Kroger 2010 Annual Report Download - page 104

A-24
As of January 29, 2011, we maintained a $2 billion, unsecured revolving credit facility that, unless
extended, terminates on May 15, 2014. Outstanding borrowings under the credit agreement and commercial
paper borrowings, and some outstanding letters of credit, reduce funds available under the credit agreement.
In addition to the credit agreement, we maintained three uncommitted money market lines totaling $100
million in the aggregate. The money market lines allow us to borrow from banks at mutually agreed upon
rates, usually at rates below the rates offered under the credit agreement. As of January 29, 2011, we had
no borrowings under our credit agreement, money market lines or outstanding commercial paper. The
outstanding letters of credit that reduce funds available under our credit agreement totaled $134 million
as of January 29, 2011.
In addition to the available credit mentioned above, as of January 29, 2011, we had authorized for
issuance $2 billion of securities under a shelf registration statement filed with the SEC and effective on
December 15, 2010.
We also maintain surety bonds related primarily to our self-insured workers compensation claims.
These bonds are required by most states in which we are self-insured for workers’ compensation and are
placed with third-party insurance providers to insure payment of our obligations in the event we are unable
to meet our claim payment obligations up to our self-insured retention levels. These bonds do not represent
liabilities of Kroger, as we already have reserves on our books for the claims costs. Market changes may
make the surety bonds more costly and, in some instances, availability of these bonds may become more
limited, which could affect our costs of, or access to, such bonds. Although we do not believe increased
costs or decreased availability would significantly affect our ability to access these surety bonds, if this
does become an issue, we would issue letters of credit, in states where allowed, against our credit facility to
meet the state bonding requirements. This could increase our cost and decrease the funds available under
our credit facility.
We have guaranteed half of the indebtedness of two real estate entities in which we have a 50%
ownership interest. Our share of the responsibility for this indebtedness, should the entities be unable to
meet their obligations, totals approximately $7 million. Based on the covenants underlying this indebtedness
as of January 29, 2011, we believe that it is unlikely that we will be responsible for repayment of these
obligations.
We also are contingently liable for leases that have been assigned to various third parties in connection
with facility closings and dispositions. We could be required to satisfy obligations under the leases if any of
the assignees are unable to fulfill their lease obligations. Due to the wide distribution of our assignments
among third parties, and various other remedies available to us, we believe the likelihood that we will be
required to assume a material amount of these obligations is remote. We have agreed to indemnify certain
third-party logistics operators for certain expenses, including pension trust fund contribution obligations
and withdrawal liabilities.
In addition to the above, we enter into various indemnification agreements and take on indemnification
obligations in the ordinary course of business. Such arrangements include indemnities against third party
claims arising out of agreements to provide services to Kroger; indemnities related to the sale of our
securities; indemnities of directors, officers and employees in connection with the performance of their
work; and indemnities of individuals serving as fiduciaries on benefit plans. While Kroger’s aggregate
indemnification obligation could result in a material liability, we are not aware of any current matter that
could result in a material liability.