Kroger 2011 Annual Report Download - page 66

Download and view the complete annual report

Please find page 66 of the 2011 Kroger annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 124

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124

A-11
CO M M O N SH A R E RE P U R C H A S E PR O G R A M
We maintain share repurchase programs that comply with Securities Exchange Act Rule 10b5-1 and
allow for the orderly repurchase of our common shares, from time to time. We made open market purchases
of Kroger common shares totaling $1.4 billion in 2011, $505 million in 2010 and $156 million in 2009 under
these repurchase programs. In addition to these repurchase programs, we also repurchase common shares to
reduce dilution resulting from our employee stock option plans. This program is solely funded by proceeds from
stock option exercises, and the tax benefit from these exercises. We repurchased approximately $127 million
in 2011, $40 million in 2010 and $62 million in 2009 of Kroger shares under the stock option program.
On March 3, 2011, the Board of Directors authorized a $1 billion share repurchase program. On
September 15, 2011, the Board of Directors authorized a new $1 billion share repurchase program that replaced
the share repurchase program authorized by the Board of Directors on March 3, 2011. As of January 28, 2012,
we had $475 million remaining on the September 15, 2011 $1 billion share repurchase program.
CA P I T A L EX P E N D I T U R E S
Capital expenditures, including changes in construction-in-progress payables and excluding acquisitions
and the purchase of leased facilities, totaled $1.9 billion in 2011 compared to $1.9 billion in 2010 and $2.2 billion
in 2009. The decrease in capital expenditures in 2010, compared to 2009, was due to Kroger reducing the
capital expenditures in our original plan in order to provide the cash flow necessary to execute our financial
strategy. Capital expenditures for the purchase of leased facilities totaled $60 million in 2011 compared to
$38 million for 2010 and $164 million for 2009. The increase in capital expenditures for the purchase of leased
facilities in 2011, compared to 2010, was due to Kroger purchasing several more previously leased retail stores
in 2011 compared to 2010. The decrease in capital expenditures for the purchase of leased facilities in 2010,
compared to 2009, was due to Kroger purchasing several more previously leased retail stores and one large
distribution center in 2009 compared to 2010. The table below shows our supermarket storing activity and
our total food store square footage:
Supermarket Storing Activity
2011 2010 2009
Beginning of year ............................................ 2,460 2,469 2,481
Opened .................................................... 10 14 14
Opened (relocation) .......................................... 12 6 9
Acquired ................................................... 64 1
Acquired (relocation) ......................................... 2— 1
Closed (operational) .......................................... (41) (27) (27)
Closed (relocation) ........................................... (14) (6) (10)
End of year ................................................. 2,435 2,460 2,469
Total food store square footage (in millions) ....................... 149 149 148
CR I T I C A L AC C O U N T I N G PO L I C I E S
We have chosen accounting policies that we believe are appropriate to report accurately and fairly our
operating results and financial position, and we apply those accounting policies in a consistent manner. Our
significant accounting policies are summarized in Note 1 to the Consolidated Financial Statements.
The preparation of financial statements in conformity with generally accepted accounting principles
(“GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities,
revenues, and expenses, and related disclosures of contingent assets and liabilities. We base our estimates
on historical experience and other factors we believe to be reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results could differ from those estimates.