Kroger 2013 Annual Report Download - page 118

A-45
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
Pro forma results of operations, assuming the transaction had taken place at the beginning of 2012,
are included in the following table. The pro forma information includes historical results of operations of
Harris Teeter and adjustments for interest expense that would have been incurred due to financing the
acquisition, depreciation and amortization of the assets acquired and excludes the pre-acquisition transaction
related expenses incurred by Harris Teeter and the Company. The pro forma information does not include
efficiencies, cost reductions, synergies and investments in lower prices for our customers expected to result
from the merger or immaterial acquisitions completed in 2012. The unaudited pro forma financial information
is not necessarily indicative of the results that actually would have occurred had the merger been completed
at the beginning of the 2012.
Fiscal year ended
February 1, 2014
Fiscal year ended
February 2, 2013
Sales ..................................................... $103,202 $101,214
Net earnings including noncontrolling interests .................. 1,664 1,584
Net earnings attributable to noncontrolling interests............... 12 11
Net earnings attributable to The Kroger Co..................... $ 1,652 $ 1,573
3 . G O O D W I L L A N D I N T A N G I B L E A S S E T S
The following table summarizes the changes in the Company’s net goodwill balance through
February 1, 2014.
2013 2012
Balance beginning of year
Goodwill ................................................. $ 3,766 $ 3,670
Accumulated impairment losses ............................... (2,532) (2,532)
1,234 1,138
Activity during the year
Acquisitions............................................... 901 96
Balance end of year
Goodwill ................................................. 4,667 3,766
Accumulated impairment losses ............................... (2,532) (2,532)
$ 2,135 $ 1,234
In 2013, the Company acquired all the outstanding shares of Harris Teeter, a supermarket retailer in
southeastern and mid-Atlantic markets and Washington, D.C., resulting in additional goodwill of $901. See
Note 2 for additional information regarding the merger.
In 2012, the Company acquired an interest in one of its suppliers and all the outstanding shares of Axium
Pharmacy, a leading specialty pharmacy that provides specialized drug therapies and support services for
patients with complex medical conditions, resulting in combined additional goodwill of $96.
Testing for impairment must be performed annually, or on an interim basis upon the occurrence of
a triggering event or a change in circumstances that would more likely than not reduce the fair value of a
reporting unit below its carrying amount. The annual evaluation of goodwill performed during the fourth
quarter of 2013, 2012 and 2011 did not result in impairment.
Based on current and future expected cash flows, the Company believes goodwill impairments are
not reasonably likely. A 10% reduction in fair value of the Company’s reporting units would not indicate a
potential for impairment of the Company’s remaining goodwill balance.