Kroger 2013 Annual Report Download - page 117

A-44
NO T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S , CO N T I N U E D
Pending the finalization of the Company’s valuations and other items, the following table summarizes
the preliminary fair values of the assets acquired and liabilities assumed:
January 28,
2014
ASSETS
Cash and temporary cash investments .............................................. $ 92
Store deposits in-transit .......................................................... 28
Receivables.................................................................... 41
FIFO inventory................................................................. 426
Prepaid and other current assets................................................... 31
Total current assets ........................................................... 618
Property, plant and equipment .................................................... 1,328
Intangibles .................................................................... 558
Other assets ................................................................... 238
Total Assets, excluding Goodwill................................................. 2,742
LIABILITIES
Current portion of long-term debt including obligations under
capital leases and financing obligations........................................... (7)
Trade accounts payable .......................................................... (202)
Accrued salaries and wages ....................................................... (47)
Deferred income taxes........................................................... (20)
Other current liabilities .......................................................... (159)
Total current liabilities ........................................................ (435)
Fair-value of long-term debt including obligations under
capital leases and financing obligations........................................... (252)
Deferred income taxes........................................................... (285)
Pension and postretirement benefit obligations ....................................... (98)
Other long-term liabilities ........................................................ (137)
Total Liabilities .............................................................. (1,207)
Total Identifiable Net Assets .................................................... 1,535
Goodwill ..................................................................... 901
Total Purchase Price .......................................................... $ 2,436
Of the $558 allocated to intangible assets, $430 relates to the Harris Teeter trade name, to which we
assigned an indefinite life and, therefore, will not be amortized. The Company also recorded $53 and $75
related to pharmacy prescription files and favorable leasehold interests, respectively. The Company will
amortize the pharmacy prescription files and favorable leasehold interests over seven and 24 years, respectively.
The goodwill recorded as part of the merger was attributable to the assembled workforce of Harris Teeter
and operational synergies expected from the merger, as well as any intangible assets that do not qualify for
separate recognition. The transaction was treated as a stock purchase for income tax purposes. The assets
acquired and liabilities assumed as part of the merger did not result in a step up of the tax basis and goodwill
is not expected to be deductible for tax purposes. The above amounts represent the preliminary allocation of
the purchase price, and are subject to revision when the resulting valuations of property and intangible assets
are finalized, which will occur prior to January 28, 2015. Due to the timing of the merger closing late in the
year, the revenue and earnings of Harris Teeter in 2013 were not material.