KROGER CO — Earnings Release 2010

Dec 2, 2010

8-K 1 a10-22301_18k.htm 8-K

*UNITED STATES*

*SECURITIES AND EXCHANGE COMMISSION*

*Washington, DC 20549*

*FORM 8-K*

*CURRENT REPORT*

*Pursuant to Section 13 or 15(d) of the*

*Securities Exchange Act of 1934*

Date of Report: December 2, 2010

(Date of earliest event reported)

*THE KROGER CO.*

(Exact name of registrant as specified in its charter)

An Ohio Corporation	No. 1-303	31-0345740
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

*1014 Vine Street*

*Cincinnati, OH 45201*

(Address of principal executive offices)

Registrant’s telephone number: (513) 762-4000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Section 2 — Financial Information

Item 2.02 Results of Operations and Financial Condition.

On December 2, 2010, the Company released its earnings for third quarter 2010. Attached hereto as Exhibit 99.1, and filed herewith, is the text of that release.

Section 7 — Regulation FD

Item 7.01 Regulation FD Disclosure.

2010 Guidance :
Identical
supermarket sales growth (excluding fuel sales)	2.5
- 3%
Net
earnings per diluted share	$1.65
- $1.78
Non-fuel
operating margin	For
the full year, we expect a decline in rate that is comparable to three
quarters year-to-date 2010, excluding the 2009 impairment charges.
Capital
expenditures	$1.8
- $2.0 billion, excluding acquisitions and purchases of leased facilities.
These capital projects include approximately 35-43 major projects covering
new stores, expansions and relocations, and 135-145 remodels, and other
investments to support our Customer 1 st business strategy.
Supermarket
square footage growth	1.0
- 1.4% before acquisitions and operational closings, with an emphasis on
large, fast-growing markets
Expected
tax rate	Slightly
below 35%
Fuel
margins	Our
guidance for fiscal 2010 assumes a fuel margin of approximately 12¢ per
gallon as well as continued strong growth in gallons sold.
LIFO	$50
million
Pension
Contributions/ Expenses	Company-sponsored
pension plans We
expect 2010 expense to be approximately $64 million. Although we are
not required to make a contribution, we expect to contribute approximately
$140 million during 2010. 401(k) plan For
2010, we expect a slight increase in our cash contributions and expense
compared to 2009.

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| | Multi-employer
plans In
2010, we expect to contribute approximately $250 million to multi-employer
pension funds. We expect meaningful increases in expense as a result of
increases in multi-employer pension plan contributions over the next five
years, but we believe it unlikely that contributions will double during that
period. |
| --- | --- |
| Labor | In the remainder of 2010, we will negotiate agreements with the
UFCW for store associates in Ft. Wayne and Little Rock. Negotiations
this year will be challenging as we must have competitive cost structures in
each market while meeting our associates’ needs for good wages and affordable
health care. Also, we must address the underfunding of Taft-Hartley pension
plans. |

Our ability to achieve identical supermarket sales and earnings growth and earnings per share goals may be affected by: labor disputes, particularly as the Company seeks to manage health care and pension costs; industry consolidation; pricing and promotional activities of existing and new competitors, including non-traditional competitors and the aggressiveness of that competition; our response to these actions; unexpected changes in product costs; the state of the economy, including interest rates and the inflationary and deflationary trends in certain commodities; the extent to which our customers exercise caution in their purchasing behavior in response to economic conditions; the number of shares outstanding; the success of our future growth plans; goodwill impairment; volatility in our fuel margins, which will be affected by changes in fuel costs; and our ability to generate sales at desirable margins, as well as the success of our programs designed to increase our identical sales without fuel. In addition, any delays in opening new stores, or changes in the economic climate could cause us to fall short of our sales and earnings targets. Our ability to increase identical supermarket sales also could be adversely affected by increased competition and sales shifts to other stores that we operate, as well as increases in sales of our corporate brand products. Earnings and sales also may be affected by adverse weather conditions, particularly to the extent that hurricanes, tornadoes, floods, and other conditions disrupt our operations or those of our suppliers; create shortages in the availability or increases in the cost of products that we sell in our stores or materials and ingredients we use in our manufacturing facilities; or raise the cost of supplying energy to our various operations. Our results also will be affected by the inconsistent pace of the economic recovery, changes in government-funded benefit programs, consumer confidence, and changes in inflation and deflation in product and operating costs. Our guidance for LIFO is based on our forecast of cost changes for products in our inventory. Our estimate of product cost changes could be affected by general economic conditions, weather, availability of raw materials and ingredients in the products that we sell and their packaging, and other factors beyond our control. Our non-fuel operating margin guidance could change if we are unable to pass on any cost increases, if our strategies fail to deliver the cost savings contemplated, or if changes in the cost of our inventory and the timing of those changes differ from our expectations. Our LIFO charge and the timing of our recognition of LIFO expense will be affected by changes in product costs during the year. Our fuel margins could fail to average 12¢ per gallon if rapid changes in fuel costs occur. Our capital expenditures, and the number of projects that we complete, could vary from our expectations if we are unsuccessful in acquiring suitable sites for new stores; development costs vary from those budgeted; our logistics and technology or store projects are not completed on budget or within the time frame projected; or if current operating conditions fail to improve, or worsen. Square footage growth during the year is dependent upon our ability to acquire desirable sites for construction of new facilities, as well as the timing of completion of projects. Any change in tax laws,

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the regulations related thereto, the applicable accounting rules or standards, or the interpretation thereof by federal, state or local authorities could affect our expected effective tax rate. Should asset values in the multi-employer pension funds further deteriorate, or if employers withdraw from these funds without providing for their share of the liability, or should our estimates prove to be understated, our contributions and pension expense could increase more than we have anticipated. The actual amount of cash contributions to our 401(k) Retirement Savings Account Plan will depend on the number of employees who participate and the level of their participation.

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Section 9 — Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits .

99.1 Earnings release for third quarter 2010, filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

| /s/
Paul Heldman |
| --- |
| Paul
Heldman |
| Executive
Vice President, Secretary and General Counsel |

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EXHIBIT INDEX

Exhibit No.	Exhibit
99.1	Earnings
release for third quarter 2010, filed herewith.

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