UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-Q

 


 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended May 25, 2019

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from           to         

Commission file number 1-303

 


 

 

Picture 1

The Kroger Co.

(Exact name of registrant as specified in its charter)

 


 

 

 

 

Ohio

 

31-0345740

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

1014 Vine Street, Cincinnati, Ohio 45202

(Address of principal executive offices)

(Zip Code)

 

(513) 762-4000

(Registrant’s telephone number, including area code)

 

Unchanged

(Former name, former address and former fiscal year, if changed since last report)

 


 

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

Title of each class

Trading Symbol

Name of each exchange on which registered

Common, $1.00 Par Value

KR

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒  No  ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  ☒  No  ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer (do not check if a smaller reporting company)

 

Smaller reporting company

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐  No  ☒.

 

There were 798,798,567 shares of Common Stock ($1 par value) outstanding as of June 25, 2019.

 

 

 

 

 

PART I – FINANCIAL INFORMATION

 

Item 1.Financial Statements.

 

THE KROGER CO.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

First Quarter Ended

 

 

 

May 25,

 

May 26,

 

(In millions, except per share amounts)

    

2019

    

2018

 

Sales

 

$

37,251

 

$

37,722

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below

 

 

28,983

 

 

29,419

 

Operating, general and administrative

 

 

6,314

 

 

6,257

 

Rent

 

 

274

 

 

276

 

Depreciation and amortization

 

 

779

 

 

741

 

 

 

 

 

 

 

 

 

Operating profit

 

 

901

 

 

1,029

 

 

 

 

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

Interest expense

 

 

(197)

 

 

(192)

 

Non-service component of company-sponsored pension plan costs

 

 

 3

 

 

(10)

 

Mark to market gain on Ocado securities

 

 

106

 

 

36

 

Gain on sale of businesses

 

 

176

 

 

1,771

 

 

 

 

 

 

 

 

 

Net earnings before income tax expense

 

 

989

 

 

2,634

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

226

 

 

616

 

 

 

 

 

 

 

 

 

Net earnings including noncontrolling interests

 

 

763

 

 

2,018

 

Net loss attributable to noncontrolling interests

 

 

(9)

 

 

(8)

 

 

 

 

 

 

 

 

 

Net earnings attributable to The Kroger Co.

 

$

772

 

$

2,026

 

 

 

 

 

 

 

 

 

Net earnings attributable to The Kroger Co. per basic common share

 

$

0.96

 

$

2.39

 

 

 

 

 

 

 

 

 

Average number of common shares used in basic calculation

 

 

798

 

 

839

 

 

 

 

 

 

 

 

 

Net earnings attributable to The Kroger Co. per diluted common share

 

$

0.95

 

$

2.37

 

 

 

 

 

 

 

 

 

Average number of common shares used in diluted calculation

 

 

805

 

 

846

 

 

The accompanying notes are an integral part of the Consolidated Financial Statements.

2

 

THE KROGER CO.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

 

 

 

 

 

 

 

 

 

 

    

First Quarter Ended

 

 

 

May 25,

 

May 26,

 

(In millions)

    

2019

    

2018

    

Net earnings including noncontrolling interests

 

$

763

 

$

2,018

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

Realized gains and losses on available for sale securities, net of income tax (1)  

 

 

 —

 

 

(4)

 

Change in pension and other postretirement defined benefit plans, net of income tax(2)

 

 

 7

 

 

15

 

Unrealized gains and losses on cash flow hedging activities, net of income tax(3)

 

 

(8)

 

 

 4

 

Amortization of unrealized gains and losses on cash flow hedging activities, net of income tax(4)

 

 

 1

 

 

 1

 

Cumulative effect of accounting change (5)

 

 

(146)

 

 

 —

 

 

 

 

 

 

 

 

 

Total other comprehensive (loss) income

 

 

(146)

 

 

16

 

 

 

 

 

 

 

 

 

Comprehensive income

 

 

617

 

 

2,034

 

Comprehensive loss attributable to noncontrolling interests

 

 

(9)

 

 

(8)

 

Comprehensive income attributable to The Kroger Co.

 

$

626

 

$

2,042

 


(1)

Amount is net of tax of ($1) for the first quarter of 2018.

(2)

Amount is net of tax of $3 for the first quarter of 2019 and $4 for the first quarter of 2018.

(3)

Amount is net of tax of ($9) for the first quarter of 2019 and $1 for the first quarter of 2018.

(4)

Amount is net of tax of $1 for the first quarters of 2019 and 2018.

(5)

Related to the adoption of Accounting Standards Update (“ASU”) 2018-02, "Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income," (see Note 5 for additional details).

 

 

The accompanying notes are an integral part of the Consolidated Financial Statements.

 

 

3

 

THE KROGER CO.

CONSOLIDATED BALANCE SHEETS

(unaudited)

 

 

 

 

 

 

 

 

 

 

    

May 25,

    

February 2,

 

(In millions, except par amounts)

 

2019

 

2019

 

ASSETS 

 

 

 

 

 

 

 

Current assets 

 

 

 

 

 

 

 

Cash and temporary cash investments 

 

$

409

 

$

429

 

Store deposits in-transit 

 

 

1,066

 

 

1,181

 

Receivables 

 

 

1,560

 

 

1,589

 

FIFO inventory 

 

 

7,998

 

 

8,123

 

LIFO reserve 

 

 

(1,291)

 

 

(1,277)

 

Assets held for sale

 

 

 —

 

 

166

 

Prepaid and other current assets 

 

 

420

 

 

592

 

Total current assets 

 

 

10,162

 

 

10,803

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net 

 

 

21,661

 

 

21,635

 

Operating lease assets

 

 

6,819

 

 

 —

 

Intangibles, net

 

 

1,123

 

 

1,258

 

Goodwill 

 

 

3,087

 

 

3,087

 

Other assets 

 

 

1,467

 

 

1,335

 

 

 

 

 

 

 

 

 

Total Assets 

 

$

44,319

 

$

38,118

 

 

 

 

 

 

 

 

 

LIABILITIES 

 

 

 

 

 

 

 

Current liabilities 

 

 

 

 

 

 

 

Current portion of long-term debt including obligations under finance leases

 

$

1,453

 

$

3,157

 

Current portion of operating lease liabilities

 

 

682

 

 

 —

 

Trade accounts payable 

 

 

6,423

 

 

6,059

 

Accrued salaries and wages 

 

 

1,078

 

 

1,227

 

Liabilities held for sale

 

 

 —

 

 

51

 

Other current liabilities 

 

 

3,939

 

 

3,780

 

Total current liabilities 

 

 

13,575

 

 

14,274

 

 

 

 

 

 

 

 

 

Long-term debt including obligations under finance leases

 

 

12,016

 

 

12,072

 

Noncurrent operating lease liabilities

 

 

6,420

 

 

 —

 

Deferred income taxes 

 

 

1,484

 

 

1,562

 

Pension and postretirement benefit obligations

 

 

485

 

 

494

 

Other long-term liabilities 

 

 

1,807

 

 

1,881

 

 

 

 

 

 

 

 

 

Total Liabilities 

 

 

35,787

 

 

30,283

 

 

 

 

 

 

 

 

 

Commitments and contingencies see Note 7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred shares, $100 par per share, 5 shares authorized and unissued 

 

 

 —

 

 

 —

 

Common shares, $1 par per share, 2,000 shares authorized; 1,918 shares issued in 2019 and 2018

 

 

1,918

 

 

1,918

 

Additional paid-in capital 

 

 

3,287

 

 

3,245

 

Accumulated other comprehensive loss 

 

 

(492)

 

 

(346)

 

Accumulated earnings 

 

 

20,481

 

 

19,681

 

Common shares in treasury, at cost, 1,119 shares in 2019 and 1,120 shares in 2018

 

 

(16,613)

 

 

(16,612)

 

 

 

 

 

 

 

 

 

Total Shareholders’ Equity - The Kroger Co.

 

 

8,581

 

 

7,886

 

Noncontrolling interests 

 

 

(49)

 

 

(51)

 

 

 

 

 

 

 

 

 

Total Equity 

 

 

8,532

 

 

7,835

 

 

 

 

 

 

 

 

 

Total Liabilities and Equity 

 

$

44,319

 

$

38,118

 

 

The accompanying notes are an integral part of the Consolidated Financial Statements.

4

 

THE KROGER CO.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

First Quarter Ended

 

 

 

 

May 25,

 

May 26,

 

 

(In millions)

    

2019

    

2018

 

 

Cash Flows from Operating Activities:

 

 

 

 

 

 

 

 

Net earnings including noncontrolling interests 

 

$

763

 

$

2,018

 

 

Adjustments to reconcile net earnings including noncontrolling interests to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

779

 

 

741

 

 

Operating lease asset amortization

 

 

197

 

 

 —

 

 

LIFO charge

 

 

15

 

 

15

 

 

Stock-based employee compensation

 

 

48

 

 

45

 

 

Expense for company-sponsored pension plans

 

 

11

 

 

27

 

 

Deferred income taxes

 

 

(73)

 

 

17

 

 

Gain on sale of businesses

 

 

(176)

 

 

(1,771)

 

 

Gain on sale of assets

 

 

(57)

 

 

 —

 

 

Mark to market gain on Ocado securities

 

 

(106)

 

 

(36)

 

 

Other

 

 

(29)

 

 

 —

 

 

Changes in operating assets and liabilities net of effects from mergers and disposals of businesses:

 

 

 

 

 

 

 

 

Store deposits in-transit

 

 

115

 

 

108

 

 

Receivables

 

 

33

 

 

(123)

 

 

Inventories

 

 

124

 

 

134

 

 

Prepaid and other current assets

 

 

86

 

 

307

 

 

Trade accounts payable

 

 

364

 

 

345

 

 

Accrued expenses

 

 

(18)

 

 

43

 

 

Income taxes receivable and payable

 

 

63

 

 

558

 

 

Operating lease liabilities

 

 

(146)

 

 

 —

 

 

Proceeds from contract associated with sale of business

 

 

295

 

 

 —

 

 

Other

 

 

(20)

 

 

(60)

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

 

2,268

 

 

2,368

 

 

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

 

 

 

 

Payments for property and equipment

 

 

(901)

 

 

(758)

 

 

Proceeds from sale of assets

 

 

117

 

 

47

 

 

Purchases of stores

 

 

 —

 

 

(44)

 

 

Net proceeds from sale of businesses

 

 

326

 

 

2,142

 

 

Other

 

 

(6)

 

 

(38)

 

 

 

 

 

 

 

 

 

 

 

Net cash (used) provided by investing activities

 

 

(464)

 

 

1,349

 

 

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of long-term debt

 

 

 9

 

 

1,010

 

 

Payments on long-term debt including obligations under finance leases

 

 

(1,013)

 

 

(214)

 

 

Net payments on commercial paper

 

 

(700)

 

 

(2,120)

 

 

Dividends paid

 

 

(113)

 

 

(110)

 

 

Proceeds from issuance of capital stock

 

 

12

 

 

10

 

 

Treasury stock purchases

 

 

(15)

 

 

(1,809)

 

 

Other

 

 

(4)

 

 

(140)

 

 

 

 

 

 

 

 

 

 

 

Net cash used by financing activities

 

 

(1,824)

 

 

(3,373)

 

 

 

 

 

 

 

 

 

 

 

Net (decrease) increase in cash and temporary cash investments

 

 

(20)

 

 

344

 

 

 

 

 

 

 

 

 

 

 

Cash and temporary cash investments:

 

 

 

 

 

 

 

 

Beginning of year

 

 

429

 

 

347

 

 

End of period

 

$

409

 

$

691

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of capital investments:

 

 

 

 

 

 

 

 

Payments for property and equipment

 

$

(901)

 

$

(758)

 

 

Changes in construction-in-progress payables

 

 

25

 

 

(91)

 

 

Total capital investments

 

$

(876)

 

$

(849)

 

 

 

 

 

 

 

 

 

 

 

Disclosure of cash flow information:

 

 

 

 

 

 

 

 

Cash paid during the year for interest

 

$

115

 

$

124

 

 

Cash paid during the year for income taxes

 

$

231

 

$

36

 

 

The accompanying notes are an integral part of the Consolidated Financial Statements.

 

 

5

 

THE KROGER CO.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS’ EQUITY

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

Paid-In

 

Treasury Stock

 

Comprehensive

 

Accumulated

 

Noncontrolling

 

 

 

 

(In millions, except per share amounts)

  

Shares

  

Amount

  

Capital

  

Shares

  

Amount

  

Loss

  

Earnings

  

Interest

  

Total

 

Balances at February 3, 2018

 

1,918

 

$

1,918

 

$

3,161

 

1,048

 

$

(14,684)

 

$

(471)

 

$

17,007

 

$

(26)

 

$

6,905

 

Issuance of common stock:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options exercised

 

 —

 

 

 —

 

 

 —

 

(1)

 

 

10

 

 

 —

 

 

 —

 

 

 —

 

 

10

 

Restricted stock issued

 

 —

 

 

 —

 

 

(6)

 

 —

 

 

 5

 

 

 —

 

 

 —

 

 

 —

 

 

(1)

 

Treasury stock activity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Treasury stock purchases, at cost

 

 —

 

 

 —

 

 

(134)

 

74

 

 

(1,792)

 

 

 —

 

 

 —

 

 

 —

 

 

(1,926)

 

Stock options exchanged

 

 —

 

 

 —

 

 

 —

 

 1

 

 

(17)

 

 

 —

 

 

 —

 

 

 —

 

 

(17)

 

Share-based employee compensation

 

 —

 

 

 —

 

 

45

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

45

 

Other comprehensive income net of income tax of $5

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

16

 

 

 —

 

 

 —

 

 

16

 

Other

 

 —

 

 

 —

 

 

(7)

 

 —

 

 

 2

 

 

 —

 

 

 —

 

 

 5

 

 

 —

 

Cash dividends declared ($0.125 per common share)

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

(109)

 

 

 —

 

 

(109)

 

Net earnings including noncontrolling interests

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

2,026

 

 

(8)

 

 

2,018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at May 26, 2018

 

1,918

 

$

1,918

 

$

3,059

 

1,122

 

$

(16,476)

 

$

(455)

 

$

18,924

 

$

(29)

 

$

6,941

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at February 2, 2019

 

1,918

 

$

1,918

 

$

3,245

 

1,120

 

$

(16,612)

 

$

(346)

 

$

19,681

 

$

(51)

 

$

7,835

 

Issuance of common stock:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options exercised

 

 —

 

 

 —

 

 

 —

 

(1)

 

 

12

 

 

 —

 

 

 —

 

 

 —

 

 

12

 

Restricted stock issued

 

 —

 

 

 —

 

 

(14)

 

 —

 

 

10

 

 

 —

 

 

 —

 

 

 —

 

 

(4)

 

Treasury stock activity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options exchanged

 

 —

 

 

 —

 

 

 —

 

 —

 

 

(15)

 

 

 —

 

 

 —

 

 

 —

 

 

(15)

 

Share-based employee compensation

 

 —

 

 

 —

 

 

48

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

48

 

Other comprehensive income net of income tax of ($5)

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

(146)

 

 

 —

 

 

 —

 

 

(146)

 

Cumulative effect of accounting change

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

146

 

 

 —

 

 

146

 

Other

 

 —

 

 

 —

 

 

 8

 

 —

 

 

(8)

 

 

 —

 

 

(5)

 

 

11

 

 

 6

 

Cash dividends declared ($0.14 per common share)

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

(113)

 

 

 —

 

 

(113)

 

Net earnings including noncontrolling interests

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

772

 

 

(9)

 

 

763

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at May 25, 2019

 

1,918

 

$

1,918

 

$

3,287

 

1,119

 

$

(16,613)

 

$

(492)

 

$

20,481

 

$

(49)

 

$

8,532

 

 

The accompanying notes are an integral part of the Consolidated Financial Statements.

 

 

6

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

All amounts in the Notes to the Unaudited Consolidated Financial Statements are in millions except per share amounts.

 

1.ACCOUNTING POLICIES

 

Basis of Presentation and Principles of Consolidation

 

The accompanying financial statements include the consolidated accounts of The Kroger Co., its wholly-owned subsidiaries and other consolidated entities.  The February 2, 2019 balance sheet was derived from audited financial statements and, due to its summary nature, does not include all disclosures required by generally accepted accounting principles (“GAAP”).  Significant intercompany transactions and balances have been eliminated.  References to the “Company” in these Consolidated Financial Statements mean the consolidated company.

 

In the opinion of management, the accompanying unaudited Consolidated Financial Statements include adjustments, all of which are of a normal, recurring nature that are necessary for a fair statement of results of operations for such periods but should not be considered as indicative of results for a full year.  The financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted, pursuant to SEC regulations.  Accordingly, the accompanying Consolidated Financial Statements should be read in conjunction with the financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2019.

 

The unaudited information in the Consolidated Financial Statements for the first quarters ended May 25, 2019 and May 26, 2018, includes the results of operations of the Company for the 16-week periods then ended.

 

Products and services related primarily to Kroger Personal Finance and Media, which were historically accounted for as an offset to operating, general and administrative expenses (“OG&A”), are now classified as a component of sales, except for certain amounts in Media, which are netted against merchandise costs. These prior-year amounts have been reclassified to conform to current-year presentation.

 

Refer to Note 5 for a description of changes to the Consolidated Balance Sheet for recently adopted accounting standards regarding the recognition of lease agreements and reclassification of stranded tax effects.

 

Fair Value Measurements

 

Fair value measurements are classified and disclosed in one of the following three categories:

 

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. 

 

The Company records cash and temporary cash investments, store deposits in-transit, receivables, prepaid and other current assets, trade accounts payable, accrued salaries and wages and other current liabilities at approximated fair value.  Certain other investments and derivatives are recorded as Level 1, 2 or 3 instruments.  Refer to Note 2 for the disclosure of debt instrument fair values.

7

 

2.DEBT OBLIGATIONS

 

Long-term debt consists of:

 

 

 

 

 

 

 

 

 

 

May 25,

 

February 2,

 

    

2019

    

2019

1.50% to 8.00% Senior Notes due through 2048

 

$

12,101

 

$

12,097

5.63% to 12.75% Mortgages due in varying amounts through 2027

 

 

14

 

 

14

2.60% to 2.63% Commercial paper borrowings due through May 2019

 

 

100

 

 

800

3.37% Term Loan due 2019

 

 

 —

 

 

1,000

Other

 

 

446

 

 

440

 

 

 

 

 

 

 

Total debt, excluding obligations under finance leases

 

 

12,661

 

 

14,351

Less current portion

 

 

(1,405)

 

 

(3,103)

 

 

 

 

 

 

 

Total long-term debt, excluding obligations under finance leases

 

$

11,256

 

$

11,248

 

 

The fair value of the Company’s long-term debt, including current maturities, was estimated based on the quoted market prices for the same or similar issues adjusted for illiquidity based on available market evidence.  If quoted market prices were not available, the fair value was based upon the net present value of the future cash flow using the forward interest rate yield curve in effect at May 25, 2019 and February 2, 2019.  At May 25, 2019, the fair value of total debt was $12,856 compared to a carrying value of $12,661.  At February 2, 2019, the fair value of total debt was $14,190 compared to a carrying value of $14,351.

 

3.BENEFIT  PLANS

 

The following table provides the components of net periodic benefit cost for the company-sponsored defined benefit pension plans and other post-retirement benefit plans for the first quarters of 2019 and 2018.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Quarter Ended

 

 

Pension Benefits

 

Other Benefits

 

 

May 25,

 

May 26,

 

May 25,

 

May 26,

 

    

2019

    

2018

    

2019

    

2018

Components of net periodic benefit cost: 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost 

 

$

11

 

$

15

 

$

 2

 

$

 2

Interest cost 

 

 

41

 

 

43

 

 

 2

 

 

 2

Expected return on plan assets 

 

 

(56)

 

 

(54)

 

 

 —

 

 

 —

Amortization of: 

 

 

 

 

 

 

 

 

 

 

 

 

Prior service cost 

 

 

 —

 

 

 —

 

 

(3)

 

 

(3)

Actuarial loss (gain)

 

 

16

 

 

25

 

 

(3)

 

 

(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net periodic benefit cost 

 

$

12