Kroger 2015 Annual Report Download - page 117
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A-43
Pending finalization of the Company’s valuation and other items, the following table summarizes the
preliminary fair values of the assets acquired and liabilities assumed as part of the merger with Roundy’s:
December 18,
2015
ASSETS
Cash and temporary cash investments $ 20
Store deposits in-transit 30
Receivables 43
FIFO inventory 323
Prepaid and other current assets 19
Total current assets 435
Property, plant and equipment 342
Intangibles 324
Other assets 4
Total Assets, excluding Goodwill 1,105
LIABILITIES
Current portion of obligations under capital leases and financing obligations (9)
Trade accounts payable (236)
Accrued salaries and wages (40)
Other current liabilities (89)
Total current liabilities (374)
Fair-value of long-term debt (678)
Fair-value of long-term obligations under capital leases and financing obligations (20)
Deferred income taxes (112)
Pension and postretirement benefit obligations (36)
Other long-term liabilities (111)
Total Liabilities (1,331)
Total Identifiable Net Liabilities (226)
Goodwill 414
Total Purchase Price $ 188
Of the $324 allocated to intangible assets, $211 relates to the Mariano’s, Pick ’n Save, Metro Market
and Copps trade names, to which we assigned an indefinite life and, therefore, will not be amortized. The
Company also recorded $69, $38, and $6 related to favorable leasehold interests, pharmacy prescription
files and customer lists, respectively. The Company will amortize the favorable leasehold interests over
a weighted average of twelve years. The Company will amortize the pharmacy prescription files and
customer lists over seven and two years, respectively. The goodwill recorded as part of the merger
was attributable to the assembled workforce of Roundy’s 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 December 18, 2016. Due to the timing of the merger closing late in the year, the revenue
and earnings of Roundy’s in 2015 were not material.