Kroger 2013 Annual Report Download - page 88

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A-15
CO M M O N S H A R E R E P U R C H A S E P R 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 $338 million in 2013, $1.2 billion in 2012 and $1.4 billion in 2011 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 $271 million
in 2013, $96 million in 2012 and $127 million in 2011 of Kroger shares under the stock option program.
The shares reacquired in 2013 were acquired under two separate share repurchase programs. The first is
a $500 million repurchase program that was authorized by Kroger’s Board of Directors on October 16, 2012.
The second is a program that uses the cash proceeds from the exercises of stock options by participants in
Kroger’s stock option and long-term incentive plans as well as the associated tax benefits. As of February 1,
2014, we had $129 million remaining on the October 16, 2012 $500 million share repurchase program. On
March 13, 2014, the Company announced a new $1 billion share repurchase program that was authorized by
the Board of Directors, replacing the $500 million repurchase program that was authorized by the Board of
Directors on October 16, 2012.
CA P I T A L I N V E S T M E N T S
Capital investments, including changes in construction-in-progress payables and excluding acquisitions
and the purchase of leased facilities, totaled $2.3 billion in 2013, $2.0 billion in 2012 and $1.9 billion in 2011.
Capital investments for acquisitions totaled $2.3 billion in 2013, $122 million in 2012 and $51 million in 2011.
Capital investments for acquisitions of $2.3 billion in 2013 relate to our merger with Harris Teeter. Refer to
Note 2 to the Consolidated Financial Statements for more information on the merger with Harris Teeter.
Capital investments for the purchase of leased facilities totaled $108 million in 2013, $73 million in 2012
and $60 million in 2011. The table below shows our supermarket storing activity and our total food store
square footage:
Supermarket Storing Activity
2013 2012 2011
Beginning of year.................................................. 2,424 2,435 2,460
Opened.......................................................... 17 18 10
Opened (relocation)................................................ 7 7 12
Acquired......................................................... 227 — 6
Acquired (relocation)............................................... — — 2
Closed (operational) ............................................... (28) (29) (41)
Closed (relocation)................................................. (7) (7) (14)
End of year ....................................................... 2,640 2,424 2,435
Total food store square footage (in millions) ............................ 161 149 149
RE T U R N O N I N V E S T E D C A P I T A L
We calculate return on invested capital (“ROIC”) by dividing adjusted operating profit for the prior four
quarters by the average invested capital. Adjusted operating profit is calculated by excluding certain items
included in operating profit, and adding our LIFO charge, depreciation and amortization and rent. Average
invested capital is calculated as the sum of (i) the average of our total assets, (ii) the average LIFO reserve,
(iii) the average accumulated depreciation and amortization and (iv) a rent factor equal to total rent for the
last four quarters multiplied by a factor of eight; minus (i) the average taxes receivable, (ii) the average trade
accounts payable, (iii) the average accrued salaries and wages and (iv) the average other current liabilities.
Averages are calculated for return on invested capital by adding the beginning balance of the first quarter
and the ending balance of the fourth quarter, of the last four quarters, and dividing by two. We use a factor
of eight for our total rent as we believe this is a common factor used by our investors and analysts. Harris