Document and Entity Information
Document and Entity Information - shares | 4 Months Ended | |
May 26, 2018 | Jun. 26, 2018 | |
Document and Entity Information Abstract | ||
Entity Registrant Name | KROGER CO | |
Entity Central Index Key | 56,873 | |
Document Type | 10-Q | |
Document Period End Date | May 26, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --02-02 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 796,675,676 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 4 Months Ended | |
May 26, 2018 | May 20, 2017 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Sales | $ 37,530 | $ 36,285 |
Operating expenses | ||
Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below | 29,362 | 28,281 |
Operating, general and administrative | 6,122 | 6,367 |
Rent | 276 | 270 |
Depreciation and amortization | 741 | 736 |
Operating profit | 1,029 | 631 |
Other income (expense) | ||
Interest expense | (192) | (177) |
Non-service component of company-sponsored pension plan costs | (10) | (9) |
Mark to market gain on Ocado securities | 36 | |
Gain on sale of business | 1,771 | |
Net earnings before income tax expense | 2,634 | 445 |
Income tax expense | 616 | 148 |
Net earnings including noncontrolling interests | 2,018 | 297 |
Net loss attributable to noncontrolling interests | (8) | (6) |
Net earnings attributable to The Kroger Co. | $ 2,026 | $ 303 |
Net earnings attributable to The Kroger Co. per basic common share | $ 2.39 | $ 0.33 |
Average number of common shares used in basic calculation | 839 | 914 |
Net earnings attributable to The Kroger Co. per diluted common share | $ 2.37 | $ 0.32 |
Average number of common shares used in diluted calculation | 846 | 925 |
Dividends declared per common share | $ 0.125 | $ 0.12 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 4 Months Ended | ||
May 26, 2018 | May 20, 2017 | ||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Net earnings including noncontrolling interests | $ 2,018 | $ 297 | |
Other comprehensive income (loss) | |||
Realized and unrealized gains and losses 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] | 15 | 13 |
Unrealized gains and losses on cash flow hedging activities, net of income tax | [3] | 4 | (36) |
Amortization of unrealized gains and losses on cash flow hedging activities, net of income tax | [4] | 1 | |
Total other comprehensive income (loss) | 16 | (23) | |
Comprehensive income | 2,034 | 274 | |
Comprehensive loss attributable to noncontrolling interests | (8) | (6) | |
Comprehensive income attributable to The Kroger Co. | $ 2,042 | $ 280 | |
[1] | Amount is net of tax of $(1) for the first quarter of 2018. | ||
[2] | Amount is net of tax of $4 for the first quarter of 2018 and $8 for the first quarter of 2017. | ||
[3] | Amount is net of tax of $1 for the first quarter of 2018 and $(21) for the first quarter of 2017. | ||
[4] | Amount is net of tax of $1 for the first quarter of 2018. |
CONSOLIDATED STATEMENTS OF COM4
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions | 4 Months Ended | |
May 26, 2018 | May 20, 2017 | |
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 | 4 | $ 8 |
Unrealized gains and losses on cash flow hedging activities, income tax | 1 | $ (21) |
Amortization of unrealized gains and losses on cash flow hedging activities, income tax | $ 1 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | May 26, 2018 | Feb. 03, 2018 |
Current assets | ||
Cash and temporary cash investments | $ 691 | $ 347 |
Store deposits in-transit | 1,053 | 1,161 |
Receivables | 1,583 | 1,637 |
FIFO inventory | 7,650 | 7,781 |
LIFO reserve | (1,263) | (1,248) |
Assets held for sale | 42 | 604 |
Prepaid and other current assets | 530 | 835 |
Total current assets | 10,286 | 11,117 |
Property, plant and equipment, net | 21,195 | 21,071 |
Intangibles, net | 1,100 | 1,100 |
Goodwill | 2,925 | 2,925 |
Other assets | 1,055 | 984 |
Total Assets | 36,561 | 37,197 |
Current liabilities | ||
Current portion of long-term debt including obligations under capital leases and financing obligations | 2,242 | 3,560 |
Trade accounts payable | 6,202 | 5,858 |
Accrued salaries and wages | 1,011 | 1,099 |
Liabilities held for sale | 18 | 259 |
Other current liabilities | 4,003 | 3,421 |
Total current liabilities | 13,476 | 14,197 |
Long-term debt including obligations under capital leases and financing obligations | 12,059 | 12,029 |
Deferred income taxes | 1,590 | 1,568 |
Pension and postretirement benefit obligations | 789 | 792 |
Other long-term liabilities | 1,706 | 1,706 |
Total Liabilities | 29,620 | 30,292 |
Commitments and contingencies see Note 7 | ||
SHAREHOLDERS’ EQUITY | ||
Preferred shares, $100 per share, 5 shares authorized and unissued | ||
Common shares, $1 par per share, 2,000 shares authorized; 1,918 shares issued in 2018 and 2017 | 1,918 | 1,918 |
Additional paid-in capital | 3,059 | 3,161 |
Accumulated other comprehensive loss | (455) | (471) |
Accumulated earnings | 18,924 | 17,007 |
Common shares in treasury, at cost, 1,122 shares in 2018 and 1,048 shares in 2017 | (16,476) | (14,684) |
Total Shareholders’ Equity - The Kroger Co. | 6,970 | 6,931 |
Noncontrolling interests | (29) | (26) |
Total Equity | 6,941 | 6,905 |
Total Liabilities and Equity | $ 36,561 | $ 37,197 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Millions | May 26, 2018 | Feb. 03, 2018 |
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 | 1,122 | 1,048 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 4 Months Ended | |
May 26, 2018 | May 20, 2017 | |
Cash Flows from Operating Activities: | ||
Net earnings including noncontrolling interests | $ 2,018 | $ 297 |
Adjustments to reconcile net earnings including noncontrolling interests to net cash provided by operating activities: | ||
Depreciation and amortization | 741 | 736 |
LIFO charge | 15 | 25 |
Stock-based employee compensation | 45 | 53 |
Expense for company-sponsored pension plans | 27 | 35 |
Deferred income taxes | 17 | 6 |
Gain on sale of business | (1,771) | |
Mark to market gain on Ocado securities | (36) | |
Other | (50) | |
Changes in operating assets and liabilities net of effects from mergers of businesses: | ||
Store deposits in-transit | 108 | (42) |
Receivables | (123) | 149 |
Inventories | 134 | 177 |
Prepaid and other current assets | 307 | 409 |
Trade accounts payable | 345 | 260 |
Accrued expenses | 43 | (86) |
Income taxes receivable and payable | 558 | 153 |
Other | (60) | 187 |
Net cash provided by operating activities | 2,368 | 2,309 |
Cash Flows from Investing Activities: | ||
Payments for property and equipment | (758) | (817) |
Proceeds from sale of assets | 47 | 83 |
Purchase of stores | (44) | |
Net proceeds from sale of business | 2,142 | |
Other | (38) | (10) |
Net cash provided (used) by investing activities | 1,349 | (744) |
Cash Flows from Financing Activities: | ||
Proceeds from issuance of long-term debt | 1,010 | 1 |
Payments on long-term debt | (214) | (84) |
Net payments on commercial paper | (2,120) | (545) |
Dividends paid | (110) | (111) |
Proceeds from issuance of capital stock | 10 | 17 |
Treasury stock purchases | (1,809) | (772) |
Other | (140) | (37) |
Net cash used by financing activities | (3,373) | (1,531) |
Net increase in cash and temporary cash investments | 344 | 34 |
Cash and temporary cash investments: | ||
Beginning of year | 347 | 322 |
End of period | 691 | 356 |
Reconciliation of capital investments: | ||
Payments for property and equipment | (758) | (817) |
Changes in construction-in-progress payables | (91) | (104) |
Total capital investments | (849) | (921) |
Disclosure of cash flow information: | ||
Cash paid during the year for interest | 124 | 188 |
Cash paid during the year for income taxes | $ 36 | $ 11 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY - USD ($) shares in Millions, $ in Millions | Common Stock | Additional Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Accumulated Earnings | Noncontrolling Interest | Total |
Balances at Jan. 28, 2017 | $ 1,918 | $ 3,070 | $ (13,118) | $ (715) | $ 15,543 | $ 12 | $ 6,710 |
Balances (in shares) at Jan. 28, 2017 | 1,918 | 994 | |||||
Issuance of common stock: | |||||||
Stock options exercised | $ 17 | 17 | |||||
Stock options exercised (in shares) | (1) | ||||||
Restricted stock issued | (11) | $ 5 | (6) | ||||
Treasury stock activity: | |||||||
Treasury stock purchases, at cost | $ (747) | (747) | |||||
Treasury stock purchases, at cost (in shares) | 24 | ||||||
Stock options exchanged | $ (25) | (25) | |||||
Share-based employee compensation | 53 | 53 | |||||
Other comprehensive income (loss), net of income tax of $5 and $(13) in May 26, 2018 and May 20, 2017, respectively | (23) | (23) | |||||
Other | (8) | (6) | (16) | (30) | |||
Cash dividends declared ($0.125 and $0.12 in May 26, 2018 and May 20, 2017, respectively, per common share) | (111) | (111) | |||||
Net earnings including noncontrolling interests | 303 | (6) | 297 | ||||
Balances at May. 20, 2017 | $ 1,918 | 3,104 | $ (13,874) | (738) | 15,735 | (10) | 6,135 |
Balances (in shares) at May. 20, 2017 | 1,918 | 1,017 | |||||
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 of $5 and $(13) in May 26, 2018 and May 20, 2017, respectively | 16 | 16 | |||||
Other | (7) | $ 2 | 5 | ||||
Cash dividends declared ($0.125 and $0.12 in May 26, 2018 and May 20, 2017, respectively, per common share) | (109) | (109) | |||||
Net earnings including noncontrolling 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 |
CONSOLIDATED STATEMENTS OF CHA9
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY (Parenthetical) - USD ($) $ in Millions | 4 Months Ended | |
May 26, 2018 | May 20, 2017 | |
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY | ||
Other comprehensive gain (loss), income tax expense (benefit) | $ 5 | $ (13) |
Cash dividends declared per common share (in dollars per share) | $ 0.125 | $ 0.12 |
ACCOUNTING POLICIES
ACCOUNTING POLICIES | 4 Months Ended |
May 26, 2018 | |
ACCOUNTING POLICIES | |
ACCOUNTING POLICIES | 1. Basis of Presentation and Principles of Consolidation The accompanying financial statements include the consolidated accounts of The Kroger Co., its wholly-owned subsidiaries, and the variable interest entities in which the Company is the primary beneficiary. The February 3, 2018 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 3, 2018. The unaudited information in the Consolidated Financial Statements for the first quarters ended May 26, 2018 and May 20, 2017, includes the results of operations of the Company for the 16 -week periods then ended. Refer to Note 5 for a description of changes to the Consolidated Statements of Operations for a recently adopted accounting standard regarding the presentation of the non-service component of company-sponsored pension plan costs. 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. Revenue Recognition Sales The Company recognizes revenues from the retail sale of products, net of sales taxes, at the point of sale. Pharmacy sales are recorded when the product is provided to the customer. Digital channel originated sales are recognized either upon pickup in store or upon delivery to the customer and may include shipping revenue. Discounts provided to customers by the Company at the time of sale, including those provided in connection with loyalty cards, are recognized as a reduction in sales as the products are sold. Discounts provided by vendors, usually in the form of paper coupons, are not recognized as a reduction in sales provided the coupons are redeemable at any retailer that accepts coupons. The Company records a receivable from the vendor for the difference in sales price and cash received. For merchandise sold in one of our stores or online, tender is accepted at the point of sale. Certain pharmacy fees previously recorded as merchandise costs have been reclassified to be recorded as a reduction of sales. Effective February 4, 2018, the Company prospectively reclassified $61 of these pharmacy fees from merchandise costs to sales on the Company’s Consolidated Statements of Operations. For pharmacy sales, collection of third party receivables is typically expected within three months or less from the time of purchase. The third party receivables from pharmacy sales are recorded in Receivables in the Company’s Consolidated Balance Sheets and were $635 as of May 26, 2018 and $571 as of February 3, 2018. Gift Cards and Gift Certificates The Company does not recognize a sale when it sells its own gift cards and gift certificates. Rather, it records a deferred revenue liability equal to the amount received. A sale is then recognized when the gift card or gift certificate is redeemed to purchase the Company’s products. The Company’s gift cards and gift certificates do not expire. While gift cards and gift certificates are generally redeemed within 12 months, some are never fully redeemed. The Company recognizes gift card and gift certificate breakage under the proportional method, where recognition of breakage income is based upon the historical run-off rate of unredeemed gift cards and gift certificates. The Company’s gift card and gift certificate deferred revenue liability was $72 as of May 26, 2018 and $90 as of February 3, 2018. Disaggregated Revenues The following table presents sales revenue by type of product for the first quarters of 2018 and 2017: First Quarter Ended First Quarter Ended May 26, 2018 May 20, 2017 Amount % of total Amount % of total Non Perishable (1) $ 18,289 48.7 % $ 17,927 49.4 % Fresh (2) 9,083 24.2 % 8,775 24.2 % Supermarket Fuel 4,560 12.2 % 3,817 10.5 % Pharmacy 3,236 8.6 % 3,198 8.8 % Convenience Stores 944 2.5 % 1,311 3.6 % Other (3) 1,418 3.8 % 1,257 3.5 % Total Sales and other revenue $ 37,530 100 % $ 36,285 100 % (1) Consists primarily of grocery, general merchandise, health and beauty care and natural foods. (2) Consists primarily of produce, floral, meat, seafood, deli, bakery and fresh prepared. (3) Consists primarily of sales related to jewelry stores, food production plants to outside vendors, data analytic services, variable interest entities, specialty pharmacy, in-store health clinics, digital coupon services and other online sales not included in the categories above. |
DEBT OBLIGATIONS
DEBT OBLIGATIONS | 4 Months Ended |
May 26, 2018 | |
DEBT OBLIGATIONS | |
DEBT OBLIGATIONS | 2. Long-term debt consists of: May 26, February 3, 2018 2018 1.50% to 8.00% Senior Notes due through 2048 $ 12,005 $ 12,201 5.63% to 12.75% Mortgages due in varying amounts through 2027 22 22 1.68% Commercial paper borrowings — 2,121 2.82% Term Loan due 2019 1,000 — Other 450 443 Total debt, excluding capital leases and financing obligations 13,477 14,787 Less current portion (2,189) (3,509) Total long-term debt, excluding capital leases and financing obligations $ 11,288 $ 11,278 On March 16, 2018, the Company obtained a $1,000 term loan with a maturity date of March 16, 2019. The funds were drawn on March 26, 2018 and were used to reduce outstanding commercial paper borrowings. Under the terms of the agreement, interest rates are adjusted monthly based on the Company’s Public Debt Rating and prevailing LIBOR rates. Additionally, in the first quarter of 2018, the Company repaid, upon maturity, $200 of senior notes bearing an interest rate of 7%. 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 May 26, 2018 and February 3, 2018. At May 26, 2018, the fair value of total debt was $13,509 compared to a carrying value of $13,477. At February 3, 2018, the fair value of total debt was $15,167 compared to a carrying value of $14,787. |
BENEFIT PLANS
BENEFIT PLANS | 4 Months Ended |
May 26, 2018 | |
BENEFIT PLANS | |
BENEFIT PLANS | 3. 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 quarters of 2018 and 2017. First Quarter Ended Pension Benefits Other Benefits May 26, May 20, May 26, May 20, 2018 2017 2018 2017 Components of net periodic benefit cost: Service cost $ 15 $ 24 $ 2 $ 3 Interest cost 43 56 2 3 Expected return on plan assets (54) (73) — — Amortization of: Prior service cost — — (3) (2) Actuarial loss (gain) 25 26 (3) (3) Curtailment — 2 — — Net periodic benefit cost $ 29 $ 35 $ (2) $ 1 The Company is not required to make any contributions to its Company-sponsored pension plans in 2018, 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 quarter of 2018 or 2017. The Company contributed $89 and $73 to employee 401(k) retirement savings accounts in the first quarter of 2018 and 2017, 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 quarter of 2017, the Company incurred a charge of $199, $126 net of tax, due to withdrawing from two multi-employer pension plans, which were substantially settled in the fourth quarter of 2017. The charge was recorded in the ‘Operating, general and administrative’ (“OG&A”) caption in the Consolidated Statements of Operations. |
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE | 4 Months Ended |
May 26, 2018 | |
EARNINGS PER COMMON SHARE | |
EARNINGS PER COMMON SHARE | 4. 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: First Quarter Ended First Quarter Ended May 26, 2018 May 20, 2017 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 $ 2,005 839 $ 2.39 $ 301 914 $ 0.33 Dilutive effect of stock options 7 11 Net earnings attributable to The Kroger Co. per diluted common share $ 2,005 846 $ 2.37 $ 301 925 $ 0.32 The Company had combined undistributed and distributed earnings to participating securities totaling $21 in the first quarter of 2018 and $2 in the first quarter of 2017. The Company had options outstanding for approximately 17 and 9 shares during the first quarter of 2018 and 2017, 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 | 4 Months Ended |
May 26, 2018 | |
RECENTLY ADOPTED ACCOUNTING STANDARDS | |
RECENTLY ADOPTED ACCOUNTING STANDARDS | 5. On February 4, 2018, the Company adopted the Financial Accounting Standards Board's ("FASB") Accounting Standards Update ("ASU") No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” which superseded previous revenue recognition guidance. Topic 606 is a comprehensive new revenue recognition model that requires a company to recognize revenue when goods and services are transferred to the customer in an amount that is proportionate to what has been delivered at that point and that reflects the consideration to which the company expects to be entitled for those goods or services. The Company adopted the standard using a modified retrospective approach with the adoption primarily involving the evaluation of whether the Company acts as principal or agent in certain vendor arrangements where the purchase and sale of inventory are virtually simultaneous. The Company will continue to record revenue and related costs on a gross basis for the arrangements. The adoption of the standard did not have a material effect on the Company’s Consolidated Statements of Operations, Consolidated Balance Sheets or Consolidated Statements of Cash Flows. In March 2017, the FASB issued ASU "Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASU 2017-07).” ASU 2017-07 requires an employer to report the service cost component of retiree benefits in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented separately from the service cost component and outside a subtotal of income from operations. The Company adopted ASU 2017-07 on February 4, 2018 and retrospectively applied it to all periods presented. As a result, retiree benefit plan interest expense, investment returns, settlements and other non-service cost components of retiree benefit expenses are excluded from the Company’s operating profit subtotal as reported in the Company’s Consolidated Statements of Operations, but remain included in net earnings before income tax expense. Due to the adoption, the Company reclassified $9 of non-service company-sponsored pension plan costs from operating profit to other income (expense) on the Company’s Consolidated Statements of Operations. Information about retiree benefit plans' interest expense, investment returns and other components of retiree benefit expenses can be found in Note 3 to the Company’s Consolidated Financial Statements. In January 2016, the FASB issued “Financial Instruments–Overall (Topic 825),” which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments (ASU 2016-01). The Company adopted this ASU on February 4, 2018. As a result of the adoption, the Company recorded a mark to market gain on the Ocado securities, for those securities the Company owned as of the end of the first quarter of 2018, within the Consolidated Statements of Operations as opposed to a component of Other Comprehensive Income on the Company’s Consolidated Statements of Comprehensive Income. |
RECENTLY ISSUED ACCOUNTING STAN
RECENTLY ISSUED ACCOUNTING STANDARDS | 4 Months Ended |
May 26, 2018 | |
RECENTLY ISSUED ACCOUNTING STANDARDS | |
RECENTLY ISSUED ACCOUNTING STANDARDS | 6. In February 2016, the FASB issued ASU 2016-02, “Leases,” which provides guidance for the recognition of lease agreements. The standard’s core principle is that a company will now recognize most leases on its balance sheet as lease liabilities with corresponding right-of-use assets. This guidance will be effective for the Company in the first quarter of fiscal year ending February 1, 2020. Early adoption is permitted. The adoption of this ASU will result in a material increase to the Company’s Consolidated Balance Sheets for lease liabilities and right-of-use assets, and the Company is currently evaluating the other effects of adoption of this ASU on the Company’s Consolidated Financial Statements. This evaluation process includes reviewing all forms of leases, performing a completeness assessment over the lease population, analyzing the practical expedients and assessing opportunities to make certain changes to the Company’s lease accounting information technology system in order to determine the best implementation strategy . In February 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income.” ASU 2018-02 amends ASC 220, “Income Statement - Reporting Comprehensive Income,” to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. In addition, under the ASU 2018-02, the Company may be required to provide certain disclosures regarding stranded tax effects. ASU 2018-02 is effective for years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the effect of the standard on its Consolidated Financial Statements. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 4 Months Ended |
May 26, 2018 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 7. 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) | 4 Months Ended |
May 26, 2018 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 8. The following table represents the changes in AOCI by component for the first quarters of 2018 and 2017: Pension and Cash Flow Postretirement Hedging Available for sale Defined Benefit Activities(1) Securities(1) Plans(1) Total(1) Balance at January 28, 2017 $ (2) $ — $ (713) $ (715) OCI before reclassifications (2) (36) — — (36) Amounts reclassified out of AOCI (3) — — 13 13 Net current-period OCI (36) — 13 (23) Balance at May 20, 2017 $ (38) $ — $ (700) $ (738) Balance at February 3, 2018 $ 24 $ 4 $ (499) $ (471) OCI before reclassifications (2) 4 (4) — — Amounts reclassified out of AOCI (3) 1 — 15 16 Net current-period OCI 5 (4) 15 16 Balance at May 26, 2018 $ 29 $ — $ (484) $ (455) (1) All amounts are net of tax. (2) Net of tax of $(21) for cash flow hedging activities for the first quarter of 2017. Net of tax of $1 for cash flow hedging activities and $(1) for available for sale securities for the first quarter of 2018. (3) Net of tax of $8 for pension and postretirement defined benefit plans for the first quarter of 2017. Net of tax of $1 for cash flow hedging activities and $ 4 for pension and postretirement defined benefit plans for the first quarter of 2018. The following table represents the items reclassified out of AOCI and the related tax effects for the first quarters of 2018 and 2017: First Quarter Ended May 26, May 20, 2018 2017 Cash flow hedging activity items Amortization of gains and losses on cash flow hedging activities (1) $ 2 $ — Tax expense (1) — Net of tax 1 — Pension and postretirement defined benefit plan items Amortization of amounts included in net periodic pension expense (2) 19 21 Tax expense (4) (8) Net of tax 15 13 Total reclassifications, net of tax $ 16 $ 13 (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 expense (see Note 3 for additional details). |
INCOME TAXES
INCOME TAXES | 4 Months Ended |
May 26, 2018 | |
INCOME TAXES | |
INCOME TAXES | 9. The effective income tax rate was 23.4% and 33.3% for the first quarter of 2018 and 2017, respectively. The effective income tax rate for the first quarter of 2018 differed from the federal statutory rate due to the effect of state income taxes, partially offset by the utilization of tax credits and deductions. The effective income tax rate for the first quarter of 2017 differed from the federal statutory rate due to the utilization of tax credits and deductions partially offset by the effect of state income taxes. The rate for the first quarter of 2018 is lower than the rate for the first quarter of 2017 primarily due to a reduction in the federal statutory rate enacted by the Tax Cuts and Jobs Act. |
HELD FOR SALE AND DISPOSAL OF B
HELD FOR SALE AND DISPOSAL OF BUSINESS | 4 Months Ended |
May 26, 2018 | |
HELD FOR SALE AND DISPOSAL OF BUSINESS | |
HELD FOR SALE AND DISPOSAL OF BUSINESS | 10. Certain assets and liabilities, primarily those related to the Company’s convenience store business unit, were classified as held for sale in the Consolidated Balance Sheets beginning in the third quarter of 2017. On April 20, 2018, the Company completed the sale of its convenience store business unit for $2,150. The Company recognized a net gain on this sale for $1,771, $1,352 net of tax. The Company used the proceeds from the sale of the convenience store business unit to pay down outstanding commercial paper borrowings and fund an accelerated stock repurchase (“ASR”) program. The Company entered and funded a $1,200 ASR program on April 20, 2018. $1,100 of the ASR program settled during the first quarter of 2018 and the Company expects the remaining repurchases under the ASR program to be completed no later than July 6, 2018. |
PARTNERSHIP AND MERGER AGREEMEN
PARTNERSHIP AND MERGER AGREEMENT | 4 Months Ended |
May 26, 2018 | |
PARTNERSHIP AND MERGER AGREEMENTS | |
PARTNERSHIP AND MERGER AGREEMENTS | 11. On May 17, 2018, the Company entered into a Partnership Framework Agreement with Ocado International Holdings Limited and Ocado Group plc (“Ocado”). Under this agreement, Ocado will partner exclusively with the Company in the U.S., enhancing the Company’s digital and robotics capabilities. As part of the agreement, the Company has committed to contract with Ocado to build a number of fulfilment centers through 2022. In addition, on May 17, 2018, the Company entered into a Share Subscription Agreement with Ocado, pursuant to which the Company agreed to purchase 33.1 ordinary shares of Ocado for an aggregate purchase price of $243. The Company completed the purchase of these 33.1 shares on May 29, 2018. On June 22, 2018, the Company finalized the merger with Home Chef. The initial transaction price is $200 and future earnout payments of up to $500 over five years that are contingent on achieving certain milestones. The major classes of assets and liabilities of Home Chef are expected to be net working capital, property, intangible assets (amortizable and non-amortizable) and goodwill. |
ACCOUNTING POLICIES (Policies)
ACCOUNTING POLICIES (Policies) | 4 Months Ended |
May 26, 2018 | |
ACCOUNTING POLICIES | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The accompanying financial statements include the consolidated accounts of The Kroger Co., its wholly-owned subsidiaries, and the variable interest entities in which the Company is the primary beneficiary. The February 3, 2018 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 3, 2018. The unaudited information in the Consolidated Financial Statements for the first quarters ended May 26, 2018 and May 20, 2017, includes the results of operations of the Company for the 16 -week periods then ended. Refer to Note 5 for a description of changes to the Consolidated Statements of Operations for a recently adopted accounting standard regarding the presentation of the non-service component of company-sponsored pension plan costs. |
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. |
Revenue Recognition | Revenue Recognition Sales The Company recognizes revenues from the retail sale of products, net of sales taxes, at the point of sale. Pharmacy sales are recorded when the product is provided to the customer. Digital channel originated sales are recognized either upon pickup in store or upon delivery to the customer and may include shipping revenue. Discounts provided to customers by the Company at the time of sale, including those provided in connection with loyalty cards, are recognized as a reduction in sales as the products are sold. Discounts provided by vendors, usually in the form of paper coupons, are not recognized as a reduction in sales provided the coupons are redeemable at any retailer that accepts coupons. The Company records a receivable from the vendor for the difference in sales price and cash received. For merchandise sold in one of our stores or online, tender is accepted at the point of sale. Certain pharmacy fees previously recorded as merchandise costs have been reclassified to be recorded as a reduction of sales. Effective February 4, 2018, the Company prospectively reclassified $61 of these pharmacy fees from merchandise costs to sales on the Company’s Consolidated Statements of Operations. For pharmacy sales, collection of third party receivables is typically expected within three months or less from the time of purchase. The third party receivables from pharmacy sales are recorded in Receivables in the Company’s Consolidated Balance Sheets and were $635 as of May 26, 2018 and $571 as of February 3, 2018. Gift Cards and Gift Certificates The Company does not recognize a sale when it sells its own gift cards and gift certificates. Rather, it records a deferred revenue liability equal to the amount received. A sale is then recognized when the gift card or gift certificate is redeemed to purchase the Company’s products. The Company’s gift cards and gift certificates do not expire. While gift cards and gift certificates are generally redeemed within 12 months, some are never fully redeemed. The Company recognizes gift card and gift certificate breakage under the proportional method, where recognition of breakage income is based upon the historical run-off rate of unredeemed gift cards and gift certificates. The Company’s gift card and gift certificate deferred revenue liability was $72 as of May 26, 2018 and $90 as of February 3, 2018. Disaggregated Revenues The following table presents sales revenue by type of product for the first quarters of 2018 and 2017: First Quarter Ended First Quarter Ended May 26, 2018 May 20, 2017 Amount % of total Amount % of total Non Perishable (1) $ 18,289 48.7 % $ 17,927 49.4 % Fresh (2) 9,083 24.2 % 8,775 24.2 % Supermarket Fuel 4,560 12.2 % 3,817 10.5 % Pharmacy 3,236 8.6 % 3,198 8.8 % Convenience Stores 944 2.5 % 1,311 3.6 % Other (3) 1,418 3.8 % 1,257 3.5 % Total Sales and other revenue $ 37,530 100 % $ 36,285 100 % (1) Consists primarily of grocery, general merchandise, health and beauty care and natural foods. (2) Consists primarily of produce, floral, meat, seafood, deli, bakery and fresh prepared. (3) Consists primarily of sales related to jewelry stores, food production plants to outside vendors, data analytic services, variable interest entities, specialty pharmacy, in-store health clinics, digital coupon services and other online sales not included in the categories above. |
ACCOUNTING POLICIES (Tables)
ACCOUNTING POLICIES (Tables) | 4 Months Ended |
May 26, 2018 | |
ACCOUNTING POLICIES | |
Schedule of sales revenue by type of product | First Quarter Ended First Quarter Ended May 26, 2018 May 20, 2017 Amount % of total Amount % of total Non Perishable (1) $ 18,289 48.7 % $ 17,927 49.4 % Fresh (2) 9,083 24.2 % 8,775 24.2 % Supermarket Fuel 4,560 12.2 % 3,817 10.5 % Pharmacy 3,236 8.6 % 3,198 8.8 % Convenience Stores 944 2.5 % 1,311 3.6 % Other (3) 1,418 3.8 % 1,257 3.5 % Total Sales and other revenue $ 37,530 100 % $ 36,285 100 % (1) Consists primarily of grocery, general merchandise, health and beauty care and natural foods. (2) Consists primarily of produce, floral, meat, seafood, deli, bakery and fresh prepared. (3) Consists primarily of sales related to jewelry stores, food production plants to outside vendors, data analytic services, variable interest entities, specialty pharmacy, in-store health clinics, digital coupon services and other online sales not included in the categories above. |
DEBT OBLIGATIONS (Tables)
DEBT OBLIGATIONS (Tables) | 4 Months Ended |
May 26, 2018 | |
DEBT OBLIGATIONS | |
Schedule of long-term debt | May 26, February 3, 2018 2018 1.50% to 8.00% Senior Notes due through 2048 $ 12,005 $ 12,201 5.63% to 12.75% Mortgages due in varying amounts through 2027 22 22 1.68% Commercial paper borrowings — 2,121 2.82% Term Loan due 2019 1,000 — Other 450 443 Total debt, excluding capital leases and financing obligations 13,477 14,787 Less current portion (2,189) (3,509) Total long-term debt, excluding capital leases and financing obligations $ 11,288 $ 11,278 |
BENEFIT PLANS (Tables)
BENEFIT PLANS (Tables) | 4 Months Ended |
May 26, 2018 | |
BENEFIT PLANS | |
Schedule of components of net periodic benefit cost | First Quarter Ended Pension Benefits Other Benefits May 26, May 20, May 26, May 20, 2018 2017 2018 2017 Components of net periodic benefit cost: Service cost $ 15 $ 24 $ 2 $ 3 Interest cost 43 56 2 3 Expected return on plan assets (54) (73) — — Amortization of: Prior service cost — — (3) (2) Actuarial loss (gain) 25 26 (3) (3) Curtailment — 2 — — Net periodic benefit cost $ 29 $ 35 $ (2) $ 1 |
EARNINGS PER COMMON SHARE (Tabl
EARNINGS PER COMMON SHARE (Tables) | 4 Months Ended |
May 26, 2018 | |
EARNINGS PER COMMON SHARE | |
Schedule of earnings per common and diluted shares | First Quarter Ended First Quarter Ended May 26, 2018 May 20, 2017 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 $ 2,005 839 $ 2.39 $ 301 914 $ 0.33 Dilutive effect of stock options 7 11 Net earnings attributable to The Kroger Co. per diluted common share $ 2,005 846 $ 2.37 $ 301 925 $ 0.32 |
ACCUMULATED OTHER COMPREHENSI26
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 4 Months Ended |
May 26, 2018 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |
Schedule of changes in AOCI by component | Pension and Cash Flow Postretirement Hedging Available for sale Defined Benefit Activities(1) Securities(1) Plans(1) Total(1) Balance at January 28, 2017 $ (2) $ — $ (713) $ (715) OCI before reclassifications (2) (36) — — (36) Amounts reclassified out of AOCI (3) — — 13 13 Net current-period OCI (36) — 13 (23) Balance at May 20, 2017 $ (38) $ — $ (700) $ (738) Balance at February 3, 2018 $ 24 $ 4 $ (499) $ (471) OCI before reclassifications (2) 4 (4) — — Amounts reclassified out of AOCI (3) 1 — 15 16 Net current-period OCI 5 (4) 15 16 Balance at May 26, 2018 $ 29 $ — $ (484) $ (455) (1) All amounts are net of tax. (2) Net of tax of $(21) for cash flow hedging activities for the first quarter of 2017. Net of tax of $1 for cash flow hedging activities and $(1) for available for sale securities for the first quarter of 2018. (3) Net of tax of $8 for pension and postretirement defined benefit plans for the first quarter of 2017. Net of tax of $1 for cash flow hedging activities and $ 4 for pension and postretirement defined benefit plans for the first quarter of 2018. |
Schedule of items reclassified out of AOCI and the related tax effects | First Quarter Ended May 26, May 20, 2018 2017 Cash flow hedging activity items Amortization of gains and losses on cash flow hedging activities (1) $ 2 $ — Tax expense (1) — Net of tax 1 — Pension and postretirement defined benefit plan items Amortization of amounts included in net periodic pension expense (2) 19 21 Tax expense (4) (8) Net of tax 15 13 Total reclassifications, net of tax $ 16 $ 13 (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 expense (see Note 3 for additional details). |
ACCOUNTING POLICIES - POLICIES
ACCOUNTING POLICIES - POLICIES (Details) | 4 Months Ended | |
May 26, 2018 | May 20, 2017 | |
Fiscal Year | ||
Length of fiscal period | 112 days | 112 days |
ACCOUNTING POLICIES - Revenue R
ACCOUNTING POLICIES - Revenue Recognition (Details) - USD ($) $ in Millions | Feb. 04, 2018 | May 26, 2018 | May 20, 2017 | Feb. 03, 2018 |
Disaggregation of revenue | ||||
Receivables | $ 1,583 | $ 1,637 | ||
Typical period for redemption of gift certificates | 12 months | |||
Gift card and gift certificate deferred revenue liability | $ 72 | $ 90 | ||
Total Sales and other revenue | $ 37,530 | $ 36,285 | ||
Percentage of total sales | 100.00% | 100.00% | ||
Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below | $ 29,362 | $ 28,281 | ||
Non Perishable | ||||
Disaggregation of revenue | ||||
Total Sales and other revenue | $ 18,289 | $ 17,927 | ||
Percentage of total sales | 48.70% | 49.40% | ||
Fresh | ||||
Disaggregation of revenue | ||||
Total Sales and other revenue | $ 9,083 | $ 8,775 | ||
Percentage of total sales | 24.20% | 24.20% | ||
Supermarket Fuel | ||||
Disaggregation of revenue | ||||
Total Sales and other revenue | $ 4,560 | $ 3,817 | ||
Percentage of total sales | 12.20% | 10.50% | ||
Pharmacy | ||||
Disaggregation of revenue | ||||
Typical period for collection of third party receivables | 3 months | |||
Receivables | $ 635 | $ 571 | ||
Total Sales and other revenue | $ 3,236 | $ 3,198 | ||
Percentage of total sales | 8.60% | 8.80% | ||
Pharmacy | Adjustment | ||||
Disaggregation of revenue | ||||
Total Sales and other revenue | $ (61) | |||
Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below | $ (61) | |||
Convenience Stores | ||||
Disaggregation of revenue | ||||
Total Sales and other revenue | $ 944 | $ 1,311 | ||
Percentage of total sales | 2.50% | 3.60% | ||
Other | ||||
Disaggregation of revenue | ||||
Total Sales and other revenue | $ 1,418 | $ 1,257 | ||
Percentage of total sales | 3.80% | 3.50% |
DEBT OBLIGATIONS (Details)
DEBT OBLIGATIONS (Details) - USD ($) $ in Millions | 4 Months Ended | ||
May 26, 2018 | Mar. 16, 2018 | Feb. 03, 2018 | |
Debt | |||
Total debt, excluding capital leases and financing obligations | $ 13,477 | $ 14,787 | |
Less current portion | (2,189) | (3,509) | |
Total long-term debt, excluding capital leases and financing obligations | 11,288 | 11,278 | |
Fair value of total debt | 13,509 | 15,167 | |
Senior Notes due through 2048 | |||
Debt | |||
Total debt, excluding capital leases and financing obligations | $ 12,005 | 12,201 | |
Senior Notes due through 2048 | Minimum | |||
Debt | |||
Interest rate (as a percent) | 1.50% | ||
Senior Notes due through 2048 | Maximum | |||
Debt | |||
Interest rate (as a percent) | 8.00% | ||
7% Senior Notes | |||
Debt | |||
Repayment of debt | $ 200 | ||
Interest rate (as a percent) | 7.00% | ||
Mortgages due in varying amounts through 2027 | |||
Debt | |||
Total debt, excluding capital leases and financing obligations | $ 22 | 22 | |
Mortgages due in varying amounts through 2027 | Minimum | |||
Debt | |||
Interest rate (as a percent) | 5.63% | ||
Mortgages due in varying amounts through 2027 | Maximum | |||
Debt | |||
Interest rate (as a percent) | 12.75% | ||
Commercial paper borrowings | |||
Debt | |||
Total debt, excluding capital leases and financing obligations | $ 2,121 | ||
Interest rate (as a percent) | 1.68% | ||
Term Loan due 2019 | |||
Debt | |||
Total debt, excluding capital leases and financing obligations | $ 1,000 | ||
Interest rate (as a percent) | 2.82% | ||
Debt face amount | $ 1,000 | ||
Other | |||
Debt | |||
Total debt, excluding capital leases and financing obligations | $ 450 | $ 443 |
BENEFIT PLANS - COMPONENTS OF N
BENEFIT PLANS - COMPONENTS OF NET PERIODIC BENEFIT COSTS (Details) - USD ($) $ in Millions | 4 Months Ended | |
May 26, 2018 | May 20, 2017 | |
Pension Benefits | ||
Components of net periodic benefit cost: | ||
Service cost | $ 15 | $ 24 |
Interest cost | 43 | 56 |
Expected return on plan assets | (54) | (73) |
Amortization of: | ||
Actuarial loss (gain) | 25 | 26 |
Curtailment | 2 | |
Net periodic benefit cost | 29 | 35 |
Other Benefits | ||
Components of net periodic benefit cost: | ||
Service cost | 2 | 3 |
Interest cost | 2 | 3 |
Amortization of: | ||
Prior service cost | (3) | (2) |
Actuarial loss (gain) | (3) | (3) |
Net periodic benefit cost | $ (2) | $ 1 |
BENEFIT PLANS - DEFINED CONTRIB
BENEFIT PLANS - DEFINED CONTRIBUTION PLAN INFORMATION (Details) - USD ($) $ in Millions | 4 Months Ended | |
May 26, 2018 | May 20, 2017 | |
BENEFIT PLANS | ||
Contribution to 401(k) retirement savings accounts | $ 89 | $ 73 |
BENEFIT PLANS - MULTI EMPLOYER
BENEFIT PLANS - MULTI EMPLOYER PENSION PLAN OBLIGATIONS (Details) - Multi-employer pension funds $ in Millions | 4 Months Ended |
May 20, 2017USD ($)item | |
Multiemployer Plans | |
Charge (before-tax) related to pension plan agreements | $ 199 |
Charge (after-tax) related to pension plan agreements | $ 126 |
Number of multi-employer pension plans withdrawn | item | 2 |
EARNINGS PER COMMON SHARE (Deta
EARNINGS PER COMMON SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 4 Months Ended | |
May 26, 2018 | May 20, 2017 | |
EARNINGS PER COMMON SHARE | ||
Net earnings numerator | $ 2,005 | $ 301 |
Average number of common shares used in basic calculation | 839 | 914 |
Net earnings attributable to The Kroger Co. per basic common share | $ 2.39 | $ 0.33 |
Dilutive effect of stock options (in shares) | 7 | 11 |
Average number of common shares used in diluted calculation | 846 | 925 |
Net earnings attributable to The Kroger Co. per diluted common share | $ 2.37 | $ 0.32 |
Undistributed and distributed earnings to participating securities | $ 21 | $ 2 |
Shares excluded from the earnings per share calculation due to anti-dilutive effect on earnings per share | 17 | 9 |
RECENTLY ADOPTED ACCOUNTING S34
RECENTLY ADOPTED ACCOUNTING STANDARDS (Details) - USD ($) $ in Millions | 4 Months Ended | |
May 26, 2018 | May 20, 2017 | |
Recently adopted accounting standards | ||
Operating profit | $ 1,029 | $ 631 |
ASU 2017-07 | Adjustment | ||
Recently adopted accounting standards | ||
Operating profit | 9 | |
Other income (expense) | $ (9) |
ACCUMULATED OTHER COMPREHENSI35
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - CHANGES IN AOCI BY COMPONENT (Details) - USD ($) $ in Millions | 4 Months Ended | |
May 26, 2018 | May 20, 2017 | |
Accumulated other comprehensive income (loss) | ||
Balance at the beginning of the period | $ 6,931 | |
Amounts reclassified out of AOCI | 16 | $ 13 |
Total other comprehensive income (loss) | 16 | (23) |
Balance at the end of the period | 6,970 | |
Accumulated Other Comprehensive Loss | ||
Accumulated other comprehensive income (loss) | ||
Balance at the beginning of the period | (471) | (715) |
OCI before reclassifications | (36) | |
Amounts reclassified out of AOCI | 16 | 13 |
Total other comprehensive income (loss) | 16 | (23) |
Balance at the end of the period | (455) | (738) |
Cash Flow Hedging Activities | ||
Accumulated other comprehensive income (loss) | ||
Balance at the beginning of the period | 24 | (2) |
OCI before reclassifications | 4 | (36) |
Amounts reclassified out of AOCI | 1 | |
Total other comprehensive income (loss) | 5 | (36) |
Balance at the end of the period | 29 | (38) |
OCI before reclassifications, tax | 1 | (21) |
Amounts reclassified out of AOCI, tax | 1 | |
Available for sale Securities | ||
Accumulated other comprehensive income (loss) | ||
Balance at the beginning of the period | 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 | (499) | (713) |
Amounts reclassified out of AOCI | 15 | 13 |
Total other comprehensive income (loss) | 15 | 13 |
Balance at the end of the period | (484) | (700) |
Amounts reclassified out of AOCI, tax | $ 4 | $ 8 |
ACCUMULATED OTHER COMPREHENSI36
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - ITEMS RECLASSIFIED OUT OF AOCI (Details) - USD ($) $ in Millions | 4 Months Ended | |
May 26, 2018 | May 20, 2017 | |
Reclassification out of AOCI and the related tax effects | ||
Amortization of gains and losses on cash flow hedging activities | $ 192 | $ 177 |
Tax expense | 616 | 148 |
Net of tax | (2,026) | (303) |
Total reclassifications, net of tax | 16 | 13 |
Cash Flow Hedging Activities | ||
Reclassification out of AOCI and the related tax effects | ||
Tax expense | (1) | |
Total reclassifications, net of tax | 1 | |
Pension and Postretirement Defined Benefit Plans | ||
Reclassification out of AOCI and the related tax effects | ||
Amortization of amounts included in net periodic pension expense | 19 | 21 |
Tax expense | (4) | (8) |
Total reclassifications, net of tax | 15 | $ 13 |
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 | |
Tax expense | (1) | |
Net of tax | $ 1 |
INCOME TAXES - EFFECTIVE INCOME
INCOME TAXES - EFFECTIVE INCOME TAX RATE (Details) | 4 Months Ended | |
May 26, 2018 | May 20, 2017 | |
INCOME TAXES | ||
Effective income tax rate (as a percent) | 23.40% | 33.30% |
HELD FOR SALE AND DISPOSAL OF38
HELD FOR SALE AND DISPOSAL OF BUSINESS (Details) - USD ($) $ in Millions | Apr. 20, 2018 | May 26, 2018 |
HELD FOR SALE | ||
Gain on sale of business | $ 1,771 | |
ASR | ||
HELD FOR SALE | ||
Share repurchase authorized amount | $ 1,200 | |
Amount of shares settled | $ 1,100 | |
Convenience Store Business | Disposal Group, Held-for-sale, Not Discontinued Operations | ||
HELD FOR SALE | ||
Consideration for sale of convenience store business | 2,150 | |
Gain on sale of business | 1,771 | |
Gain on sale of business, net of tax | $ 1,352 |
PARTNERSHIP AND MERGER AGREEM39
PARTNERSHIP AND MERGER AGREEMENTS - Share Subscription (Details) - Share Subscription Agreement - Ocado shares in Millions, $ in Millions | May 29, 2018USD ($)shares |
Arrangement | |
Number of ordinary shares to be purchased | shares | 33.1 |
Aggregate purchase price | $ | $ 243 |
PARTNERSHIP AND MERGER AGREEM40
PARTNERSHIP AND MERGER AGREEMENTS - Merger (Details) - Home Chef $ in Millions | Jun. 22, 2018USD ($) |
MERGERS | |
Initial transaction price | $ 200 |
Future earnout payments | $ 500 |
Future earnout period | 5 years |