions to the extent such contributions are beneficial to the Company. The Company did not make any contributions to its company-sponsored pension plans in the first three quarters of 2019. In the third quarter of 2018, the Company contributed $185, $117 net of tax, to the company-sponsored pension plan. The Company contributed $209 and $204 to employee 401(k) retirement savings accounts in the first three quarters of 2019 and 2018, 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 first three quarters of 2019, the Company incurred charges totaling $131, $101 net of tax, due to obligations related to withdrawal liabilities for certain multi-employer pension funds. This included charges in the third quarter of 2019, totaling net of tax, due to obligations related to withdrawal liabilities for certain multi-employer pension funds. The charges were recorded in the OG&A caption in the Consolidated Statements of Operations. Additionally, during the first three quarters of 2019, the Company sold an unused warehouse. The gain on the sale was used to contribute a similar amount into the UFCW Consolidated Pension Plan. During the third quarter of 2019 , the Company approved and implemented a plan to reorganize certain portions of its division management structure. This reorganization is expected to increase operational effectiveness and reduce overhead costs while maintaining a high quality customer experience. The Company recorded a charge for severance and related benefits of $80 , $61 net of tax, in the third quarter of 2019, which is included in the OG&A caption within the Consolidated Statements of Operations. Of the total charge, $63 remains unpaid as of November 9, 2019 and is included in Other Current Liabilities within the Consolidated Balance Sheet. |
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE | 9 Months Ended |
Nov. 09, 2019 | |
EARNINGS PER COMMON SHARE | |
EARNINGS PER COMMON SHARE | 4. 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, 2019 November 10, 2018 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 $ 260 802 $ 0.32 $ 313 797 $ 0.39 Dilutive effect of stock options 5 10 Net earnings attributable to The Kroger Co. per diluted common share $ 260 807 $ 0.32 $ 313 807 $ 0.39 Three Quarters Ended Three Quarters Ended November 9, 2019 November 10, 2018 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 $ 1,317 800 $ 1.65 $ 2,820 814 $ 3.46 Dilutive effect of stock options 5 8 Net earnings attributable to The Kroger Co. per diluted common share $ 1,317 805 $ 1.64 $ 2,820 822 $ 3.43 The Company had combined undistributed and distributed earnings to participating securities totaling $3 and $4 in the third quarters of 2019 and 2018, respectively. For the first three quarters of 2019 and 2018, the Company had combined undistributed and distributed earnings to participating securities of The Company had options outstanding for approximately 18 million and 11 million shares during the third quarters of 2019 and 2018, 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. |
RECENTLY ADOPTED ACCOUNTING STA
RECENTLY ADOPTED ACCOUNTING STANDARDS | 9 Months Ended |
Nov. 09, 2019 | |
RECENTLY ADOPTED ACCOUNTING STANDARDS | |
RECENTLY ADOPTED ACCOUNTING STANDARDS | 5. RECENTLY ADOPTED ACCOUNTING STANDARDS On February 3, 2019, the Company adopted ASU 2016-02, “Leases,” which provides guidance for the recognition of lease agreements. The Company adopted the standard using the modified retrospective approach, which provides a method for recording existing leases at adoption that approximates the results of a full retrospective approach. In addition, the Company elected the transition package The adoption of the standard resulted in the recognition of operating lease assets and operating lease liabilities of approximately $6,800 and $7,000, respectively, as of February 3, 2019. Included in the measurement of the new lease assets is the reclassification of certain balances including those historically recorded as prepaid or deferred rent and favorable and unfavorable leasehold interests. Several other asset and liability line items in the Consolidated Balance Sheets were also impacted by immaterial amounts . In February 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-02, "Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." This amendment allows companies to reclassify stranded tax effects resulting from the Tax Act from accumulated other comprehensive income (AOCI) to retained earnings. The Company adopted ASU 2018-02 on February 3, 2019, which resulted in a decrease to AOCI and an increase to accumulated earnings of $146, primarily related to deferred taxes previously recorded for pension and other postretirement benefits and cash flow hedges. The adoption of this standard did not have an effect on the Company’s consolidated results of operations or cash flows. |
RECENTLY ISSUED ACCOUNTING STAN
RECENTLY ISSUED ACCOUNTING STANDARDS | 9 Months Ended |
Nov. 09, 2019 | |
RECENTLY ISSUED ACCOUNTING STANDARDS | |
RECENTLY ISSUED ACCOUNTING STANDARDS | 6. RECENTLY ISSUED ACCOUNTING STANDARDS In August 2018, the FASB issued ASU 2018-15, “Intangibles – Goodwill and Other – Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” Under the new standard, implementation costs related to a cloud computing arrangement will be deferred or expensed as incurred, in accordance with the existing internal-use software guidance for similar costs. The new standard also prescribes the balance sheet, income statement, and cash flow classification of the capitalized implementation costs and related amortization expense. This guidance will be effective for the Company in the first quarter of the Company’s fiscal year ending January 30, 2021. The amendments may be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently assessing the impact that adoption of this guidance will have on its Consolidated Financial Statements and related disclosures. |
LEASES AND LEASE-FINANCED TRANS
LEASES AND LEASE-FINANCED TRANSACTIONS | 9 Months Ended |
Nov. 09, 2019 | |
LEASES AND LEASE-FINANCED TRANSACTIONS | |
LEASES AND LEASE-FINANCED TRANSACTIONS | 7. LEASES AND LEASE-FINANCED TRANSACTIONS The Company leases certain store real estate, warehouses, distribution centers, office space and equipment. While the Company’s current strategy emphasizes ownership of store real estate, the Company operates in leased facilities in approximately half of its store locations. Lease terms options renew for varying terms at the Company’s sole discretion. Certain leases also include options to purchase the leased property. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Certain leases include escalation clauses or payment of executory costs such as property taxes, utilities or insurance and maintenance. Rent expense for leases with escalation clauses or other lease concessions are accounted for on a straight-line basis over the lease term. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Certain properties or portions thereof are subleased to others periods one The following table provides supplemental balance sheet classification information related to leases: November 9, February 2, Classification 2019 2019 Assets Operating Operating lease assets $ 6,847 $ — Finance Property, plant and equipment, net (1) 760 721 Total leased assets $ 7,607 $ 721 Liabilities Current Operating Current portion of operating lease liabilities $ 673 $ — Finance Current portion of long-term debt including obligations under finance leases 50 54 Noncurrent Operating Noncurrent operating lease liabilities 6,449 — Finance Long-term debt including obligations under finance leases 916 824 Total lease liabilities $ 8,088 $ 878 (1) Finance lease assets are recorded net of accumulated amortization of $298 and $345 as of November 9, 2019 and February 2, 2019. The following table provides the components of lease cost: Third Quarter Ended Three Quarters Ended Lease Cost Classification November 9, 2019 November 9, 2019 Operating lease cost (1) Rent Expense $ 229 $ 768 Sublease and other rental income Rent Expense (28) (93) Finance lease cost Amortization of leased assets Depreciation and Amortization 13 41 Interest on lease liabilities Interest Expense 12 37 Net lease cost $ 226 $ 753 (1) Includes short-term leases and variable lease costs, which are immaterial. Maturities of operating and finance lease liabilities are listed below. Amounts in the table include options to extend lease terms that are reasonably certain of being exercised. Operating Finance Leases Leases Total Remainder of 2019 $ 195 $ 17 $ 212 2020 966 95 1,061 2021 891 96 987 2022 754 93 847 2023 685 93 778 Thereafter 6,910 1,003 7,913 Total lease payments 10,401 1,397 $ 11,798 Less amount representing interest 3,279 431 Present value of lease liabilities (1) $ 7,122 $ 966 (1) Includes the current portion of $673 for operating leases and $50 for finance leases. Total future minimum rentals under non-cancellable subleases at November 9, 2019 were $308. The following table provides the weighted-average lease term and discount rate for operating and finance leases: November 9, 2019 Weighted-average remaining lease term (years) Operating leases 16.1 Finance leases 16.0 Weighted-average discount rate Operating leases 4.3 % Finance leases 4.2 % The following table provides supplemental cash flow information related to leases: Three Quarters Ended November 9, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 711 Operating cash flows from finance leases 37 Financing cash flows from finance leases 33 Leased assets obtained in exchange for new operating lease liabilities 658 Leased assets obtained in exchange for new finance lease liabilities 185 Net gain recognized from sale and leaseback transactions (1) 51 Impairment of operating lease assets 29 Impairment of finance lease assets 40 (1) During the first three quarters of 2019, the Company entered into sale leaseback transactions related to eight properties, which resulted in total proceeds of $102 . The Company adopted new lease accounting guidance in the first quarter of 2019 as discussed in Note 1 and Note 5, and as required, the following disclosure is provided for periods prior to adoption. Minimum annual rentals and payments under capital leases and lease-financed transactions for the five years subsequent to February 2, 2019 and in the aggregate are listed below. Amounts in the table below only include payments through the noncancelable lease term. Lease- Capital Operating Financed Leases Leases Transactions 2019 $ 103 $ 948 $ 5 2020 89 880 6 2021 86 773 5 2022 82 649 5 2023 81 556 5 Thereafter 766 3,197 17 Total 1,207 $ 7,003 $ 43 Less estimated executory costs included in capital leases — Net minimum lease payments under capital leases 1,207 Less amount representing interest 372 Present value of net minimum lease payments under capital leases $ 835 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Nov. 09, 2019 | |
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, 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. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 9 Months Ended |
Nov. 09, 2019 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 9. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following table represents the changes in AOCI by component for the first three quarters of 2019 and 2018: Pension and Cash Flow Postretirement Hedging Available for sale Defined Benefit Activities (1) Securities (1) Plans (1) Total (1) Balance at February 3, 2018 $ 24 $ 4 $ (499) $ (471) OCI before reclassifications (2) 37 (4) — 33 Amounts reclassified out of AOCI (3) 3 — 33 36 Net current-period OCI 40 (4) 33 69 Balance at November 10, 2018 $ 64 $ — $ (466) $ (402) Balance at February 2, 2019 $ 6 $ — $ (352) $ (346) Cumulative effect of accounting change (4) (5) — (141) (146) OCI before reclassifications (2) (29) — — (29) Amounts reclassified out of AOCI (3) 3 — 23 26 Net current-period OCI (31) — (118) (149) Balance at November 9, 2019 $ (25) $ — $ (470) $ (495) (1) All amounts are net of tax. (2) Net of tax of $ 10 for cash flow hedging activities and ($1 ) for available for sale securities for the first three quarters of 2018. Net of tax of ($16) for cash flow hedging activities for the first three quarters of 2019. (3) Net of tax of $3 for cash flow hedging activities and $10 for pension and postretirement defined benefit plans for the first three quarters of 2018. Net of tax of $3 for cash flow hedging activities and $8 for pension and postretirement defined benefit plans for the first three quarters of 2019. (4) Related to the adoption of ASU 2018-02, "Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income," (see Note 5 for additional details). The following table represents the items reclassified out of AOCI and the related tax effects for the third quarter and first three quarters of 2019 and 2018: Third Quarter Ended Three Quarters Ended November 9, November 10, November 9, November 10, 2019 2018 2019 2018 Cash flow hedging activity items Amortization of gains and losses on cash flow hedging activities (1) $ 2 $ 2 $ 6 $ 6 Tax expense (1) (1) (3) (3) Net of tax 1 1 3 3 Pension and postretirement defined benefit plan items Amortization of amounts included in net periodic pension cost (2) 10 13 31 43 Tax expense (3) (3) (8) (10) Net of tax 7 10 23 33 Total reclassifications, net of tax $ 8 $ 11 $ 26 $ 36 (1) Reclassified from AOCI into interest expense. (2) Reclassified from AOCI into non-service component of company-sponsored pension plan costs. These components are included in the computation of net periodic pension cost (see Note 3 for additional details). |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Nov. 09, 2019 | |
INCOME TAXES | |
INCOME TAXES | 10. INCOME TAXES The effective income tax rate was 35.6% in the third quarter of 2019, compared to 22.8% in the third quarter of 2018. The effective income tax rate was 25.0% for the first three quarters of 2019, compared to 22.8% for the first three quarters of 2018. The effective income tax rate for the third quarter and the first three quarters of 2019 differed from the federal statutory rate primarily due to the portion of the impairment of Lucky’s Market attributable to the minority interest, which reduces pre-tax income, but does not impact tax expense. The impact of this item on the effective income tax rate is approximately 12% for the third quarter and 2% for the first three quarters of 2019. The difference from the statutory rate is also impacted by the effect of state income taxes, partially offset by the utilization of tax credits and deductions. Refer to Note 11 for information about the impairment of Lucky’s Market. The effective income tax rate for the third quarter and first three quarters of 2018 differed from the federal statutory rate primarily due to the effect of state income taxes and an IRS audit that resulted in a reduction of prior year tax deductions at pre-Tax Reform rates and an increase in future tax deductions at post-Tax Reform rates, partially offset by the utilization of tax credits and deductions and favorable provision to return adjustments. Additionally, the rate for the first three quarters of 2018 benefitted from favorable settlements of certain state tax items. |
HELD FOR SALE AND DISPOSAL OF B
HELD FOR SALE AND DISPOSAL OF BUSINESS | 9 Months Ended |
Nov. 09, 2019 | |
HELD FOR SALE AND DISPOSAL OF BUSINESS | |
HELD FOR SALE AND DISPOSAL OF BUSINESS | 11. HELD FOR SALE AND DISPOSAL OF BUSINESSES Certain assets and liabilities related to the Company’s Turkey Hill Dairy and You Technology businesses were classified as held for sale in the Consolidated Balance Sheet as of February 2, 2019. On March 13, 2019, the Company completed the sale of its You Technology business to Inmar for total consideration of $565, including $396 of cash and $64 of preferred equity received upon closing. The Company is also entitled to receive other cash payments of . The transaction includes a long-term service agreement for Inmar to provide the Company digital coupon services. The sale resulted in a gain of On April 26, 2019, the Company completed the sale of its Turkey Hill Dairy business to an affiliate of Peak Rock Capital for total proceeds of $225 . The sale resulted in a gain of net of tax, which is included in “Gain on sale of businesses” in the Consolidated Statements of Operations. In the third quarter of 2019, as a result of a portfolio review, the Company has decided to divest its interest in Lucky’s Market. The Company recognized an impairment charge of $238 in the third quarter of 2019, which is included in OG&A in the Consolidated Statements of Operations. The impairment charge consists of property, plant and equipment of $200, which includes $40 of finance lease assets; |
ACCOUNTING POLICIES (Policies)
ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Nov. 09, 2019 | |
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 other consolidated entities. The February 2, 2019 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 adjustments, all of which are of a normal, recurring nature that are necessary for a fair statement 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 February 2, 2019. The unaudited information in the Consolidated Financial Statements for the third quarters and three quarters ended November 9, 2019 and November 10, 2018, includes the results of operations of the Company for the 12 and 40-week periods then ended. Products and services related primarily to Kroger Personal Finance and Media, which were historically accounted for as an offset to operating, general and administrative expenses (“OG&A”), are classified as a component of sales as of the beginning of fiscal year 2019, except for certain amounts in Media, which are netted against merchandise costs. These prior-year amounts have been reclassified to conform to current-year presentation. Refer to Note 5 for a description of changes to the Consolidated Balance Sheet for recently adopted accounting standards regarding the recognition of lease agreements and reclassification of stranded tax effects. In the third quarter of 2019, the Company recorded an out of period adjustment that decreased sales by $29 with a corresponding increase to other current liabilities related to a provision in a pharmacy contract that should have been recognized over the previous six quarters. The Company evaluated the impact of the adjustment and concluded it is not material, individually and in the aggregate, to the current or any prior period financial statements. |
Fair Value Measurements | Fair Value Measurements Fair value measurements are classified and disclosed in one of the following three categories: 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. The Company records 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 at approximated fair value. Certain other investments and derivatives are recorded as Level 1, 2 or 3 instruments. Refer to Note 2 for the disclosure of debt instrument fair values. |
DEBT OBLIGATIONS (Tables)
DEBT OBLIGATIONS (Tables) | 9 Months Ended |
Nov. 09, 2019 | |
DEBT OBLIGATIONS | |
Schedule of long-term debt | November 9, February 2, 2019 2019 1.50% to 8.00% Senior Notes due through 2048 $ 11,606 $ 12,097 5.63% to 12.75% Mortgages due through 2027 12 14 1.83% to 2.63% Commercial paper borrowings 565 800 3.37% Term Loan — 1,000 Other 495 440 Total debt, excluding obligations under finance leases 12,678 14,351 Less current portion (1,367) (3,103) Total long-term debt, excluding obligations under finance leases $ 11,311 $ 11,248 |
BENEFIT PLANS (Tables)
BENEFIT PLANS (Tables) | 9 Months Ended |
Nov. 09, 2019 | |
BENEFIT PLANS | |
Schedule of components of net periodic benefit cost | Third Quarter Ended Three Quarters Ended Pension Benefits Other Benefits November 9, November 10, November 9, November 10, 2019 2018 2019 2018 Components of net periodic benefit cost: Service cost $ 24 $ 29 $ 6 $ 6 Interest cost 105 104 6 6 Expected return on plan assets (140) (134) — — Amortization of: Prior service cost — — (8) (9) Actuarial loss (gain) 47 59 (8) (7) Net periodic benefit cost $ 36 $ 58 $ (4) $ (4) |
EARNINGS PER COMMON SHARE (Tabl
EARNINGS PER COMMON SHARE (Tables) | 9 Months Ended |
Nov. 09, 2019 | |
EARNINGS PER COMMON SHARE | |
Schedule of earnings per common and diluted shares | Third Quarter Ended Third Quarter Ended November 9, 2019 November 10, 2018 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 $ 260 802 $ 0.32 $ 313 797 $ 0.39 Dilutive effect of stock options 5 10 Net earnings attributable to The Kroger Co. per diluted common share $ 260 807 $ 0.32 $ 313 807 $ 0.39 Three Quarters Ended Three Quarters Ended November 9, 2019 November 10, 2018 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 $ 1,317 800 $ 1.65 $ 2,820 814 $ 3.46 Dilutive effect of stock options 5 8 Net earnings attributable to The Kroger Co. per diluted common share $ 1,317 805 $ 1.64 $ 2,820 822 $ 3.43 |
LEASES AND LEASE-FINANCED TRA_2
LEASES AND LEASE-FINANCED TRANSACTIONS (Tables) | 9 Months Ended |
Nov. 09, 2019 | |
LEASES AND LEASE-FINANCED TRANSACTIONS | |
Schedule of supplemental balance sheet classification | November 9, February 2, Classification 2019 2019 Assets Operating Operating lease assets $ 6,847 $ — Finance Property, plant and equipment, net (1) 760 721 Total leased assets $ 7,607 $ 721 Liabilities Current Operating Current portion of operating lease liabilities $ 673 $ — Finance Current portion of long-term debt including obligations under finance leases 50 54 Noncurrent Operating Noncurrent operating lease liabilities 6,449 — Finance Long-term debt including obligations under finance leases 916 824 Total lease liabilities $ 8,088 $ 878 (1) Finance lease assets are recorded net of accumulated amortization of $298 and $345 as of November 9, 2019 and February 2, 2019. |
Schedule of components of lease cost | Third Quarter Ended Three Quarters Ended Lease Cost Classification November 9, 2019 November 9, 2019 Operating lease cost (1) Rent Expense $ 229 $ 768 Sublease and other rental income Rent Expense (28) (93) Finance lease cost Amortization of leased assets Depreciation and Amortization 13 41 Interest on lease liabilities Interest Expense 12 37 Net lease cost $ 226 $ 753 (1) Includes short-term leases and variable lease costs, which are immaterial. |
Schedule of maturities of operating and finance lease liabilities | Operating Finance Leases Leases Total Remainder of 2019 $ 195 $ 17 $ 212 2020 966 95 1,061 2021 891 96 987 2022 754 93 847 2023 685 93 778 Thereafter 6,910 1,003 7,913 Total lease payments 10,401 1,397 $ 11,798 Less amount representing interest 3,279 431 Present value of lease liabilities (1) $ 7,122 $ 966 (1) Includes the current portion of $673 for operating leases and $50 for finance leases. |
Schedule of weighted-average lease term and discount rate | November 9, 2019 Weighted-average remaining lease term (years) Operating leases 16.1 Finance leases 16.0 Weighted-average discount rate Operating leases 4.3 % Finance leases 4.2 % |
Schedule of supplemental cash flow information | Three Quarters Ended November 9, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 711 Operating cash flows from finance leases 37 Financing cash flows from finance leases 33 Leased assets obtained in exchange for new operating lease liabilities 658 Leased assets obtained in exchange for new finance lease liabilities 185 Net gain recognized from sale and leaseback transactions (1) 51 Impairment of operating lease assets 29 Impairment of finance lease assets 40 (1) During the first three quarters of 2019, the Company entered into sale leaseback transactions related to eight properties, which resulted in total proceeds of $102 . |
Schedule of minimum annual rentals and payments under capital leases and lease-financed transactions | Lease- Capital Operating Financed Leases Leases Transactions 2019 $ 103 $ 948 $ 5 2020 89 880 6 2021 86 773 5 2022 82 649 5 2023 81 556 5 Thereafter 766 3,197 17 Total 1,207 $ 7,003 $ 43 Less estimated executory costs included in capital leases — Net minimum lease payments under capital leases 1,207 Less amount representing interest 372 Present value of net minimum lease payments under capital leases $ 835 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 9 Months Ended |
Nov. 09, 2019 | |
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 February 3, 2018 $ 24 $ 4 $ (499) $ (471) OCI before reclassifications (2) 37 (4) — 33 Amounts reclassified out of AOCI (3) 3 — 33 36 Net current-period OCI 40 (4) 33 69 Balance at November 10, 2018 $ 64 $ — $ (466) $ (402) Balance at February 2, 2019 $ 6 $ — $ (352) $ (346) Cumulative effect of accounting change (4) (5) — (141) (146) OCI before reclassifications (2) (29) — — (29) Amounts reclassified out of AOCI (3) 3 — 23 26 Net current-period OCI (31) — (118) (149) Balance at November 9, 2019 $ (25) $ — $ (470) $ (495) (1) All amounts are net of tax. (2) Net of tax of $ 10 for cash flow hedging activities and ($1 ) for available for sale securities for the first three quarters of 2018. Net of tax of ($16) for cash flow hedging activities for the first three quarters of 2019. (3) Net of tax of $3 for cash flow hedging activities and $10 for pension and postretirement defined benefit plans for the first three quarters of 2018. Net of tax of $3 for cash flow hedging activities and $8 for pension and postretirement defined benefit plans for the first three quarters of 2019. (4) Related to the adoption of ASU 2018-02, "Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income," (see Note 5 for additional details). |
Schedule of items reclassified out of AOCI and the related tax effects | Third Quarter Ended Three Quarters Ended November 9, November 10, November 9, November 10, 2019 2018 2019 2018 Cash flow hedging activity items Amortization of gains and losses on cash flow hedging activities (1) $ 2 $ 2 $ 6 $ 6 Tax expense (1) (1) (3) (3) Net of tax 1 1 3 3 Pension and postretirement defined benefit plan items Amortization of amounts included in net periodic pension cost (2) 10 13 31 43 Tax expense (3) (3) (8) (10) Net of tax 7 10 23 33 Total reclassifications, net of tax $ 8 $ 11 $ 26 $ 36 (1) Reclassified from AOCI into interest expense. (2) Reclassified from AOCI into non-service component of company-sponsored pension plan costs. These components are included in the computation of net periodic pension cost (see Note 3 for additional details). |
ACCOUNTING POLICIES - DESCRIPTI
ACCOUNTING POLICIES - DESCRIPTION OF BUSINESS (Details) | 3 Months Ended | 9 Months Ended | ||
Nov. 09, 2019 | Nov. 10, 2018 | Nov. 09, 2019 | Nov. 10, 2018 | |
Fiscal Year | ||||
Length of fiscal period | 84 days | 84 days | 280 days | 280 days |
ACCOUNTING POLICIES - PHARMACY
ACCOUNTING POLICIES - PHARMACY CONTRACT (Details) - Pharmacy - Sales $ in Millions | 3 Months Ended |
Nov. 09, 2019USD ($) | |
Description of Business, Basis of Presentation and Principles of Consolidation | |
Decrease in sales | $ (29) |
Increase in current liabilities | $ 29 |
DEBT OBLIGATIONS (Details)
DEBT OBLIGATIONS (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |
Nov. 09, 2019USD ($)DerivativeInstrument | Nov. 09, 2019USD ($)DerivativeInstrument | Feb. 02, 2019USD ($) | |
Debt | |||
Total debt, excluding capital leases and financing obligations | $ 12,678 | $ 12,678 | $ 14,351 |
Less current portion | (1,367) | (1,367) | (3,103) |
Total long-term debt, excluding capital leases and financing obligations | 11,311 | 11,311 | 11,248 |
Fair value of total debt | 13,540 | 13,540 | 14,190 |
Forward-starting interest rate swaps | Cash flow hedges | |||
Debt | |||
Notional amount | $ 600 | $ 600 | |
Forward Starting Interest Rate Swap Maturing January 2021 | Cash flow hedges | |||
Debt | |||
Number of interest-rate swaps | DerivativeInstrument | 6 | 6 | |
Notional amount | $ 300 | $ 300 | |
Forward Starting Interest Rate Swap Maturing January 2020 | Cash flow hedges | |||
Debt | |||
Number of interest-rate swaps | DerivativeInstrument | 1 | 1 | |
Notional amount | $ 50 | $ 50 | |
Senior Notes due through 2048 | |||
Debt | |||
Total debt, excluding capital leases and financing obligations | $ 11,606 | $ 11,606 | 12,097 |
Senior Notes due through 2048 | Minimum | |||
Debt | |||
Interest rate (as a percent) | 1.50% | 1.50% | |
Senior Notes due through 2048 | Maximum | |||
Debt | |||
Interest rate (as a percent) | 8.00% | 8.00% | |
Senior notes 1.50% due 2019 | |||
Debt | |||
Repayment of debt | $ 500 | ||
Interest rate (as a percent) | 1.50% | 1.50% | |
Mortgages due through 2027 | |||
Debt | |||
Total debt, excluding capital leases and financing obligations | $ 12 | $ 12 | 14 |
Mortgages due through 2027 | Minimum | |||
Debt | |||
Interest rate (as a percent) | 5.63% | 5.63% | |
Mortgages due through 2027 | Maximum | |||
Debt | |||
Interest rate (as a percent) | 12.75% | 12.75% | |
Commercial paper borrowings | |||
Debt | |||
Total debt, excluding capital leases and financing obligations | $ 565 | $ 565 | 800 |
Commercial paper borrowings | Minimum | |||
Debt | |||
Interest rate (as a percent) | 1.83% | 1.83% | |
Commercial paper borrowings | Maximum | |||
Debt | |||
Interest rate (as a percent) | 2.63% | 2.63% | |
Term Loan | |||
Debt | |||
Total debt, excluding capital leases and financing obligations | $ 1,000 | ||
Repayment of debt | $ 1,000 | ||
Interest rate (as a percent) | 3.37% | 3.37% | 3.37% |
Other | |||
Debt | |||
Total debt, excluding capital leases and financing obligations | $ 495 | $ 495 | $ 440 |
BENEFIT PLANS - COMPONENTS OF N
BENEFIT PLANS - COMPONENTS OF NET PERIODIC BENEFIT COSTS (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 09, 2019 | Nov. 10, 2018 | Nov. 09, 2019 | Nov. 10, 2018 | |
Pension Benefits | ||||
Components of net periodic benefit cost: | ||||
Service cost | $ 6 | $ 8 | $ 24 | $ 29 |
Interest cost | 32 | 31 | 105 | 104 |
Expected return on plan assets | (43) | (40) | (140) | (134) |
Amortization of: | ||||
Actuarial loss (gain) | 16 | 18 | 47 | 59 |
Net periodic benefit cost | 11 | 17 | 36 | 58 |
Contributions into Fund | 185 | |||
Contributions into Fund, net of tax | 117 | |||
Other Benefits | ||||
Components of net periodic benefit cost: | ||||
Service cost | 2 | 2 | 6 | 6 |
Interest cost | 2 | 2 | 6 | 6 |
Amortization of: | ||||
Prior service cost | (3) | (3) | (8) | (9) |
Actuarial loss (gain) | (3) | (2) | (8) | (7) |
Net periodic benefit cost | $ (2) | $ (1) | $ (4) | $ (4) |
BENEFIT PLANS - DEFINED CONTRIB
BENEFIT PLANS - DEFINED CONTRIBUTION PLAN INFORMATION (Details) - USD ($) $ in Millions | 9 Months Ended | |
Nov. 09, 2019 | Nov. 10, 2018 | |
BENEFIT PLANS | ||
Contribution to 401(k) retirement savings accounts | $ 209 | $ 204 |
BENEFIT PLANS - MULTI EMPLOYER
BENEFIT PLANS - MULTI EMPLOYER PLAN (Details) $ in Millions | 3 Months Ended | 9 Months Ended |
Nov. 09, 2019USD ($) | Nov. 09, 2019USD ($) | |
Multiemployer Plans | ||
Severance and related benefits | $ 80 | |
Severance and related benefits, net of tax | 61 | |
Multi-employer pension funds | ||
Multiemployer Plans | ||
Charge (before-tax) related to pension plan agreements | 45 | $ 131 |
Charge (after-tax) related to pension plan agreements | 35 | 101 |
Other Current Liabilities | ||
Multiemployer Plans | ||
Unpaid restructuring charges | $ 63 | $ 63 |
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. 09, 2019 | Nov. 10, 2018 | Nov. 09, 2019 | Nov. 10, 2018 | |
EARNINGS PER COMMON SHARE | ||||
Net earnings numerator (basic) | $ 260 | $ 313 | $ 1,317 | $ 2,820 |
Net earnings numerator (diluted) | $ 260 | $ 313 | $ 1,317 | $ 2,820 |
Average number of common shares used in basic calculation | 802 | 797 | 800 | 814 |
Net earnings attributable to The Kroger Co. per basic common share | $ 0.32 | $ 0.39 | $ 1.65 | $ 3.46 |
Dilutive effect of stock options (in shares) | 5 | 10 | 5 | 8 |
Average number of common shares used in diluted calculation | 807 | 807 | 805 | 822 |
Net earnings attributable to The Kroger Co. per diluted common share | $ 0.32 | $ 0.39 | $ 1.64 | $ 3.43 |
Undistributed and distributed earnings to participating securities | $ 3 | $ 4 | $ 15 | $ 31 |
Shares excluded from the earnings per share calculation due to anti-dilutive effect on earnings per share | 18 | 11 | 24 | 11 |
RECENTLY ADOPTED ACCOUNTING S_2
RECENTLY ADOPTED ACCOUNTING STANDARDS (Details) - USD ($) $ in Millions | Feb. 03, 2019 | Nov. 09, 2019 | Feb. 02, 2019 |
Recently adopted accounting standards | |||
Operating Lease, Right-of-Use Asset | $ 6,847 | ||
Operating Lease, Liability | $ 7,122 | ||
Cumulative effect of accounting change | $ 146 | ||
ASU 2016-02 | |||
Recently adopted accounting standards | |||
Lease - Practical Expedient - Package | true | ||
ASU 2016-02 | Restatement Adjustment | |||
Recently adopted accounting standards | |||
Operating Lease, Right-of-Use Asset | $ 6,800 | ||
Operating Lease, Liability | 7,000 | ||
ASU 2018-02 | Restatement Adjustment | |||
Recently adopted accounting standards | |||
Cumulative effect of accounting change | $ 146 |
LEASES AND LEASE-FINANCED TRA_3
LEASES AND LEASE-FINANCED TRANSACTIONS - NARRATIVE (Details) | 9 Months Ended |
Nov. 09, 2019 | |
LEASES AND LEASE-FINANCED TRANSACTIONS | |
Option to renew - Operating | true |
Option to renew - Finance | true |
Minimum | |
LEASES AND LEASE-FINANCED TRANSACTIONS | |
Term - Operating | 10 years |
Term - Finance | 10 years |
Sublease term - Operating | 1 year |
Sublease term - Finance | 1 year |
Maximum | |
LEASES AND LEASE-FINANCED TRANSACTIONS | |
Term - Operating | 20 years |
Term - Finance | 20 years |
Sublease term - Operating | 20 years |
Sublease term - Finance | 20 years |
LEASES AND LEASE-FINANCED TRA_4
LEASES AND LEASE-FINANCED TRANSACTIONS - BALANCE SHEET CLASSIFICATION (Details) - USD ($) $ in Millions | Nov. 09, 2019 | Feb. 02, 2019 |
LEASES AND LEASE-FINANCED TRANSACTIONS | ||
Operating | $ 6,847 | |
Property, Plant and Equipment, Net. | 21,801 | $ 21,635 |
Total lease assets | 7,607 | 721 |
Current - Operating | 673 | |
Current - Finance | 50 | 54 |
Noncurrent - Operating | 6,449 | |
Noncurrent - Finance | 916 | 824 |
Total lease liabilities | 8,088 | 878 |
Finance lease assets | ||
LEASES AND LEASE-FINANCED TRANSACTIONS | ||
Property, Plant and Equipment, Net. | 760 | 721 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | $ 298 | $ 345 |
LEASES AND LEASE-FINANCED TRA_5
LEASES AND LEASE-FINANCED TRANSACTIONS - LEASE COST (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Nov. 09, 2019 | Nov. 09, 2019 | |
LEASES AND LEASE-FINANCED TRANSACTIONS | ||
Net lease cost | $ 226 | $ 753 |
Rent Expense | ||
LEASES AND LEASE-FINANCED TRANSACTIONS | ||
Operating lease cost | 229 | 768 |
Sublease and other rental income | (28) | (93) |
Depreciation and Amortization | ||
LEASES AND LEASE-FINANCED TRANSACTIONS | ||
Amortization of leased assets | 13 | 41 |
Interest expense | ||
LEASES AND LEASE-FINANCED TRANSACTIONS | ||
Interest on lease liabilities | $ 12 | $ 37 |
LEASES AND LEASE-FINANCED TRA_6
LEASES AND LEASE-FINANCED TRANSACTIONS - MATURITIES (Details) - USD ($) $ in Millions | Nov. 09, 2019 | Feb. 02, 2019 |
Operating leases maturities: | ||
Remainder of 2019 | $ 195 | |
2020 | 966 | |
2021 | 891 | |
2022 | 754 | |
2023 | 685 | |
Thereafter | 6,910 | |
Total lease payments | 10,401 | |
Less amount representing interest | 3,279 | |
Present value of lease liabilities | 7,122 | |
Finance leases maturities: | ||
Remainder of 2019 | 17 | |
2020 | 95 | |
2021 | 96 | |
2022 | 93 | |
2023 | 93 | |
Thereafter | 1,003 | |
Total lease payments | 1,397 | |
Less amount representing interest | 431 | |
Present value of lease liabilities | 966 | |
Maturities | ||
Remainder of 2019 | 212 | |
2020 | 1,061 | |
2021 | 987 | |
2022 | 847 | |
2023 | 778 | |
Thereafter | 7,913 | |
Total lease payments | 11,798 | |
Current - Operating | 673 | |
Current finance leases | $ 50 | $ 54 |
LEASES AND LEASE-FINANCED TRA_7
LEASES AND LEASE-FINANCED TRANSACTIONS - SUB LEASES (Details) $ in Millions | Nov. 09, 2019USD ($) |
LEASES AND LEASE-FINANCED TRANSACTIONS | |
Future minimum rentals under non-cancellable subleases | $ 308 |
LEASES AND LEASE-FINANCED TRA_8
LEASES AND LEASE-FINANCED TRANSACTIONS - QUANTITATIVE INFORMATION (Details) | Nov. 09, 2019 |
LEASES AND LEASE-FINANCED TRANSACTIONS | |
Operating leases -Weighted-average remaining lease term (years) | 16 years 1 month 6 days |
Finance leases - Weighted-average remaining lease term (years) | 16 years |
Operating leases - Weighted-average discount rate | 4.30% |
Finance leases - Weighted-average discount rate | 4.20% |
LEASES AND LEASE-FINANCED TRA_9
LEASES AND LEASE-FINANCED TRANSACTIONS - CASH FLOW INFORMATION (Details) $ in Millions | 9 Months Ended |
Nov. 09, 2019USD ($)property | |
LEASES AND LEASE-FINANCED TRANSACTIONS | |
Operating cash flows from operating leases | $ 711 |
Operating cash flows from finance leases | 37 |
Financing cash flows from finance leases | 33 |
Leased assets obtained in exchange for new operating lease liabilities | 658 |
Leased assets obtained in exchange for new finance lease liabilities | 185 |
Net gain recognized from sale and leaseback transactions | 51 |
Impairment of operating lease assets | 29 |
Impairment of finance lease assets | $ 40 |
Number of properties | property | 8 |
Total proceeds | $ 102 |
LEASES AND LEASE-FINANCED TR_10
LEASES AND LEASE-FINANCED TRANSACTIONS - PAYMENTS (Details) $ in Millions | Feb. 02, 2019USD ($) |
Capital Leases, Future minimum annual rentals and payments | |
Capital Leases, 2019 | $ 103 |
Capital Leases, 2020 | 89 |
Capital Leases, 2021 | 86 |
Capital Leases, 2022 | 82 |
Capital Leases, 2023 | 81 |
Capital Leases, Thereafter | 766 |
Minimum capital lease annual rentals and payments | 1,207 |
Net minimum lease payments under capital leases | 1,207 |
Less amount representing interest | 372 |
Present value of net minimum lease payments under capital leases | 835 |
Operating Leases, Future minimum annual rentals and payments | |
Operating Leases, 2019 | 948 |
Operating Leases, 2020 | 880 |
Operating Leases, 2021 | 773 |
Operating Leases, 2022 | 649 |
Operating Leases, 2023 | 556 |
Operating Leases, Thereafter | 3,197 |
Minimum operating lease annual rentals and payments | 7,003 |
Lease-Financed Transactions, Future minimum annual rentals and payments | |
Lease-Financed Transactions, 2019 | 5 |
Lease-Financed Transactions, 2020 | 6 |
Lease-Financed Transactions, 2021 | 5 |
Lease-Financed Transactions, 2022 | 5 |
Lease-Financed Transactions, 2023 | 5 |
Lease-Financed Transactions, Thereafter | 17 |
Minimum lease-financed transactions annual rentals and payments | $ 43 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - CHANGES IN AOCI BY COMPONENT (Details) - USD ($) $ in Millions | 3 Months Ended | 4 Months Ended | 9 Months Ended | |||||||
Nov. 09, 2019 | Aug. 17, 2019 | Feb. 02, 2019 | Nov. 10, 2018 | Aug. 18, 2018 | May 25, 2019 | May 26, 2018 | Nov. 09, 2019 | Nov. 10, 2018 | ||
Accumulated other comprehensive income (loss) | ||||||||||
Balance at the beginning of the period | $ 7,886 | $ 7,886 | ||||||||
Cumulative effect of accounting change | [1] | (146) | ||||||||
Amounts reclassified out of AOCI | $ 8 | $ 11 | 26 | $ 36 | ||||||
Total other comprehensive income (loss) | 42 | $ (45) | $ 56 | 48 | $ 5 | (146) | $ 16 | (149) | 69 | |
Balance at the end of the period | 8,915 | 7,886 | 8,915 | |||||||
Accumulated Other Comprehensive Loss | ||||||||||
Accumulated other comprehensive income (loss) | ||||||||||
Balance at the beginning of the period | (402) | (346) | (471) | (346) | (471) | |||||
Cumulative effect of accounting change | (146) | |||||||||
OCI before reclassifications | (29) | 33 | ||||||||
Amounts reclassified out of AOCI | 26 | 36 | ||||||||
Total other comprehensive income (loss) | 42 | $ (45) | 56 | 48 | $ 5 | (146) | 16 | (149) | 69 | |
Balance at the end of the period | (495) | (346) | (402) | (495) | (402) | |||||
Cash Flow Hedging Activities | ||||||||||
Accumulated other comprehensive income (loss) | ||||||||||
Balance at the beginning of the period | 64 | 6 | 24 | 6 | 24 | |||||
Cumulative effect of accounting change | (5) | |||||||||
OCI before reclassifications | (29) | 37 | ||||||||
Amounts reclassified out of AOCI | 3 | 3 | ||||||||
Total other comprehensive income (loss) | (31) | 40 | ||||||||
Balance at the end of the period | (25) | 6 | 64 | (25) | 64 | |||||
OCI before reclassifications, tax | (16) | 10 | ||||||||
Amounts reclassified out of AOCI, tax | 3 | 3 | ||||||||
Available for sale Securities | ||||||||||
Accumulated other comprehensive income (loss) | ||||||||||
Balance at the beginning of the period | 4 | 4 | ||||||||
OCI before reclassifications | (4) | |||||||||
Total other comprehensive income (loss) | (4) | |||||||||
OCI before reclassifications, tax | (1) | |||||||||
Pension and Postretirement Defined Benefit Plans | ||||||||||
Accumulated other comprehensive income (loss) | ||||||||||
Balance at the beginning of the period | (466) | $ (352) | $ (499) | (352) | (499) | |||||
Cumulative effect of accounting change | (141) | |||||||||
Amounts reclassified out of AOCI | 7 | 10 | 23 | 33 | ||||||
Total other comprehensive income (loss) | (118) | 33 | ||||||||
Balance at the end of the period | (470) | $ (352) | (466) | (470) | (466) | |||||
Amounts reclassified out of AOCI, tax | $ 3 | $ 3 | $ 8 | $ 10 | ||||||
[1] | Related to the adoption of Accounting Standards Update (“ASU”) 2018-02, "Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income," (see Note 5 for additional details) |
ACCUMULATED OTHER COMPREHENSI_4
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - ITEMS RECLASSIFIED OUT OF AOCI (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 09, 2019 | Nov. 10, 2018 | Nov. 09, 2019 | Nov. 10, 2018 | |
Reclassification out of AOCI and the related tax effects | ||||
Amortization of gains and losses on cash flow hedging activities | $ 137 | $ 142 | $ 463 | $ 479 |
Tax expense | 79 | 91 | 398 | 834 |
Net of tax | (263) | (317) | (1,332) | (2,851) |
Total reclassifications, net of tax | 8 | 11 | 26 | 36 |
Cash Flow Hedging Activities | ||||
Reclassification out of AOCI and the related tax effects | ||||
Tax expense | (3) | (3) | ||
Total reclassifications, net of tax | 3 | 3 | ||
Pension and Postretirement Defined Benefit Plans | ||||
Reclassification out of AOCI and the related tax effects | ||||
Amortization of amounts included in net periodic pension expense | 10 | 13 | 31 | 43 |
Tax expense | (3) | (3) | (8) | (10) |
Total reclassifications, net of tax | 7 | 10 | 23 | 33 |
Reclassification out of AOCI | Cash Flow Hedging Activities | ||||
Reclassification out of AOCI and the related tax effects | ||||
Amortization of gains and losses on cash flow hedging activities | 2 | 2 | 6 | 6 |
Tax expense | (1) | (1) | (3) | (3) |
Net of tax | $ 1 | $ 1 | $ 3 | $ 3 |
INCOME TAXES - EFFECTIVE INCOME
INCOME TAXES - EFFECTIVE INCOME TAX RATE (Details) | 3 Months Ended | 9 Months Ended | ||
Nov. 09, 2019 | Nov. 10, 2018 | Nov. 09, 2019 | Nov. 10, 2018 | |
INCOME TAXES | ||||
Effective income tax rate (as a percent) | 35.60% | 22.80% | 25.00% | 22.80% |
Effective income tax rate due to portion of the impairment of Lucky's Market | 12.00% | 2.00% |
HELD FOR SALE AND DISPOSAL OF_2
HELD FOR SALE AND DISPOSAL OF BUSINESS (Details) - USD ($) $ in Millions | Apr. 26, 2019 | Mar. 13, 2019 | Nov. 09, 2019 | Nov. 09, 2019 | Nov. 10, 2018 |
HELD FOR SALE | |||||
Gain on sale of businesses | $ 176 | $ 1,782 | |||
Impairment charges | 238 | ||||
Impairment of finance lease assets | 40 | ||||
Operating Lease, Impairment Loss | $ 29 | ||||
You Technology business unit | Disposed by Sale | |||||
HELD FOR SALE | |||||
Consideration for sale | $ 565 | ||||
Proceeds received upon closing | 396 | ||||
Preferred equity | 64 | ||||
Other cash consideration | $ 105 | ||||
Other cash consideration receivable period | 5 years | ||||
Gain on sale of businesses | $ 70 | ||||
Gain on sale of business, net of tax | $ 52 | ||||
Term to be recorded as sales | 10 years | ||||
You Technology business unit | Disposed by Sale | Other current liabilities and Other long-term liabilities | |||||
HELD FOR SALE | |||||
Fair value of long-term service agreement | $ 358 | ||||
Turkey Hill Dairy Business | Disposed by Sale | |||||
HELD FOR SALE | |||||
Proceeds received upon closing | $ 225 | ||||
Gain on sale of businesses | 106 | ||||
Gain on sale of business, net of tax | $ 80 | ||||
Lucky's Market | Disposal Group, Disposed of by Means Other than Sale, Not Discontinued Operations | |||||
HELD FOR SALE | |||||
Impairment charges | $ 238 | ||||
Impairment of property, plant and equipment | 200 | ||||
Impairment of finance lease assets | 40 | ||||
Goodwill Impairment | 19 | ||||
Operating Lease, Impairment Loss | 11 | ||||
Asset impairment other charge | 8 | ||||
Impairment charges attributable to The Kroger Co., net of tax | 131 | ||||
Impairment charges attributable to The Kroger Co. | $ 100 |