Kroger 2014 Annual Report Download - page 117

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A-52
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 following table summarizes the effect of the Company’s derivative instruments designated as cash
flow hedges for 2014 and 2013:
Year-To-Date
Derivatives in Cash Flow Hedging
Relationships
Amount of Gain/(Loss)
in AOCI on Derivative
(Effective Portion)
Amount of Gain/
(Loss) Reclassified
from AOCI into Income
(Effective Portion)
Location of Gain/(Loss)
Reclassified into Income
(Effective Portion)2014 2013 2014 2013
Forward-Starting Interest Rate
Swaps, net of tax* . . . . . . . . . $(49) $(25) $(1) $(1) Interest expense
* The amounts of Gain/(Loss) in AOCI on derivatives include unamortized proceeds and payments from
forward-starting interest rate swaps once classified as cash flow hedges that were terminated prior to
end of 2014.
For the above fair value and cash flow interest rate swaps, the Company has entered into International
Swaps and Derivatives Association master netting agreements that permit the net settlement of amounts owed
under their respective derivative contracts. Under these master netting agreements, net settlement generally
permits the Company or the counterparty to determine the net amount payable for contracts due on the same
date and in the same currency for similar types of derivative transactions. These master netting agreements
generally also provide for net settlement of all outstanding contracts with a counterparty in the case of an
event of default or a termination event.
Collateral is generally not required of the counterparties or of the Company under these master netting
agreements. As of January 31, 2015 and February 1, 2014, no cash collateral was received or pledged under the
master netting agreements.
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 31, 2015 and
February 1, 2014:
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
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
Net
Amount
Financial
Instruments
Cash
Collateral
Liabilities
Fair Value Interest Rate Swaps . . . $2 $— $2 $— $— $2
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.