Kroger 2010 Annual Report Download - page 134

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A-54
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
exit costs. In 2010, long-lived assets with a carrying amount of $37 were written down to their fair value
of $12, resulting in an impairment charge of $25. In 2009, long-lived assets with a carrying amount of $92
were written down to their fair value of $44, resulting in an impairment charge of $48.
In 2010, the Company recorded unrealized gains on its level 3 Available-for-Sale Securities in the
amount of $9.
FA I R VA L U E O F OT H E R FI N A N C I A L IN S T R U M E N T S
Current and Long-term Debt
The fair value of the Company’s long-term debt, including current maturities, was estimated based
on the quoted market price 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 respective year-ends. At January
29, 2011, the fair value of total debt was $8,191 compared to a carrying value of $7,434. At January 30, 2010,
the fair value of total debt was $8,283 compared to a carrying value of $7,576.
Cash and Temporary Cash Investments, Store Deposits In-Transit, Receivables, Prepaid and Other
Current Assets, Accounts Payable, Accrued Salaries and Wages and Other Current Liabilities
The carrying amounts of these items approximated fair value.
Long-term Investments
The fair values of these investments were estimated based on quoted market prices for those or
similar investments, or estimated cash flows, if appropriate. At January 29, 2011 and January 30, 2010, the
carrying and fair value of long-term investments for which fair value is determinable were $69 and $60,
respectively.
8. LE A S E S A N D LE A S E -FI N A N C E D TR A N S A C T I O N S
While the Company’s current strategy emphasizes ownership of store real estate, the Company
operates primarily in leased facilities. Lease terms generally range from 10 to 20 years with options to
renew for varying terms. Terms of certain leases include escalation clauses, percentage rent based on
sales or payment of executory costs such as property taxes, utilities or insurance and maintenance. Rent
expense for leases with escalation clauses or other lease concessions are accounted for on a straight-line
basis beginning with the earlier of the lease commencement date or the date the Company takes possession.
Portions of certain properties are subleased to others for periods generally ranging from one to 20 years.