Kroger 2014 Annual Report Download - page 109

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
Pro forma results of operations, assuming the Harris Teeter transaction had taken place at the beginning
of 2012 and the Vitacost.com transaction had taken place at the beginning of 2013, are included in the following
table. The pro forma information includes historical results of operations of Harris Teeter and Vitacost.com and
adjustments for interest expense that would have been incurred due to financing the mergers, depreciation
and amortization of the assets acquired and excludes the pre-merger transaction related expenses incurred by
Harris Teeter, Vitacost.com and the Company. The pro forma information does not include efficiencies, cost
reductions, synergies or investments in lower prices for our customers expected to result from the mergers.
The unaudited pro forma financial information is not necessarily indicative of the results that actually would
have occurred had the Harris Teeter merger been completed at the beginning of 2012 or the Vitacost.com
merger completed at the beginning of 2013.
Fiscal year ended
January 31, 2015
Fiscal year ended
February 1, 2014
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $108,687 $103,584
Net earnings including noncontrolling interests . . . . . . . . . . . . . . . . . . 1,736 1,624
Net earnings attributable to noncontrolling interests . . . . . . . . . . . . . . 19 12
Net earnings attributable to The Kroger Co. . . . . . . . . . . . . . . . . . . $ 1,717 $ 1,612
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
January 31, 2015.
2014 2013
Balance beginning of year
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,667 $ 3,766
Accumulated impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,532) (2,532)
2,135 1,234
Activity during the year
Acquisitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 901
Balance end of year
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,836 4,667
Accumulated impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,532) (2,532)
$ 2,304 $ 2,135
In 2014, the Company acquired all the outstanding shares of Vitacost.com, an online retailer, resulting
in additional goodwill of $160.
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 totaling $910.
Goodwill of $9 and $901 was recorded in 2014 and 2013, respectively.
See Note 2 for additional information regarding the Harris Teeter and Vitacost.com mergers.
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 evaluations of goodwill performed during the fourth
quarter of 2014, 2013 and 2012 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.