Kroger 2010 Annual Report Download - page 132

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A-52
NO T E S T O CO N S O L I D A T E D FI N A N C I A L ST A T E M E N T S , CO N T I N U E D
Cash Flow Forward-Starting Interest Rate Swaps
As of January 29, 2011 and January 30, 2010, the Company did not maintain any forward-starting
interest rate swap derivatives.
The Company has unamortized net payments from three forward-starting interest rate swaps once
classified as cash flow hedges totaling approximately $8 ($5 net of tax). The unamortized proceeds and
payments from these terminated forward-starting interest rate swaps have been recorded net of tax in
other comprehensive income and will be amortized to earnings as the payments of interest to which the
hedges relate are made. As of January 29, 2011, the Company expects to reclassify an unrealized net loss of
$3 from AOCI to earnings over the next twelve months.
The following table summarizes the effect of the Company’s derivative instruments designated as
cash flow hedges for 2010 and 2009:
Year-To-Date
Derivatives in Cash Flow Hedging
Relationships
Amount of Gain/(Loss)
in AOCI on Derivative
(Effective Portion)
Amount of Gain/(Loss)
Reclassified from AOCI
into Income
(Effective Portion)
Location of Gain/
(Loss) Reclassified
into Income
(Effective Portion)2010 2009 2010 2009
Forward-Starting Interest Rate
Swaps, net of tax . . . . . . . . . . . . $(5) $(7) $(2) $(2) Interest expense
Commodity Price Protection
The Company enters into purchase commitments for various resources, including raw materials
utilized in its manufacturing facilities and energy to be used in its stores, warehouses, manufacturing
facilities and administrative offices. The Company enters into commitments expecting to take delivery
of and to utilize those resources in the conduct of normal business. Those commitments for which the
Company expects to utilize or take delivery in a reasonable amount of time in the normal course of business
qualify as normal purchases and normal sales.
7. FA I R VA L U E ME A S U R E M E N T S
In September 2006, the FASB issued new standards defining fair value, establishing a market-based
framework for measuring fair value and expanding disclosures about fair value measurements. The new
standards did not expand or require any new fair value measurements. The standards are effective for
financial assets and financial liabilities for fiscal years beginning after November 15, 2007. In February
2008, the FASB issued new standards deferring the effective date for most non-financial assets and non-
financial liabilities to fiscal years beginning after November 15, 2008. The Company adopted the new
standards issued in September 2006 for financial assets and financial liabilities effective February 3, 2008
and adopted the remaining provisions of the new standards for nonfinancial assets and nonfinancial
liabilities on February 1, 2009.