Exhibit 99.2
The Kroger Co. Savings Plan
Index To Financial Statements
December 31, 1995
Report of Independent Accountants
Statement of Net Assets Available
For Plan Benefits at December 31, 1995
Statement of Net Assets Available
For Plan Benefits at December 31, 1994
Statement of Changes in Net Assets
Available For Plan Benefits for
the year ended December 31, 1995
Statement of Changes in Net Assets
Available For Plan Benefits for
the year ended December 31, 1994
Statement of Changes in Net Assets
Available For Plan Benefits for
the year ended December 31, 1993
Notes to Financial Statements
Item 27a - Schedule of Assets Held for Investment
Purposes at December 31, 1995
Item 27d - Schedule of Reportable Transactions
for the year ended December 31, 1995
Report of Independent Accountants
----------------------------------
To the Administrative Committee of The Kroger Co. Savings Plan
We have audited the accompanying statements of net assets available
for plan benefits of The Kroger Co. Savings Plan as of December 31,
1995 and 1994, and the related statements of changes in net assets
available for plan benefits for the years ended December 31, 1995,
1994 and 1993. These financial statements are the responsibility
of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for plan
benefits of The Kroger Co. Savings Plan as of December 31, 1995 and
1994, and the changes in net assets available for plan benefits for
the years ended December 31, 1995, 1994, and 1993 in conformity
with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on
the basic financial statements taken as a whole. The supplemental
schedules of assets held for investment and reportable transactions
are presented for the purpose of additional analysis and are not a
required part of the basic financial statements but are
supplementary information required by the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974. The fund
information in the statement of net assets available for plan
benefits and the statement of changes in net assets available for
plan benefits is presented for purposes of additional analysis
rather than to present the net assets available for plan benefits
and changes in net assets available for plan benefits of each fund.
The supplemental schedules and fund information have been subjected
to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements
taken as a whole.
(COOPERS & LYBRAND L.L.P.)
COOPERS & LYBRAND L.L.P.
Cincinnati, Ohio
March 29, 1996
THE KROGER CO. SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
at December 31, 1995
(In thousands of dollars)
--------------------------
1995
-------------------------------------------------------------------------------------------------
MERRILL
LYNCH MERRILL MERRILL AMERICAN
EMPLOYER EQUITY LYNCH LYNCH CAPITAL TEMPORARY
STOCK INDEX BASIC GLOBAL EMERGING TEMPLETON FIXED PARTICIPANT INVESTMENT
ASSETS FUND TRUST VALUE ALLOCATION GROWTH FOREIGN INCOME LOANS FUND TOTAL
---------- -------- ------- ---------- -------- --------- ------ ----------- ---------- -------
Investments:
The Kroger Co. common shares
(Cost - $198,005) $540,548 $540,548
Contracts with insurance
companies (stated at
contract value) $83,352 83,352
Mutual funds (cost - $25,248) $6,926 $5,012 $8,127 $6,423 26,488
Collective investment trust
(cost - $38,162) $50,818 50,818
Temporary cash investments
and loans to participants 21,701 $12,735 $380 34,816
--------- ------- ------ ------- ----- ------- -------- ------- -------- --------
Total investments 540,548 50,818 6,926 5,012 8,127 6,423 105,053 12,735 380 736,022
Receivables:
Employee contributions 1,204 233 45 33 58 43 369 1,985
Employer contributions 6,080 6,080
Interest and dividends 107 107
-------- ------- ------ ------ ----- ------- -------- ------- ------- --------
Total assets 547,832 51,051 6,971 5,045 8,185 6,466 105,422 12,735 487 744,194
-------- ------- ------ ------ ----- ------- -------- ------- ------- --------
LIABILITIES
Payable for administrative
fees 324 324
-------- ------- ------ ------ ----- ------- -------- ------- ------- --------
Total liabilities 324 324
-------- ------- ------ ------ ----- ------- -------- ------- ------- --------
Net assets available for
plan benefits $547,832 $51,051 $6,971 $5,045 $8,185 $6,466 $105,422 $12,735 $163 $743,870
======== ======= ====== ====== ====== ====== ======== ======= ======= ========
The accompanying notes are an integral
part of the financial statements.
THE KROGER CO. SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
at December 31, 1994
(In thousands of dollars)
--------------------------
1994
----------------------------------------- -----------------------------------------------------------
MERRILL
LYNCH MERRILL MERRILL AMERICAN
EMPLOYER EQUITY LYNCH LYNCH CAPITAL TEMPORARY
STOCK INDEX BASIC GLOBAL EMERGING TEMPLETON FIXED PARTICIPANT INVESTMENT
ASSETS FUND TRUST VALUE ALLOCATION GROWTH FOREIGN INCOME LOANS FUND TOTAL
--------- ------- ------- ---------- -------- --------- ------ ----------- ---------- --------
Investments:
The Kroger Co. common shares
(Cost - $186,931) $360,232 $360,232
Contracts with insurance
companies (stated at
contract value) $65,133 65,133
Mutual funds (cost - $11,109) $2,075 $2,469 $2,343 $3,569 10,456
Collective investment trust
(cost - $32,708) $33,045 33,045
Temporary cash investments
and loans to participants 15,157 $9,124 $178 24,459
--------- ------- ------ ------- ------ ------- ------- ------- --------- --------
Total investments 360,232 33,045 2,075 2,469 2,343 3,569 80,290 9,124 178 493,325
Receivables:
Employee contributions 246 58 4 5 5 7 122 447
Employer contributions 5,865 5,865
Interest and dividends 33 33
--------- ------- ------ ------- ------ ------- ------- ------- --------- --------
Total assets 366,343 33,103 2,079 2,474 2,348 3,576 80,412 9,124 211 499,670
--------- ------- ------ ------- ------ ------- ------- ------- --------- --------
LIABILITIES
Payable for administrative
fees 298 298
--------- ------- ------ ------ ------ ------- ------- ------- ---------- --------
Total liabilities 298 298
--------- ------- ------ ------ ------ ------- ------- ------- ---------- --------
Net assets available for
plan benefits $366,343 $33,103 $2,079 $2,474 $2,348 $3,576 $80,412 $9,124 $(87) $499,372
========= ======= ====== ====== ====== ======= ======= ======= ========== ========
The accompanying notes are an integral
part of the financial statements.
THE KROGER CO. SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1995
(In thousands of dollars)
--------------------------
1995
---------------------------------------------------------------------------------------------------
MERRILL
LYNCH MERRILL MERRILL AMERICAN
EMPLOYER EQUITY LYNCH LYNCH CAPITAL TEMPORARY
STOCK INDEX BASIC GLOBAL EMERGING TEMPLETON FIXED PARTICIPANT INVESTMENT
ASSETS FUND TRUST VALUE ALLOCATION GROWTH FOREIGN INCOME LOANS FUND TOTAL
---------- ------- ------ ---------- -------- --------- ------- ----------- ---------- --------
Employee contributions $ 24,177 $ 5,212 $ 780 $ 657 $ 932 $ 865 $ 9,587 $ 42,210
Employer contributions 6,080 6,080
Transfer from (to) other funds (29,677) 953 3,105 1,239 3,489 1,572 15,223 $ 3,945 $151
---------- ------- ------ --------- ------- --------- ------- ----------- ---------- --------
Total contributions
and transfers 580 6,165 3,885 1,896 4,421 2,437 24,810 3,945 151 48,290
Investment income:
Dividends 264 387 721 373 1,745
Interest 577 87 7 7 9 12 6,334 74 7,107
Net appreciation 194,359 12,945 773 343 796 131 209,347
--------- ------- ------ -------- ------- --------- ------- ----------- ---------- --------
Total additions 195,516 19,197 4,929 2,633 5,947 2,953 31,144 3,945 225 266,489
--------- ------- ------ -------- ------- --------- ------- ----------- ---------- --------
Distributions to participants 13,924 1,226 35 60 108 61 5,939 $ 334 (209) 21,478
Administrative expenses 103 23 2 2 2 2 195 184 513
--------- ------- ------ -------- ------- --------- ------- ----------- ---------- --------
Total deductions 14,027 1,249 37 62 110 63 6,134 334 (25) 21,991
--------- ------- ------ -------- ------- --------- ------- ----------- ---------- --------
Net increase 181,489 17,948 4,892 2,571 5,837 2,890 25,010 3,611 250 244,498
Net assets available for
plan benefits:
Beginning of year 366,343 33,103 2,079 2,474 2,348 3,576 80,412 9,124 (87) 499,372
-------- ------- ------- -------- ------ ------ -------- --------- --------- --------
End of year $547,832 $51,051 $ 6,971 $5,045 $8,185 $6,466 $105,422 $12,735 $163 $743,870
======== ======= ======= ======== ====== ====== ======== ========= ========= ========
The accompanying notes are an integral
part of the financial statements.
THE KROGER CO. SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1994
(In thousands of dollars)
--------------------------
1994
------------------------------------------------------------------------------------------------------
MERRILL
LYNCH MERRILL MERRILL AMERICAN
EMPLOYER EQUITY LYNCH LYNCH CAPITAL TEMPORARY
STOCK INDEX BASIC GLOBAL EMERGING TEMPLETON FIXED MELLON PARTICIPANT INVESTMENT
ASSETS FUND TRUST VALUE ALLOCATION GROWTH FOREIGN INCOME EQUITY LOANS FUND TOTAL
--------- -------- ------ ---------- -------- --------- ------ -------- ----------- ---------- -------
Employee contributions $ 21,972 $ 5,846 $ 271 $ 314 $ 355 $ 373 $ 9,807 $ (532) $ 38,406
Employer contributions 6,684 6,684
Transfer from (to) other funds (11,554) 28,186 1,795 2,238 2,013 3,283 3,014 $(32,266) $9,905 (6,614)
--------- -------- ------ ---------- -------- --------- ------- -------- ---------- --------- --------
Total contributions
and transfers 17,102 34,032 2,066 2,552 2,368 3,656 12,821 (32,266) 9,905 (7,146) 45,090
Investment income (loss):
Dividends 108 133 60 223 524
Interest 381 65 2 3 3 4 4,885 31 5,374
Net appreciation(depreciation)59,151 224 (88) (208) (72) (303) 58,704
--------- -------- ------- --------- -------- --------- ------- -------- -------- --------- --------
Total additions(deductions) 76,634 34,321 2,088 2,480 2,359 3,580 17,706 (32,266) 9,905 (7,115) 109,692
--------- -------- ------- --------- -------- --------- ------- -------- -------- --------- --------
Distributions to participants 10,897 1,185 9 6 11 4 3,565 781 1,127 17,585
Administrative expenses 78 33 141 298 550
--------- -------- ------- --------- -------- --------- ------- -------- -------- --------- --------
Total deductions 10,975 1,218 9 6 11 4 3,706 781 1,425 18,135
--------- -------- ------- --------- -------- --------- ------- -------- -------- --------- --------
Net increase(decrease) 65,659 33,103 2,079 2,474 2,348 3,576 14,000 (32,266) 9,124 (8,540) 91,557
Net assets available for
plan benefits:
Beginning of year 300,684 66,412 32,266 8,453 407,815
-------- ------- ------- -------- -------- --------- ------- ------- --------- ------- --------
End of year $366,343 $33,103 $2,079 $2,474 $2,348 $3,576 $80,412 $0 $9,124 $(87) $499,372
======== ======= ======= ======== ======== ========= ======= ======= ========= ======= ========
The accompanying notes are an integral
part of the financial statements.
THE KROGER CO. SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
for the year ended December 31, 1993
(In thousands of dollars)
--------------------------
1993
------------------------------------------------------------------
EMPLOYER FIDELITY MELLON TEMPORARY
STOCK EQUITY EQUITY FIXED INVESTMENT
FUND FUND FUND INCOME FUND TOTAL
-------- -------- ------ ------ ---------- --------
Employee contributions $ 34,909 $ 34,909
Employer contributions $ 3,125 3,125
Transfer from (to) other funds 7,751 $(12,170) $ 17,286 $ 9,686 (22,553)
Total contributions -------- --------- -------- --------- ---------- --------
and transfers 10,876 (12,170) 17,286 9,686 12,356 38,034
Investment income(loss):
Dividends 7 773 780
Interest 90 4,106 529 4,725
Net appreciation (depreciation) 79,119 1,947 (14) 81,052
Other 362 362
-------- --------- -------- --------- -------- --------
Total additions (deductions) 90,085 (12,163) 20,006 13,778 13,247 124,953
-------- --------- -------- --------- -------- --------
Distributions to participants 3,961 12,053 16,014
Administrative expenses 1 15 123 388 527
-------- --------- -------- --------- -------- --------
Total deductions 3,962 15 123 12,441 16,541
-------- --------- -------- --------- -------- --------
Net increase (decrease) 86,123 (12,163) 19,991 13,655 806 108,412
Net assets available for
plan benefits:
Beginning of year 214,561 12,163 12,275 52,757 7,647 299,403
--------- -------- -------- --------- -------- --------
End of year $300,684 $ 0 $32,266 $ 66,412 $ 8,453 $407,815
========= ======== ======== ========= ======== ========
The accompanying notes are an integral
part of the financial statements.
THE KROGER CO. SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
-----------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
The following describes the significant policies followed in
the preparation of these financial statements.
INVESTMENTS VALUATION
---------------------
Investments in equity securities, mutual funds and collective
trusts are valued at fair value (quoted market prices where
available) or estimated fair values. Investment contracts are
valued at contract value (cost plus accrued interest).
In 1995, the Plan adopted the American Institute of Certified
Public Accountants Statement of Position (SOP) 94-4 "Reporting
of Investment Contracts Held by Health and Welfare Benefit
Plans and Defined Contribution Pension Plans". SOP 94-4
requires that investment contracts that are fully benefit-
responsive be stated at contract value and all other
investment contracts be stated at fair value. The adoption of
SOP 94-4 did not have a material effect on the financial
position of the Plan.
PERVASIVENESS OF ESTIMATES
--------------------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of net assets available for plan benefits as of the
date of the Plan's financial statements and the reported changes
in net assets available for plan benefits during the reporting
period. Actual results could differ from those estimates.
OTHER
-----
Purchases and sales of securities are reflected on a trade
date basis. Gain or loss on sales of securities are based on
average cost.
Dividend income is recorded on the ex-dividend date. Income
from other investments is recorded as earned on an accrual
basis.
The plan presents in the statement of changes in net assets
available for plan benefits the net appreciation or
depreciation in the fair value of its investments which
consists of the realized gains or losses and the unrealized
appreciation or depreciation on those investments.
Certain prior year amounts have been reclassified to conform
to the current year presentation.
2. PLAN DESCRIPTION
-----------------
The Plan provides for eligible employees of The Kroger Co. and
subsidiaries (the "Company") to redirect a portion of their
salary, up to limits defined in the Plan, to the seven
investment funds of the Plan at any time.
Employee contributions to the Plan are limited to the lower of
$9,240 or 15% (6% if the participant is a highly compensated
employee as defined by the Internal Revenue Service) of the
employee's annual compensation during the period in which they
are a participant in the Plan, subject to Internal Revenue
Service Code limitations.
At the end of each year, the Company makes a basic matching
contribution into the Employer Stock Fund equal to ten percent
(10%) of the salary directed by participants to the Employer
Stock Fund during the year. A supplemental matching
contribution is allocated in proportion to salary directed to
all investment funds. The supplemental contribution is based
on the annual financial results of the Company and determined
annually by the Board of Directors. The supplemental
contribution ranges from none to twenty percent (20%) of
participant contributors.
In 1995, 1994 and 1993 the Company made both a basic matching
contribution and a supplemental matching contribution.
Each participant's account is credited with the participant's
contribution and an allocation of the Company's matching
contribution, Plan earnings, and other adjustments as defined in
the Plan. Allocations are based on participant earnings or
account balances as defined. The benefit to which a
participant is entitled is the benefit that can be provided
from the participant's account.
Further information about the Plan, including vesting,
allocation and benefit provisions, and employer and employee
contributions is contained in the Plan, and Plan amendments.
Copies of these documents are available from the Company's
Personnel Department.
3. INVESTMENT CONTRACTS
---------------------
The Plan's Fixed Income Fund contains various investment
contracts which are fully benefit-responsive. A fully
benefit-responsive investment provides a liquidity guarantee
by a financially responsible third party of principal and
previously accrued interest for liquidations, transfers,
loans, or withdrawals initiated by plan participants
under the terms of the ongoing Plan. Certain employer
initiated events (i.e., lay-offs, mergers, bankruptcy, plan
termination) are not eligible for the liquidity guarantee.
The following information is presented in the aggregate for
the investment contracts:
1995 1994
------------ ------------
Fair value 87,186,580 63,704,766
Crediting interest rates 6.0% to 9.4% 6.0% to 9.5%
Average yield 7.0% 6.8%
The crediting interest rates for the investment contracts are
based upon the contract rate or a predetermined formula which
factors in duration, market value and book value of the
investment. Certain of the crediting rates are adjusted
quarterly. The minimum crediting interest rate for these
investments is zero.
The fair value of the investment contracts is calculated as
the aggregate present value of the underlying cash flows using
interest rates quoted for securities with similar duration and
credit risk.
4. TAX STATUS
----------
The Plan obtained its latest determination letter on October
7, 1986, in which the Internal Revenue Service stated that the
Plan, as then designed, was in compliance with the Internal
Revenue Code. However, the Plan has been amended since
receiving the determination letter. The Plan administrator
and the Plan's tax counsel believe that the Plan is currently
designed and being operated in compliance with the applicable
requirements of the Internal Revenue Code. Therefore, no
provision for income taxes has been included in the Plan's
financial statements.
Participant contributions and earnings of the Plan are not
subject to federal income tax until distribution, at which
time they are taxable to the recipient.
5. RECONCILIATION TO FORM 5500
---------------------------
Department of Labor regulations require that differences
between the amounts included in the financial statements of
the Plan and reported on Form 5500 be disclosed. Differences
in amounts shown in the financial statements of the Plan and
those reported on Form 5500, as amended, for the year ended
December 31, 1993 are as follows:
Amounts per Amounts per
Financial Statements Form 5500 Difference
-------------------- ----------- ----------
The Kroger Co. Savings Plan
- ----------------------------
For the year ended December 31, 1993
Statement of Net Assets
Available for Plan Benefits:
Employer contributions receivable $3,115,652 $3,851,048 $(735,396)
Statement of Changes in Net Assets
Available for Plan Benefits:
Employer contributions $3,115,652 $3,851,048 $(735,396)
These differences result from the valuation of the employer
stock contribution receivable at December 31, 1993. The
financial statements reflect the value of the shares to be
contributed to the Plan at the date the matching contribution
was granted. Form 5500 reflects the value of the shares
contributed to the Plan on the date the shares were
transferred to the Trustee.
Since the employer matching contribution to the Plan for 1995
and 1994 was made in cash, the employer contribution
receivable in the statement of net assets available for plan
benefits, and employer contributions and change in unrealized
appreciation in the statement of changes in net assets
available for plan benefits for the years ended December 31,
1995 and 1994 do not differ from those reported on Form 5500.
THE KROGER CO. SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
at December 31, 1995
(In thousands of dollars)
-------------------------
NUMBER OF
SHARES OR
PRINCIPAL 1995
-------
NAME OF ISSUER AND TITLE OF ISSUE AMOUNT COST FAIR VALUE
- --------------------------------- --------------- -------- ----------
EMPLOYER STOCK FUND
-------------------
The Kroger Co. common shares 14,462,827 shs. $198,005 $540,548
MERRILL LYNCH EQUITY INDEX TRUST
--------------------------------
Collective Investment Trust 1,267,529 shs. 38,162 50,818
MERRILL LYNCH BASIC VALUE
-------------------------
Mutual Fund 244,635 shs. 6,285 6,926
MERRILL LYNCH GLOBAL ALLOCATION
-------------------------------
Mutual Fund 361,088 shs. 4,869 5,012
AMERICAN CAPITAL EMERGING GROWTH
--------------------------------
Mutual Fund 266,572 shs. 7,511 8,127
TEMPLETON FOREIGN
-----------------
Mutual Fund 699,647 shs. 6,582 6,423
FIXED INCOME
------------
Investment Contracts 83,352 shs. 83,352 87,187
Temporary Cash Investments 21,701 shs. 21,701 21,701
PARTICIPANT LOANS
-----------------
Loans to Participants $12,735 12,735 12,735
TEMPORARY INVESTMENT FUND
-------------------------
Temporary Cash Investments 380 shs. 380 380
-------- --------
Total $379,582 $739,857
======== ========
THE KROGER CO. SAVINGS PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
For the Year Ended December 31, 1995
(In thousands of dollars)
-------------------------
Expenses
incurred in
Transaction # of # of connection with Realized
Type Security Description Trans Shares transaction Cost Proceeds Gain(Loss)
- ----------- --------------------------- ------ --------- ---------------- ---------- ----------- ----------
KROGER COMMON STOCK
BUY Kroger Co. Common Stock 885 1,449,701 41,207,246
SELL Kroger Co. Common Stock 1211 1,796,874 209,709 28,786,287 54,112,220 25,116,224
POOLED SEPARATE A/C(GICS)
BUY Kroger Co. Fixed Income Fund 1029 46,423,054 46,423,054
SELL Kroger Co. Fixed Income Fund 1101 21,660,145 21,659,530 21,660,149 619
PENDING SETTLEMENT FUNDS
BUY Temporary Investment Fund 252 43,695,979 43,695,979
SELL Temporary Investment Fund 250 43,609,373 43,609,373 43,609,373