Kroger 2012 Annual Report Download - page 84

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February 2, 2013, we had $1.6 billion of borrowings of commercial paper and no borrowings under our credit
agreement and money market lines. The outstanding letters of credit that reduce funds available under our
credit agreement totaled $13 million as of February 2, 2013.
In addition to the available credit mentioned above, as of February 2, 2013, we had authorized for
issuance $700 million of securities under a shelf registration statement filed with the SEC and effective on
December 15, 2010. On January 18, 2013, the Board of Directors authorized for issuance additional securities
in the amount of $1.8 billion over and above the $700 million of securities available for issuance as of
February 2, 2013. Subsequent to year-end, we filed a Current Report on Form 8-K, on February 11, 2013,
incorporating by reference additional exhibits to the shelf registration statement including the Board of
Directors’ resolution.
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
predominately 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 $6 million. Based on the covenants underlying this indebtedness as of
February 2, 2013, 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.
OU T L O O K
This discussion and analysis contains certain forward-looking statements about Kroger’s future
performance. These statements are based on management’s assumptions and beliefs in light of the information
currently available. Such statements relate to, among other things: projected changes in net earnings
attributable to The Kroger Co.; identical supermarket sales growth; expected product cost; expected pension
plan contributions; our ability to generate operating cash flows; projected capital expenditures; square
footage growth; opportunities to reduce costs; cash flow requirements; and our operating plan for the future;
and are indicated by words such as “comfortable,” “committed,” “will,” “expect,” “goal,” “should,” “intend,”
“target,” “believe,” “anticipate,” “plan,” and similar words or phrases. These forward-looking statements are
subject to uncertainties and other factors that could cause actual results to differ materially.