Kroger 2015 Annual Report Download - page 128

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A-54
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 January 30, 2016 and
January 31, 2015:
January 30, 2016
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
Fair Value Interest
Rate Swaps $1 $— $1 $— $— $1
Liabilities
Cash Flow Forward-Starting
Interest Rate Swaps 27 — 27 — — 27
January 31, 2015
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
Liabilities
Cash Flow Forward-Starting
Interest Rate Swaps $39 $— $39 $— $— $39
Commodity Price Protection
The Company enters into purchase commitments for various resources, including raw materials
utilized in its food production plants and energy to be used in its stores, warehouses, food production
plants 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. FAIR VALUE MEASUREMENTS
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.