Kroger 2013 Annual Report Download - page 127

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A-54
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
The effect of the net settlement provisions of these master netting agreements on the Company’s
derivative balances upon an event of default or termination event is as follows as of February 1, 2014 and
February 2, 2013:
February 1, 2014
Gross
Amount
Recognized
Gross
Amounts
Offset in
the Balance
Sheet
Net
Amount
Presented in
the Balance
Sheet
Gross Amounts Not Offset
in the Balance Sheet
Financial
Instruments
Cash
Collateral
Net
Amount
Liabilities
Fair Value Interest Rate Swaps . . . $2 $— $2 $— $— $2
February 2, 2013
Gross
Amount
Recognized
Gross
Amounts
Offset in
the Balance
Sheet
Net
Amount
Presented in
the Balance
Sheet
Gross Amounts Not Offset
in the Balance Sheet
Net
Amount
Financial
Instruments
Cash
Collateral
Assets
Cash Flow Forward-Starting
Interest Rate Swaps . . . . . . . . . $16 $ (2) $14 $— $— $14
Fair Value Interest Rate Swaps . . . 1 — 1 — — 1
Total. . . . . . . . . . . . . . . . . . . . . . . . $17 $ (2) $15 $— $— $15
Liabilities
Cash Flow Forward-Starting
Interest Rate Swaps . . . . . . . . . $11 $ (2) $ 9 $— $— $ 9
Commodity Price Protection
The Company enters into purchase commitments for various resources, including raw materials utilized
in its manufacturing facilities and energy to be used in its stores, warehouses, manufacturing facilities and
administrative offices. The Company enters into commitments expecting to take delivery of and to utilize
those resources in the conduct of normal business. Those commitments for which the Company expects to
utilize or take delivery in a reasonable amount of time in the normal course of business qualify as normal
purchases and normal sales.
8 . F A I R VA L U E M E A S U R E M E N T S
GAAP establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The three
levels of the fair value hierarchy defined in the standards are as follows:
Level 1 – Quoted prices are available in active markets for identical assets or liabilities;
Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are
either directly or indirectly observable;
Level 3 – Unobservable pricing inputs in which little or no market activity exists, therefore requiring an
entity to develop its own assumptions about the assumptions that market participants would use in pricing
an asset or liability.