Exhibit 99.1
The Kroger Co. Savings Plan
Financial Statements and Supplemental Schedule
For the Year Ended December 31, 2001
The Kroger Co. Savings Plan
Table of Contents
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Page
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Financial Statements:
Report of Independent Accountants 1
Statements of Net Assets Available For Plan Benefits
at December 31, 2001 and 2000 2
Statement of Changes in Net Assets Available For Plan Benefits
for the year ended December 31, 2001 3
Notes to Financial Statements 4-9
Supplemental Schedule:
Schedule H, line 4i - Schedule of Assets (Held At End of Year)
at December 31, 2001 Schedule I
Report of Independent Accountants
To the Administrative Committee of The Kroger Co. Savings Plan
In our opinion, the accompanying statement of net assets available for plan
benefits and the related statement of changes in net assets available for plan
benefits present fairly, in all material respects, the net assets available for
plan benefits of The Kroger Co. Savings Plan (the "Plan") at December 31, 2001
and 2000, and the changes in net assets available for plan benefits for the year
ended December 31, 2001 in conformity with accounting principles generally
accepted in the United States of America. 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 of these statements in accordance with auditing standards generally
accepted in the United States of America, which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule referred to in
the Index to Financial Statements is presented for the purpose of additional
analysis and is not a required part of the basic financial statements but is
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. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers
Cincinnati, Ohio
June 25, 2002
The Kroger Co. Savings Plan
Statement of Net Assets Available For Plan Benefits
At December 31, 2001 and 2000
(in thousands)
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2001 2000
---- ----
Assets
Investments:
Employer Stock Fund $ 1,528,402 $ 2,044,187
Merrill Lynch Equity Index Trust 226,708 165,028
Merrill Lynch Basic Value 56,874 27,690
Merrill Lynch Global Allocation 21,602 18,085
Merrill Lynch International Index Fund 26,213 3,165
Merrill Lynch Fundamental Growth Fund 180,506 1
Merrill Lynch Small Cap Index Fund 34,879 3,712
Van Kampen Emerging Growth 75,526 77,855
Van Kampen Emerging Markets 10,774 2,309
Van Kampen American Value Fund 3,669 1,208
Templeton Foreign 13,412 14,160
Fixed income 452,333 235,563
Participant Loans 53,870 50,761
Temporary Investment Fund 1,932 6,086
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Total investments 2,686,700 2,649,810
Receivables;
Contributions 11,537 3,581
Interest and dividends 1,143 1,112
Receivables from Plan Trustee - 561,499
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Total receivables 12,680 566,192
Total assets 2,699,380 3,216,002
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Liabilities
Payable for administrative fees 175 115
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Total liabilities 175 115
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Net assets available for plan benefits $ 2,699,205 $ 3,215,887
============== ============
The accompanying notes are an integral part of these financial statements
2
The Kroger Co. Savings Plan
Statement of Changes in Net Assets Available For Plan Benefits
For the year ended December 31, 2001
(in thousands)
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2001
-------------
Additions to net assets attributable to:
Employee contributions $ 150,635
Employer contributions 8,947
Transfer from other trusts 36,462
-------------
Total contributions and transfers 196,044
Investment activity:
Dividends 7,031
Interest 30,892
Net (depreciation) appreciation (594,484)
-------------
Total (reductions) additions (360,517)
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Distributions to participants 155,530
Administrative fees 635
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Total deductions 156,165
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Net (decrease) increase (516,682)
Net assets available for plan benefits:
Beginning of year 3,215,887
-------------
End of year $ 2,699,205
=============
The accompanying notes are an integral part of these financial statements
3
The Kroger Co. Savings Plan
Notes of Financial Statements
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1. PLAN DESCRIPTION
The Kroger Co. Savings Plan (the "Plan") provides for eligible employees
of The Kroger Co. and subsidiaries (the "Company") to redirect a portion
of their salary/wages, up to limits defined in the Plan, to the
investment funds of the Plan at any time.
Employee contributions to the Plan are limited to the lower of $11,000 or
20% (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
participant contributions directed to all investment funds. This
supplemental contribution is automatically invested in the Employer Stock
Fund. 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 20% of participant
contributions. Additionally, there are other employer contributions made
in compliance with contracts with employee unions.
In 2001, the Company made a matching contribution but did not make a
supplemental contribution.
Each participant's account is credited with the participant's
contribution and an allocation of the Company's matching contribution,
supplemental contribution (if any), 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 eligibility, vesting,
allocation and benefit provisions, and employer and employee
contributions is contained in the Plan and summary plan description.
Copies of these documents are available from the Company's Human
Resources Department.
4
The Kroger Co. Savings Plan
Notes to Financial Statements
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2. 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). Wrapper contracts are valued based on information
received from a financially responsible third party.
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.
Gains or losses 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.
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.
Participants may borrow from their fund accounts a minimum of $1,000 up
to a maximum equal to the lowest of: a) account balance less $2,500; b)
50% of account balance; c) $50,000 less the highest outstanding loan
balance over the last 12 months. Loan transactions are treated as a
transfer from the investment fund to the Participant Loan Fund. Loan
terms range from 1-4 years or up to 6 years for the purchase of a primary
residence. The loans are collateralized by the balance in the
participant's account and bear interest at a rate of Prime plus 1.5%. The
rate is changed quarterly and the Prime rate used for a quarter is the
Prime rate on the last business day of the previous quarter. Principal
and interest are paid through periodic payroll deductions.
5
The Kroger Co. Savings Plan
Notes to Financial Statements
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3. TRANSFERS FROM OTHER TRUSTS
During 2001, the Payless Super Markets, Inc. Employees Profit Sharing and
Savings Plan was merged into the Plan. As a result of this merger,
approximately $14 million of participant balances, which includes $.4
million in loan balances, was transferred into the Plan. Also during
2001, participant balances of approximately $22 million were transferred
from The Kroger Co. Savings Plan for Bargaining Unit Associates into the
Plan.
At the end of 2000, the Dillon Companies, Inc. Employees' Stock Ownership
and Savings Plan (the "Dillon Plan") was merged into the Plan. As such,
participant balances of the Dillon Plan, approximately $658 million, were
transferred into the Plan. Additionally, $562 million of Plan assets were
transferred from the Fred Meyer, Inc. 401(k) Savings Plan (the "Fred
Meyer Plan") on December 29, 2000. These assets were received and held by
the Plan trustee at December 31, 2000 in conjunction with the merger of
the Fred Meyer Plan into the Plan as of the end of 2000 and the amendment
and restatement of the Plan, effective immediately thereafter. As such,
at the end of 2000 a receivable from the trustee was recorded by the Plan
for these assets. On January 2, 2001 these assets were deposited into the
Plan by the trustee and were allocated among the various investments.
Approximately $20 million of loans that was previously a part of the Fred
Meyer Plan were transferred into the Plan on December 31, 2000.
Subsequent to 2001, participant balances of approximately $2 million were
transferred from the Merksamer Jewelers, Inc. Profit Sharing 401(k) Plan
into the Plan.
4. 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:
2001 2000
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Fair value $ 460,092 $ 240,741
Crediting interest rates 2.1% to 9.7% 5.2% to 8.5%
Average yield 6.5% 6.9%
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
6
The Kroger Co. Savings Plan
Notes to Financial Statements
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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.
5. TAX STATUS
The Plan obtained its latest determination letter in March 1999, in which
the Internal Revenue Service stated that the Plan, as then designed, was in
compliance with the Internal Revenue Code. The Company believes that the
Plan continues to qualify and operate as designed. 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.
7
The Kroger Co. Savings Plan
Notes to Financial Statements
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6. NON PARTICIPANT-DIRECTED INVESTMENTS
Investments in the Employer Stock Fund are generated from
participant-directed contributions, the Company's basic matching
contribution, and the Company's supplemental matching contribution.
Employee and employer amounts included in the Employer Stock Fund cannot be
separately determined. Accordingly, the investments in the Employer Stock
Fund are considered non participant-directed for disclosure purposes.
The information about the net assets and the significant components of the
changes in net assets relating to the non participant-directed investments
in the Employer Stock Fund is as follows:
Investments
At December 31,
2001 2000
--------- --------
Employer Stock Fund $ 1,528,402 $ 2,044,187
Year ended
December 31,
2001
-----------
Change in net assets in the Employer Stock Fund:
Employee contributions 72,594
Employer contributions 7,170
Transfer from other trusts 21,473
Interest 2,100
Net (depreciation) appreciation (479,676)
Distributions to participants (80,309)
Administrative expenses (330)
Transfers (to) from other funds (58,807)
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$ (515,785)
==========
8
The Kroger Co. Savings Plan
Notes to Financial Statements
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7. INVESTMENTS
During 2001, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) depreciated
in value by $594,484 as follows:
2001
----------
Employer Stock Fund $ (479,676)
Merrill Lynch Equity Index Trust (28,024)
Merrill Lynch Basic Value (6,152)
Merrill Lynch Global Allocation (522)
Merrill Lynch International Index Fund (6,547)
Merrill Lynch Small Cap Index Fund 2,391
Merrill Lynch Fundamental Growth Fund (39,756)
Van Kampen Emerging Growth (34,607)
Van Kampen Emerging Markets (137)
Van Kampen American Value Fund 42
Templeton Foreign (1,496)
---------
$(594,484)
=========
9
The Kroger Co. Savings Plan
Schedule H, line 4i - Schedule of Assets (Held At End of Year)*
at December 31,200l Schedule I
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(c)
(b) Description of investment,
Identity of issue, including maturity date, (e)
borrower, lessor rate of interest, collateral, (d) Current
(a) or similar party par or maturity value Cost value
- -------- --------------------- ------------------------------- ----------- -----------
** Employer Stock Fund The Kroger Co. common shares $ 629,277 $ 1,528,402
** Merrill Lynch Equity Index Fund 204,437 226,708
Basic Value Fund 63,842 56,874
Global Allocation Fund 23,254 21,602
International Index Fund 32,250 26,213
Fundemental Growth Fund 214,338 180,506
Small Cap Index Fund 32,677 34,879
Van Kampen Emerging Growth Fund 101,619 75,526
Emerging Markets Fund 11,309 10,774
American Value Fund 3,694 3,669
Templeton Foreign Fund 14,246 13,412
Fixed Income Fund Guaranteed Investment Contracts
(GICs) (variable maturities;
interest Tates from 2.1% to 5.9%) 71,480 71,480
Synthetic GICs (maturities ranging
from April 2002 to August 2009;
interest rates from 5.2% to 9.7%) 380,853 388,612
Wrapper contracts for synthetic
GICs - (7,759)
--------- ---------
Total Fixed Income 452,333 452,333
Participant loans Loans to participants (maturities
from l-6 years; interest rates
of Prime plus 1.5%) 53,870
Temporary Investment Fund Temporary Cash Investments 1,932 1,932
--------- ---------
Total $ 1,785,208 $ 2,686,700
========= =========
* This schedule includes those assets required to be reported under
ERISA, Section 2520.103-11 and IRS Form 5500, Schedule H, line 4i.
** Denotes party-in-interest
10
The Kroger Co. Savings Plan
for Bargaining Unit
Associates
Report and Financial Statements For
the Year Ended December 31, 2001
The Kroger Co. Savings Plan for Bargaining Unit Associates
Table of Contents
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Page
Report of Independent Accountants 1-2
Financial Statements:
Statements of Net Assets Available for Benefits at
December 31, 2001 and 2000 3
Statement of Changes in Net Assets Available for Benefits for the Year Ended
December 31, 2001 4
Notes to the Financial Statements 5-9
Supplemental Schedule:*
Schedule H, line 4i - Schedule of Assets (Held at End of Year) at
December 31, 2001 Schedule I
* Other schedules required by Section 2520.103-10 of the Department of
Labor's Rules and Regulations for Reporting and Disclosure under ERISA
have been omitted because they are not applicable.
Report of Independent Accountants
To the Participants and Administrator of the
The Koger Co. Savings Plan for Bargaining Unit Associates
We have audited the accompanying statements of net assets available for benefits
(modified cash basis) of the The Kroger Co. Savings Plan for Bargaining Unit
Associates (the Plan) as of December 31, 2001 and 2000, and the related
statement of changes in net assets available for benefits (modified cash basis)
for the year ended December 31, 2001. 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 auditing standards generally accepted
in the United States of America. 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.
As described in Note 2, these financial statements and supplemental schedule
were prepared on a modified cash basis of accounting, which is a comprehensive
basis of accounting other than accounting principles generally accepted in the
United States of America.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2001 and 2000, and the changes in net assets available for benefits
for the year ended December 31, 2001, on the basis of accounting described in
Note 2.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule (modified cash
basis) of Assets (Held at End of Year) is presented for the purpose of
additional analysis and is not a required part of the basic financial
statements, but is 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. This supplemental schedule is
the responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Cincinnati, Ohio
June 26, 2002
The Kroger Co. Savings Plan for Bargaining Unit Associates
Statements of Net Assets Available for Benefits
December 31, 2001 and 2000
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2001 2000
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Assets
Cash $ 164 $ 45,846,619
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Investments:
Employer Stock Fund 860,431 596,292
Merrill Lynch Equity Index Trust 3,870,440 * -
Merrill Lynch Basic Value Fund 1,168,397 -
Merrill Lynch Global Allocation Fund 141,871 -
Merrill Lynch International Index Fund 1,615,644 * -
Merrill Lynch Fundamental Growth Fund 7,230,199 * -
Merrill Lynch Small Cap Index Fund 1,280,418 -
Van Kampen Emerging Growth Fund 4,217,680 * -
Van Kampen Emerging Markets Fund 177,929 -
Van Kampen American Value Fund 64,249 -
Templeton Foreign Fund 52,106 -
Fixed Income Fund 8,542,134 * -
Participant loans 834,803 2,232,708
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Total investments 30,056,301 2,829,000
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Net assets available for benefits $30,056,465 $ 48,675,619
=========== ============
* Represents 5% or more of net assets available for benefits.
The accompanying notes are an integral part of these financial statements.
3
The Kroger Co. Savings Plan for Bargaining Unit Associates
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2001
- ------------------------------------------------------------
2001
--------------
Additions:
Investment income:
Net appreciation (depreciation) in fair value of investments $ (3,533,511)
Interest and dividends 655,363
--------------
Net investment (loss) income (2,878,148)
Participant contributions 10,705,456
--------------
Total additions 7,827,308
--------------
Deductions:
Administrative fees 34,031
Benefit payments to participants 2,303,287
Assets transferred to The Kroger Co. Savings Plan (Note 1):
Cash 22,529,983
Participant loans 1,579,161
--------------
Total deductions 26,446,462
--------------
Net decrease in net assets available for benefits (18,619,154)
Net assets available for benefits, beginning of period 48,675,619
--------------
Net assets available for benefits, end of period $ 30,056,465
==============
The accompanying notes are an integral part of these financial statements.
4
The Kroger Co. Savings Plan for Bargaining Unit Associates
Notes to the Financial Statements
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1. Description of the Plan
The following description of the The Kroger Co. Savings Plan for
Bargaining Unit Associates (the Plan), formerly known as the Fred Meyer
Inc. 401(k) Savings Plan for Collective Bargaining Unit Employees, is
provided for general information purposes only. Participants should refer
to the Plan agreement for more complete information.
General
The Plan is sponsored by The Kroger Co., a Ohio corporation, and its
wholly-owned subsidiaries (collectively, the Company). The Plan is a
defined contribution plan covering all employees of the Company who are
21 years of age and older, are covered by a collective bargaining
agreement and have completed one year of service. It is subject to the
provisions of the Employee Retirement Income Security Act of 1974
(ERISA). Through December 29, 2000, the Plan was sponsored by Fred Meyer,
Inc., a wholly-owned subsidiary of the Company.
Change in trustee
On December 29, 2000, the assets of the Plan (other than The Kroger Co.
common Stock) were converted to cash in order to transfer the assets from
T. Rowe Price to Merrill Lynch, new trustee and record keeper at January
1, 2001. Participant account balances were mapped by investment strategy
and transferred effective January 1, 2001 into mutual funds managed by
Merrill Lynch. At October 1, 2000 an amendment to the Plan was made to
exclude certain union participants of the Plan; a transfer was made from
the Plan to The Kroger Co. Savings Plan. As such, effective January 1,
2001, cash of $22,529,983 and participant loans of $1,579,161 were
transferred from the Plan into The Kroger Co. 401(k) Savings Plan.
Contributions
Contributions to the Plan consist of contributions made by qualified
employees to a trust. Each year participants may contribute to the Plan
up to a maximum of 18% of their pretax annual compensation.
Participants may also contribute amounts representing distributions from
other qualified defined benefit or defined contribution plans subject to
approval by the Administrative Committee. Participants direct the
investment of their contributions into various investment options offered
by the Plan. Contributions are subject to certain limitations.
5
The Kroger Co. Savings Plan for Bargaining Unit Associates
Notes to the Financial Statements
- --------------------------------------------------------------------------------
Participant accounts
Each participant's account is credited with the participant's
contribution and an allocation of Plan earnings or losses. Allocations
are based on participant earnings/losses of account balances, as defined.
The benefit to which a participant is entitled is the benefit that can be
provided from the participant's vested account.
Vesting
All accounts of a participant are fully vested at all times.
Participant loans
Participants may borrow from their account from a minimum of $1,000 up to
a maximum of $50,000 or 50% of their account balance, whichever is less.
The loans are secured by the balance in the participant's account and
bear interest at rates that range from 7.5% to 11%, which are
commensurate with local prevailing rates as determined quarterly by the
Plan administrator. Principal and interest is paid ratably through
monthly payroll deductions.
Investment options
The Plan's investment options are comprised of The Kroger Co.'s common
stock and eleven mutual and collective trust funds.
Payment of benefits
Participants are entitled to the benefit that could be provided by their
contributions and income thereon (including net realized and unrealized
investment gains and losses) allocated to their accounts. All retirement
(normal retirement age is 65), early withdrawal, and beneficiary death
benefits are paid in a lump sum or in a partial lump sum. Death benefits
are paid to beneficiaries in a lump sum. Any unclaimed benefits shall be
forfeited and applied to pay Plan expenses.
2. Summary of Significant Accounting Policies
Basis of accounting
The financial statements of the Plan were prepared using the modified
cash basis of accounting, which is the equivalent of the accrual basis
except that certain income receivable, contributions receivable and other
accruals are not recorded. This practice is not in accordance with
accounting principles generally accepted in the United States of America,
but is permitted under ERISA.
Use of estimates
The preparation of financial statements in conformity with the modified
cash basis of accounting requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and changes therein, and disclosure of contingent assets and liabilities.
Actual results could differ from those estimates.
6
The Kroger Co. Savings Plan for Bargaining Unit Associates
Notes to the Financial Statements
- --------------------------------------------------------------------------------
Investment valuation and income recognition
The Plan's investments are stated at fair value. Quoted market prices are
used to value investments. Shares of mutual funds are valued at the net
asset value of shares held by the Plan at year-end. Wrapper contracts are
valued based on information received from a financially responsible third
party, Purchases and sales of securities are recorded on a trade-date
basis. Interest income and dividend income are recorded on the date
received by the Plan.
Payment of benefits
Benefits are recorded when paid.
Fees and expenses
The Plan will pay the administrative costs and expenses of the Plan
including the trustee and management fees. Any expenses that are unable
to be allocated to participants are paid by the Company.
3. Investments
During the year ended December 31, 2001, the Plan's investments
(including gains and losses on investments bought and sold, as well as
held during the year) appreciated (depreciated) in value by $(3,533,511)
as follows:
2001
--------
Mutual funds $ (3,427,349)
Common stock (106,162)
------------
$ (3,533,511)
============
4. 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.
7
The Kroger Co. Savings Plan for Bargaining Unit Associates
Notes to the Financial Statements
The following information is presented in the aggregate for the
investment contracts:
2001 2000
---- ----
Fair value $ 8,688,491 $ -
Crediting interest rate 2.1% to 9.7% N/A
Average yield 6.5% N/A
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.
5. Related Party Transactions
Certain Plan investments are shares of mutual funds managed by Merrill
Lynch. Merrill Lynch is the trustee and recordkeeper as defined by the
Plan and, therefore, these transactions qualify as party-in-interest
transactions. During 2000, the trustee and recordkeeper function was
performed by T. Rowe Price. Fees paid by the Plan for the investment
management and recordkeeping services amounted to $34,031 for the year
ended December 31, 200l.
6. Tax Status
The Plan obtained its latest determination letter on January 8, 2002, in
which the Internal Revenue Service stated that the Plan, as then
designed, was in compliance with the applicable requirements of the
Internal Revenue Code (IRC). There have been no significant amendments to
the Plan as of the report date. The Plan administrator and the Plan's tax
counsel believe that the Plan is designed and has operated in compliance
with the applicable requirements of the IRC.
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.
8
The Kroger Co. Savings Plan for Bargaining Unit Associates
Notes to the Financial Statements
7. Priorities Upon Termination of the Plan
The Company may terminate this Plan or discontinue contributions at any
time. In the event of any total or partial termination or discontinuance,
the accounts of all affected participants shall remain fully vested and
non-forfeitable.
9
The Kroger Co. Savings Plan for Bargaining Unit Associates
Schedule H, line 4i - Schedule of Assets (Held at End of Year)
at December 31, 2001 Schedule I
- -------------------------------------------------------------------------------
(c)
(b) Description of investment,
Identity of issue, including maturity date, (e)
borrower, lessor rate of interest, collateral, (d) Current
(a) or similar party par or maturity value Cost Value
--- ---------------- --------------------- ---- -----
* Employer Stock Fund The Kroger Co. common shares $ 968,501 $ 860,431
* Merrill Lynch Equity Index Trust 4,131,696 3,870,440
Basic Value Fund 1,262,036 1,168,397
Global Allocation Fund 143,590 141,871
International Index Fund 1,953,951 1,615,644
Fundemental Growth Fund 8,303,478 7,230,199
Small Cap Index Fund 1,199,870 1,280,418
Van Kampen Emerging Growth Fund 5,356,572 4,217,680
Emerging Markets Fund 173,659 177,929
American Value Fund 61,253 64,249
Templeton Foreign Fund 52,519 52,106
Fixed Income Fund Guaranteed Investment Contracts
(GICs) (variable maturities;
interest rates from 2.1% to 5.9%) 1,349,848 1,349,848
Synthetic GICs maturities ranging
from April 2002 to August 2009;
interest rates from 5.2% to 9.7%) 7,192,286 7,338,643
Wrapper contracts for synthetic
GICs - (146,357)
------------ ------------
Total Fixed Income 8,542,134 8,542,134
Participant loans Loans to participants (maturities
from 1-10 years; interest rates
ranging from 7.5% to 11%) - 834,803
------------ ------------
Total $ 32,149,259 $ 30,056,301
============ ------------
* Denotes party-in-interest