Cover and table of contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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​

FORM 10-Q

​

​

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

​

For the quarterly period ended November 6, 2021

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

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​

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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 ☐

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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 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.

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​	​	​	​	​
Large accelerated filer	☒	​	Accelerated filer	☐
Non-accelerated filer	☐	​	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. ☐

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

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There were 735,255,564 shares of Common Stock ($1 par value) outstanding as of December 7, 2021.

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PART I – FINANCIAL INFORMATION

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Item 1.	Financial Statements.

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THE KROGER CO.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Third Quarter Ended					​	Three Quarters Ended					​
​	​	November 6,		​	November 7,		​	November 6,		​	November 7,		​
(In millions, except per share amounts)		2021			2020			2021			2020
Sales	​	$	31,860	​	$	29,723	​	$	104,840	​	$	101,761	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Operating expenses	​	​	​	​	​	​	​	​	​	​	​	​	​
Merchandise costs, including advertising, warehousing, and transportation, excluding items shown separately below	​		24,959	​		22,901	​		81,820	​		77,906	​
Operating, general and administrative	​		5,177	​		5,194	​		17,692	​		18,162	​
Rent	​		197	​		205	​		648	​		682	​
Depreciation and amortization	​		659	​		631	​		2,168	​		2,073	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Operating profit	​		868	​		792	​		2,512	​		2,938	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Other income (expense)	​	​	​	​	​	​	​	​	​	​	​	​	​
Interest expense	​	​	(135)	​	​	(129)	​	​	(438)	​	​	(438)	​
Non-service component of company-sponsored pension plan costs	​	​	(77)	​	​	9	​	​	(44)	​	​	28	​
(Loss) gain on investments	​	​	(94)	​	​	162	​	​	(694)	​	​	952	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net earnings before income tax expense	​		562	​		834	​		1,336	​		3,480	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Income tax expense	​		77	​		202	​		239	​		816	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net earnings including noncontrolling interests	​		485	​		632	​		1,097	​		2,664	​
Net income attributable to noncontrolling interests	​		2	​		1	​		7	​		2	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net earnings attributable to The Kroger Co.	​	$	483	​	$	631	​	$	1,090	​	$	2,662	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net earnings attributable to The Kroger Co. per basic common share	​	$	0.64	​	$	0.81	​	$	1.44	​	$	3.39	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Average number of common shares used in basic calculation	​		742	​		772	​		747	​		777	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net earnings attributable to The Kroger Co. per diluted common share	​	$	0.64	​	$	0.80	​	$	1.43	​	$	3.35	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Average number of common shares used in diluted calculation	​		752	​		780	​		757	​		785	​

​

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

​

​

THE KROGER CO.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​		Third Quarter Ended					​	Three Quarters Ended					​
​	​	November 6,		​	November 7,		​	November 6,		​	November 7,		​
(In millions)		2021			2020			2021			2020
Net earnings including noncontrolling interests	​	$	485	​	$	632	​	$	1,097	​	$	2,664	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Other comprehensive income (loss)	​	​	​	​	​	​	​	​	​	​	​	​	​
Change in pension and other postretirement defined benefit plans, net of income tax(1)	​	​	132	​	​	22	​	​	134	​	​	28	​
Unrealized gains and losses on cash flow hedging activities, net of income tax(2)	​		—	​		7	​		—	​		(12)	​
Amortization of unrealized gains and losses on cash flow hedging activities, net of income tax(3)	​	​	2	​	​	1	​	​	5	​	​	3	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total other comprehensive income	​		134	​		30	​		139	​	​	19	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Comprehensive income	​		619	​		662	​		1,236	​		2,683	​
Comprehensive income attributable to noncontrolling interests	​		2	​		1	​		7	​		2	​
Comprehensive income attributable to The Kroger Co.	​	$	617	​	$	661	​	$	1,229	​	$	2,681	​

(1)	Amount is net of tax of $37 for the third quarter of 2021 and $2 for the third quarter of 2020. Amount is net of tax of $39 for the first three quarters of 2021 and $5 for the first three quarters of 2020.

(2)	Amount is net of tax of $1 for the third quarter of 2020. Amount is net of tax of ($9) for the first three quarters of 2020.

(3)	Amount is net of tax of $4 for the first three quarters of 2021 and $1 for the first three quarters of 2020.

​

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

​

​

​

THE KROGER CO.

CONSOLIDATED BALANCE SHEETS

(unaudited)

​

​	​	​	​	​	​	​	​
​		November 6,			January 30,
(In millions, except par amounts)	​	2021		​	2021
ASSETS	​	​	​	​	​	​	​
Current assets	​	​	​	​	​	​	​
Cash and temporary cash investments	​	$	2,288	​	$	1,687	​
Store deposits in-transit	​		1,140	​		1,096	​
Receivables	​		1,914	​		1,781	​
FIFO inventory	​		9,070	​		8,436	​
LIFO reserve	​		(1,550)	​		(1,373)	​
Prepaid and other current assets	​	​	518	​	​	876	​
Total current assets	​		13,380	​		12,503	​
​	​	​	​	​	​	​	​
Property, plant and equipment, net	​		23,316	​		22,386	​
Operating lease assets	​	​	6,655	​	​	6,796	​
Intangibles, net	​		954	​		997	​
Goodwill	​		3,076	​		3,076	​
Other assets	​		2,448	​		2,904	​
​	​	​	​	​	​	​	​
Total Assets	​	$	49,829	​	$	48,662	​
​	​	​	​	​	​	​	​
LIABILITIES	​	​	​	​	​	​	​
Current liabilities	​	​	​	​	​	​	​
Current portion of long-term debt including obligations under finance leases	​	$	1,048	​	$	911	​
Current portion of operating lease liabilities	​	​	642	​	​	667	​
Trade accounts payable	​		7,879	​		6,679	​
Accrued salaries and wages	​		1,458	​		1,413	​
Other current liabilities	​		5,771	​		5,696	​
Total current liabilities	​		16,798	​		15,366	​
​	​	​	​	​	​	​	​
Long-term debt including obligations under finance leases	​	​	12,673	​	​	12,502	​
Noncurrent operating lease liabilities	​	​	6,343	​	​	6,507	​
Deferred income taxes	​		1,619	​		1,542	​
Pension and postretirement benefit obligations	​		490	​		535	​
Other long-term liabilities	​		2,415	​		2,660	​
​	​	​	​	​	​	​	​
Total Liabilities	​		40,338	​		39,112	​
​	​	​	​	​	​	​	​
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 2021 and 2020	​		1,918	​		1,918	​
Additional paid-in capital	​		3,590	​		3,461	​
Accumulated other comprehensive loss	​		(491)	​		(630)	​
Accumulated earnings	​		23,658	​		23,018	​
Common shares in treasury, at cost, 1,180 shares in 2021 and 1,160 shares in 2020	​		(19,156)	​		(18,191)	​
​	​	​	​	​	​	​	​
Total Shareholders’ Equity - The Kroger Co.	​		9,519	​		9,576	​
Noncontrolling interests	​		(28)	​		(26)	​
​	​	​	​	​	​	​	​
Total Equity	​		9,491	​		9,550	​
​	​	​	​	​	​	​	​
Total Liabilities and Equity	​	$	49,829	​	$	48,662	​

​

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

​

​

THE KROGER CO.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

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​	​	​	​	​	​	​	​
​	​	Three Quarters Ended					​
​	​	November 6,		​	November 7,		​
(In millions)		2021			2020
Cash Flows from Operating Activities:	​	​	​	​	​	​	​
Net earnings including noncontrolling interests	​	$	1,097	​	$	2,664	​
Adjustments to reconcile net earnings including noncontrolling interests to net cash provided by operating activities:	​	​	​	​	​	​	​
Depreciation and amortization	​		2,168	​		2,073	​
Operating lease asset amortization	​	​	468	​	​	481	​
LIFO charge	​		177	​		77	​
Share-based employee compensation	​		159	​		147	​
Company-sponsored pension plans	​		56	​		(12)	​
Deferred income taxes	​		34	​		219	​
Gain on the sale of assets	​	​	(34)	​	​	(24)	​
Loss (gain) on investments	​	​	694	​	​	(952)	​
Other	​		106	​		119	​
Changes in operating assets and liabilities:	​	​	​	​	​	​	​
Store deposits in-transit	​		(44)	​		77	​
Receivables	​		(80)	​		42	​
Inventories	​		(673)	​		(471)	​
Prepaid and other current assets	​		371	​		(56)	​
Trade accounts payable	​		1,200	​		1,006	​
Accrued expenses	​		(40)	​		469	​
Income taxes receivable and payable	​		(54)	​	​	89	​
Operating lease liabilities	​	​	(532)	​	​	(464)	​
Other	​		(282)	​		413	​
​	​	​	​	​	​	​	​
Net cash provided by operating activities	​		4,791	​		5,897	​
​	​	​	​	​	​	​	​
Cash Flows from Investing Activities:	​	​	​	​	​	​	​
Payments for property and equipment, including payments for lease buyouts	​		(2,008)	​		(2,062)	​
Proceeds from sale of assets	​		139	​	​	99	​
Other	​		(90)	​		(85)	​
​	​	​	​	​	​	​	​
Net cash used by investing activities	​		(1,959)	​		(2,048)	​
​	​	​	​	​	​	​	​
Cash Flows from Financing Activities:	​	​	​	​	​	​	​
Proceeds from issuance of long-term debt	​		43	​		537	​
Payments on long-term debt including obligations under finance leases	​		(915)	​	​	(41)	​
Net payments on commercial paper	​		—	​	​	(1,150)	​
Dividends paid	​	​	(433)	​	​	(395)	​
Proceeds from issuance of capital stock	​	​	118	​		98	​
Treasury stock purchases	​		(1,049)	​		(989)	​
Proceeds from financing arrangement	​	​	166	​	​	—	​
Other	​	​	(161)	​		(128)	​
​	​	​	​	​	​	​	​
Net cash used by financing activities	​		(2,231)	​		(2,068)	​
​	​	​	​	​	​	​	​
Net increase in cash and temporary cash investments	​		601	​		1,781	​
​	​	​	​	​	​	​	​
Cash and temporary cash investments:	​	​	​	​	​	​	​
Beginning of year	​		1,687	​		399	​
End of period	​	$	2,288	​	$	2,180	​
​	​	​	​	​	​	​	​
Reconciliation of capital investments:	​	​	​	​	​	​	​
Payments for property and equipment, including payments for lease buyouts	​	$	(2,008)	​	$	(2,062)	​
Payments for lease buyouts	​	​	—	​		42	​
Changes in construction-in-progress payables	​		(144)	​		(44)	​
Total capital investments, excluding lease buyouts	​	$	(2,152)	​	$	(2,064)	​
​	​	​	​	​	​	​	​
Disclosure of cash flow information:	​	​	​	​	​	​	​
Cash paid during the year for interest	​	$	493	​	$	474	​
Cash paid during the year for income taxes	​	$	364	​	$	495	​

​

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

​

​

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 1, 2020	​	1,918		$	1,918		$	3,337		1,130		$	(16,991)		$	(640)		$	20,978		$	(29)		$	8,573
Issuance of common stock:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Stock options exercised		—	​		—	​		—		(4)	​		57	​		—	​		—	​		—	​		57
Restricted stock issued		—	​		—	​		(20)		—	​		10	​		—	​		—	​		—	​		(10)
Treasury stock activity:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Treasury stock purchases, at cost		—	​		—	​		—		12	​		(355)	​		—	​		—	​		—	​		(355)
Stock options exchanged		—	​		—	​		—		2	​		(67)	​		—	​		—	​		—	​		(67)
Share-based employee compensation		—	​		—	​		63		—	​		—	​		—	​		—	​		—	​		63
Other comprehensive loss net of income tax of ($8)		—	​		—	​		—		—	​		—	​		(18)	​		—	​		—	​		(18)
Other		—	​		—	​		17		—	​		(17)	​		—	​		—	​		1	​		1
Cash dividends declared ($0.16 per common share)		—	​		—	​		—		—	​		—	​		—	​		(128)	​		—	​		(128)
Net earnings including noncontrolling interests		—	​		—	​		—		—	​		—	​		—	​		1,212	​		—	​		1,212
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balances at May 23, 2020		1,918		$	1,918		$	3,397		1,140		$	(17,363)		$	(658)		$	22,062		$	(28)		$	9,328
Issuance of common stock:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Stock options exercised		—	​		—	​		—		(1)	​		30	​		—	​		—	​		—	​		30
Restricted stock issued		—	​		—	​		(109)		(3)	​		57	​		—	​		—	​		—	​		(52)
Treasury stock activity:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Treasury stock purchases, at cost		—	​		—	​		—		6	​		(212)	​		—	​		—	​		—	​		(212)
Stock options exchanged		—	​		—	​		—		1	​		(35)	​		—	​		—	​		—	​		(35)
Share-based employee compensation		—	​		—	​		44		—	​		—	​		—	​		—	​		—	​		44
Other comprehensive income net of income tax of $2		—	​		—	​		—		—	​		—	​		7	​		—	​		—	​		7
Other		—	​		—	​		47		—	​		(47)	​		—	​		—	​		—	​		—
Cash dividends declared ($0.18 per common share)		—	​		—	​		—		—	​		—	​		—	​		(137)	​		—	​		(137)
Net earnings including noncontrolling interests		—	​		—	​		—		—	​		—	​		—	​		819	​		1	​		820
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balances at August 15, 2020		1,918		$	1,918		$	3,379		1,143		$	(17,570)		$	(651)		$	22,744		$	(27)		$	9,793
Issuance of common stock:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Stock options exercised		—	​		—	​		—		(1)	​		11	​		—	​		—	​		—	​		11
Restricted stock issued		—	​		—	​		(2)		—	​		1	​		—	​		—	​		—	​		(1)
Treasury stock activity:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Treasury stock purchases, at cost		—	​		—	​		—		9	​		(304)	​		—	​		—	​		—	​		(304)
Stock options exchanged		—	​		—	​		—		1	​		(16)	​		—	​		—	​		—	​		(16)
Share-based employee compensation		—	​		—	​		40		—	​		—	​		—	​		—	​		—	​		40
Other comprehensive income net of income tax of $3		—	​		—	​		—		—	​		—	​		30	​		—	​		—	​		30
Other		—	​		—	​		3		—	​		(3)	​		—	​		—	​		—	​		—
Cash dividends declared ($0.18 per common share)		—	​		—	​		—		—	​		—	​		—	​		(141)	​		—	​		(141)
Net earnings including noncontrolling interests		—	​		—	​		—		—	​		—	​		—	​		631	​		1	​		632
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balances at November 7, 2020		1,918		$	1,918		$	3,420		1,152		$	(17,881)		$	(621)		$	23,234		$	(26)		$	10,044
Issuance of common stock:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Stock options exercised		—	​		—	​		—		(1)	​		29	​		—	​		—	​		—	​		29
Restricted stock issued		—	​		—	​		(3)		—	​		3	​		—	​		—	​		—	​		—
Treasury stock activity:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Treasury stock purchases, at cost		—	​		—	​		—		9	​		(325)	​		—	​		—	​		—	​		(325)
Stock options exchanged		—	​		—	​		—		—	​		(10)	​		—	​		—	​		—	​		(10)
Share-based employee compensation		—	​		—	​		38		—	​		—	​		—	​		—	​		—	​		38
Other comprehensive loss net of income tax of $4		—	​		—	​		—		—	​		—	​		(9)	​		—	​		—	​		(9)
Other		—	​		—	​		6		—	​		(7)	​		—	​		—	​		(1)	​		(2)
Cash dividends declared ($0.18 per common share)		—	​		—	​		—		—	​		—	​		—	​		(139)	​		—	​		(139)
Net earnings including noncontrolling interests		—	​		—	​		—		—	​		—	​		—	​		(77)	​		1	​		(76)
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balances at January 30, 2021		1,918		$	1,918		$	3,461		1,160		$	(18,191)		$	(630)		$	23,018		$	(26)		$	9,550

​

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

​

​

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 January 30, 2021	​	1,918	​	$	1,918	​	$	3,461		1,160	​	$	(18,191)	​	$	(630)	​	$	23,018	​	$	(26)	​	$	9,550
Issuance of common stock:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Stock options exercised		—	​		—	​		—		(2)	​		31	​		—	​		—	​		—	​		31
Restricted stock issued		—	​		—	​		(35)		(1)	​		17	​		—	​		—	​		—	​		(18)
Treasury stock activity:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Treasury stock purchases, at cost		—	​		—	​		—		10	​		(338)	​		—	​		—	​		—	​		(338)
Stock options exchanged		—	​		—	​		—		2	​		(64)	​		—	​		—	​		—	​		(64)
Share-based employee compensation		—	​		—	​		56		—	​		—	​		—	​		—	​		—	​		56
Other comprehensive income net of income tax of $2		—	​		—	​		—		—	​		—	​		3	​		—	​		—	​		3
Other		—	​		—	​		23		—	​		(23)	​		—	​		1	​		3	​		4
Cash dividends declared ($0.18 per common share)		—	​		—	​		—		—	​		—	​		—	​		(138)	​		—	​		(138)
Net earnings including noncontrolling interests		—	​		—	​		—		—	​		—	​		—	​		140	​		3	​		143
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balances at May 22, 2021		1,918		$	1,918		$	3,505		1,169		$	(18,568)		$	(627)		$	23,021		$	(20)		$	9,229
Issuance of common stock:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Stock options exercised		—	​		—	​		—		(2)	​		54	​		—	​		—	​		—	​		54
Restricted stock issued		—	​		—	​		(99)		(2)	​		56	​		—	​		—	​		—	​		(43)
Treasury stock activity:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Treasury stock purchases, at cost		—	​		—	​		—		8	​		(299)	​		—	​		—	​		—	​		(299)
Stock options exchanged		—	​		—	​		—		1	​		(50)	​		—	​		—	​		—	​		(50)
Share-based employee compensation		—	​		—	​		52		—	​		—	​		—	​		—	​		—	​		52
Other comprehensive income net of income tax of $4		—	​		—	​		—		—	​		—	​		2	​		—	​		—	​		2
Other		—	​		—	​		69		—	​		(69)	​		—	​		—	​		(2)	​		(2)
Cash dividends declared ($0.21 per common share)		—	​		—	​		—		—	​		—	​		—	​		(154)	​		—	​		(154)
Net earnings including noncontrolling interests		—	​		—	​		—		—	​		—	​		—	​		467	​		2	​		469
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balances at August 14, 2021		1,918		$	1,918		$	3,527		1,174		$	(18,876)		$	(625)		$	23,334		$	(20)		$	9,258
Issuance of common stock:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Stock options exercised		—	​		—	​		—		(1)	​		33	​		—	​		—	​		—	​		33
Restricted stock issued		—	​		—	​		(3)		—	​		—	​		—	​		—	​		—	​		(3)
Treasury stock activity:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Treasury stock purchases, at cost		—	​		—	​		—		6	​		(251)	​		—	​		—	​		—	​		(251)
Stock options exchanged		—	​		—	​		—		1	​		(47)	​		—	​		—	​		—	​		(47)
Share-based employee compensation		—	​		—	​		51		—	​		—	​		—	​		—	​		—	​		51
Other comprehensive income net of income tax of $37		—	​		—	​		—		—	​		—	​		134	​		—	​		—	​		134
Other		—	​		—	​		15		—	​		(15)	​		—	​		(1)	​		(10)	​		(11)
Cash dividends declared ($0.21 per common share)		—	​		—	​		—		—	​		—	​		—	​		(158)	​		—	​		(158)
Net earnings including noncontrolling interests		—	​		—	​		—		—	​		—	​		—	​		483	​		2	​		485
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balances at November 6, 2021		1,918		$	1,918		$	3,590		1,180		$	(19,156)		$	(491)		$	23,658		$	(28)		$	9,491

​

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

​

​

​

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 January 30, 2021 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 January 30, 2021.

​

The unaudited information in the Consolidated Financial Statements for the third quarters and three quarters ended November 6, 2021 and November 7, 2020, includes the results of operations of the Company for the 12 and 40-week periods then ended.

​

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. The equity investment in Ocado is measured at fair value through net earnings. The fair value of all shares owned, which is measured using Level 1 inputs, was $1,114 and $1,808 as of November 6, 2021 and January 30, 2021, respectively, and is included in “Other assets” in the Company’s Consolidated Balance Sheets. An unrealized loss for this Level 1 investment of approximately $694 and an unrealized gain of approximately $879 for the first three quarters of 2021 and 2020, respectively, are included in “(Loss) gain on investments” in the Company’s Consolidated Statements of Operations. An unrealized loss of $94 and an unrealized gain of $162 for this Level 1 investment were recorded for the third quarters of 2021 and 2020, respectively, and are included in “(Loss) gain on investments” in the Company’s Consolidated Statements of Operations. The Company held other equity investments without a readily determinable fair value. These investments are measured initially at cost and remeasured for observable price changes to fair value through net earnings. The value of these investments, which were measured using Level 3 inputs, was $212 and $156 at November 6, 2021 and January 30, 2021, respectively, and is included in “Other assets” in the Company’s Consolidated Balance Sheets. The unrealized gain for these Level 3 investments was approximately $73 for the first three quarters of 2020 and is included in “(Loss) gain on investments” in the Company’s Consolidated Statements of Operations. Refer to Note 2 for the disclosure of debt instrument fair values.

​

​

2.	DEBT OBLIGATIONS

​

Long-term debt consists of:

​

​	​	​	​	​	​	​
​	​	November 6,		​	January 30,
​		2021			2021
1.70% to 8.00% Senior Notes due through 2049	​	$	11,104	​	$	11,899
Other	​		1,134	​		511
​	​	​	​	​	​	​
Total debt, excluding obligations under finance leases	​		12,238	​		12,410
Less current portion	​		(946)	​		(844)
​	​	​	​	​	​	​
Total long-term debt, excluding obligations under finance leases	​	$	11,292	​	$	11,566

​

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 November 6, 2021 and January 30, 2021. At November 6, 2021, the fair value of total debt was $13,976 compared to a carrying value of $12,238. At January 30, 2021, the fair value of total debt was $14,680 compared to a carrying value of $12,410.

​

In the third quarter of 2021, the Company repaid $500 of senior notes bearing an interest rate of 2.95% using cash on hand. Additionally, in the first three quarters of 2021, the Company repaid $300 of senior notes bearing an interest rate of 2.60% using cash on hand.

​

During the first quarter of 2021, the Company acquired 28, previously leased, properties for a purchase price of $455. Separately, the Company also entered into a transaction to sell those properties to a third party for total proceeds of $621. Total cash proceeds received as a result of the transactions was $166. The sale transaction did not qualify for sale-leaseback accounting treatment. As a result, the Company recorded property, plant and equipment for the $455 price paid and recorded a $621 financing obligation. The leases have a base term of 25 years and twelve option periods of five years each. The Company has the option to purchase the individual properties for fair market value at the end of the base term or at the end of any option period. The Company is obligated to repurchase the properties at the end of the base term for $300 if the lessor exercises its put option.

​

In the second quarter of 2021, the Company entered into an amended and restated $2,750 unsecured revolving credit facility (the “Amended and Restated Credit Agreement”), with a termination date of July 6, 2026, unless extended as permitted under the Amended and Restated Credit Agreement. This Amended and Restated Credit Agreement amended the Company’s $2,750 credit facility that would otherwise have terminated on August 29, 2022. The notable changes from the previous agreement include: (1) The removal of the Fixed Charge Coverage Ratio financial covenant (2) the ability to increase the credit facility by $1,250 compared to $1,000 in the prior Amended and Restated Credit Agreement. The Leverage Ratio is the only financial covenant remaining.

​

​

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 third quarters of 2021 and 2020:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Third Quarter Ended
​	​	Pension Benefits					​	Other Benefits
​	​	November 6,		​	November 7,		​	November 6,		​	November 7,
​		2021			2020			2021			2020
Components of net periodic benefit cost:	​	​	​	​	​	​	​	​	​	​	​	​	​
Service cost		$	2		$	3		$	1		$	3	​
Interest cost	​		24	​		26	​		1	​		1	​
Expected return on plan assets	​		(36)	​		(39)	​		—	​		—	​
Amortization of:	​	​	​	​	​	​	​	​	​	​	​	​	​
Prior service cost	​		—	​		—	​		(3)	​		(3)	​
Actuarial loss (gain)	​		8	​		8	​		(4)	​		(2)	​
Settlement loss recognized	​	​	87	​	​	—	​	​	—	​	​	—	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net periodic benefit cost		$	85		$	(2)		$	(5)		$	(1)	​

​

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 three quarters of 2021 and 2020:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Quarters Ended
​	​	Pension Benefits					​	Other Benefits
​	​	November 6,		​	November 7,		​	November 6,		​	November 7,
​		2021			2020			2021			2020
Components of net periodic benefit cost:	​	​	​	​	​	​	​	​	​	​	​	​	​
Service cost		$	9		$	10		$	3		$	6	​
Interest cost	​		78	​		86	​		3	​		4	​
Expected return on plan assets	​		(129)	​		(130)	​		—	​		—	​
Amortization of:	​	​	​	​	​	​	​	​	​	​	​	​	​
Prior service cost	​		—	​		—	​		(10)	​		(9)	​
Actuarial loss (gain)	​		29	​		27	​		(14)	​		(6)	​
Settlement loss recognized	​	​	87	​	​	—	​	​	—	​	​	—	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net periodic benefit cost		$	74		$	(7)		$	(18)		$	(5)	​

​

The Company is not required to make any contributions to its company-sponsored pension plans in 2021, but may make contributions to the extent such contributions are beneficial to the Company. The Company did not make any contributions to its company-sponsored pension plans in the first three quarters of 2021 and 2020.

​

The Company contributed $221 and $227 to employee 401(k) retirement savings accounts in the first three quarters of 2021 and 2020, respectively.

​

The Company also contributes to various multi-employer pension plans based on obligations arising from most of its collective bargaining agreements. These plans provide retirement benefits to participants based on their service to contributing employers. The Company recognizes expense in connection with these plans as contributions are funded. In addition to the recurring multi-employer pension contributions the Company makes in the normal course of business, in the first three quarters of 2021, the Company contributed an incremental $106, $81 net of tax, to multi-employer pension plans, helping stabilize future associate benefits. In the first three quarters of 2020, the Company contributed an incremental $236, $180 net of tax, to multi-employer pension plans.

​

During the first quarter of 2021, associates within the Fred Meyer and QFC divisions ratified an agreement for the transfer of liabilities from the Sound Retirement Trust to the UFCW Consolidated Pension Plan. The Company transferred $449, $344 net of tax, in net accrued pension liabilities and prepaid escrow funds to fulfill obligations for past service for associates and retirees. The agreement will be satisfied by cash installment payments to the UFCW Consolidated Pension Plan and will be paid evenly over seven years.

​

During the third quarter of 2021, the Company settled certain company-sponsored pension plan obligations using existing assets of the plans. The Company recognized a non-cash settlement charge of $87, $68 net of tax, associated with the settlement of its obligations for the eligible participants’ pension balances that were distributed out of the plans via a lump sum distribution or the purchase of an annuity contract, based on each participant’s election. The settlement charge is included in “Non-service component of company-sponsored pension plan costs” in the Consolidated Statements of Operations.

​

4.	EARNINGS PER COMMON SHARE

​

Net earnings attributable to The Kroger Co. per basic common share equal net earnings attributable to The Kroger Co. less income allocated to participating securities divided by the weighted-average number of common shares outstanding. Net earnings attributable to The Kroger Co. per diluted common share equal net earnings attributable to The Kroger Co. less income allocated to participating securities divided by the weighted-average number of common shares outstanding, after giving effect to dilutive stock options. The following table provides a reconciliation of net earnings attributable to The Kroger Co. and shares used in calculating net earnings attributable to The Kroger Co. per basic common share to those used in calculating net earnings attributable to The Kroger Co. per diluted common share:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Third Quarter Ended							​	Third Quarter Ended							​
​	​	November 6, 2021							​	November 7, 2020
​		​	​		​		Per			​	​		​		Per		​
​	​	Earnings		​	Shares	​	Share		​	Earnings		​	Shares	​	Share		​
​	​	(Numerator)		​	(Denominator)	​	Amount		​	(Numerator)		​	(Denominator)	​	Amount		​
Net earnings attributable to The Kroger Co. per basic common share	​	$	478		742	​	$	0.64	​	$	625		772	​	$	0.81	​
Dilutive effect of stock options	​	​	​		10	​	​	​	​	​	​		8	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net earnings attributable to The Kroger Co. per diluted common share	​	$	478		752	​	$	0.64	​	$	625		780	​	$	0.80	​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Quarters Ended							​	Three Quarters Ended							​
​	​	November 6, 2021							​	November 7, 2020							​
​		​	​		​		Per			​	​		​		Per
​	​	Earnings		​	Shares	​	Share		​	Earnings		​	Shares	​	Share		​
​	​	(Numerator)		​	(Denominator)	​	Amount		​	(Numerator)		​	(Denominator)	​	Amount
Net earnings attributable to The Kroger Co. per basic common share	​	$	1,079		747	​	$	1.44	​	$	2,631		777	​	$	3.39	​
Dilutive effect of stock options	​	​	​		10	​	​	​	​	​	​		8	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net earnings attributable to The Kroger Co. per diluted common share	​	$	1,079		757	​	$	1.43	​	$	2,631		785	​	$	3.35	​

​

The Company had combined undistributed and distributed earnings to participating securities totaling $5 and $6 in the third quarters of 2021 and 2020, respectively. For the first three quarters of 2021 and 2020, the Company had combined undistributed and distributed earnings to participating securities of $11 and $31, respectively.

​

The Company had options outstanding for approximately 1 million and 8 million shares during the third quarters of 2021 and 2020, respectively, that were excluded from the computations of net earnings per diluted common share because their inclusion would have had an anti-dilutive effect on net earnings per share. The Company had options outstanding for approximately 3 million and 9 million shares during the first three quarters of 2021 and 2020, respectively, that were excluded from the computations of net earnings per diluted common share because their inclusion would have had an anti-dilutive effect on net earnings per share.

​

​

5.	LEASES AND LEASE-FINANCED TRANSACTIONS

​

On May 17, 2018, the Company entered into a Partnership Framework Agreement with Ocado International Holdings Limited and Ocado Group plc (“Ocado”), which has since been amended. Under this agreement, Ocado will partner exclusively with the Company in the U.S., enhancing the Company’s digital and robotics capabilities in its distribution networks. In the first quarter of 2021, the Company opened its first two Kroger Delivery customer fulfillment centers in Monroe, Ohio and Groveland, Florida. The Company determined the arrangement with Ocado contains a lease of the robotic equipment used to fulfill customer orders. As a result, the Company established a finance lease when each facility began fulfilling orders to customers and used its 10 year incremental borrowing rate of 1.66% to calculate the lease liability. The base term of each lease is 10 years with options to renew at the Company’s sole discretion. The Company elected to combine the lease and non-lease elements in the contract. As a result, it will account for all payments to Ocado as lease payments. During the first quarter of 2021, the Company recorded finance lease assets of $267 and finance lease liabilities of $249 related to these two location openings.

​

6.	RECENTLY ISSUED ACCOUNTING STANDARDS

​

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This standard provides optional expedients and exceptions for applying GAAP to certain contract modifications and hedging relationships that reference LIBOR or other reference rates expected to be discontinued. This guidance is effective upon issuance and can be applied through December 31, 2022. The Company may elect to apply the amendments for contract modifications by Topic or Industry Subtopic as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020. The adoption of the standard is not expected to have a material effect on the Company’s Consolidated Statements of Operations, Consolidated Balance Sheets or Consolidated Statements of Cash Flows.

​

7.	COMMITMENTS AND CONTINGENCIES

​

The Company continuously evaluates contingencies based upon the best available evidence.

​

The Company believes that allowances for loss have been provided to the extent necessary and that its assessment of contingencies is reasonable. To the extent that resolution of contingencies results in amounts that vary from the Company’s estimates, future earnings will be charged or credited.

​

The principal contingencies are described below:

​

Insurance — The Company’s workers’ compensation risks are self-insured in most states. In addition, other workers’ compensation risks and certain levels of insured general liability risks are based on retrospective premium plans, deductible plans, and self-insured retention plans. The liability for workers’ compensation risks is accounted for on a present value basis. Actual claim settlements and expenses incident thereto may differ from the provisions for loss. Property risks have been underwritten by a subsidiary and are all reinsured with unrelated insurance companies. Operating divisions and subsidiaries have paid premiums, and the insurance subsidiary has provided loss allowances, based upon actuarially determined estimates.

​

Litigation — Various claims and lawsuits arising in the normal course of business, including personal injury, contract disputes, employment discrimination, wage and hour and other regulatory claims are pending against the Company. Some of these suits purport or have been determined to be class actions and/or seek substantial damages. Although it is not possible at this time to evaluate the merits of all of these claims and lawsuits, nor their likelihood of success, the Company is of the belief that any resulting liability will not have a material effect on the Company’s financial position, results of operations, or cash flows.

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The Company continually evaluates its exposure to loss contingencies arising from pending or threatened litigation and believes it has made provisions where it is reasonably possible to estimate and when an adverse outcome is probable. Nonetheless, assessing and predicting the outcomes of these matters involves substantial uncertainties. Management currently believes that the aggregate range of loss for the Company’s exposure is not material to the Company. It remains possible that despite management’s current belief, material differences in actual outcomes or changes in management’s evaluation or predictions could arise that could have a material adverse effect on the Company’s financial condition, results of operations, or cash flows.

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Assignments — The Company is contingently liable for leases that have been assigned to various third parties in connection with facility closings and dispositions. The Company could be required to satisfy the obligations under the leases if any of the assignees is unable to fulfill its lease obligations. Due to the wide distribution of the Company’s assignments among third parties, and various other remedies available, the Company believes the likelihood that it will be required to assume a material amount of these obligations is remote.

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8.	ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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The following table represents the changes in AOCI by component for the first three quarters of 2021 and 2020:

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​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	Pension and		​	​	​
​	​	Cash Flow		​	Postretirement		​	​	​
​	​	Hedging		​	Defined Benefit		​	​	​
​		Activities(1)			Plans(1)			Total(1)
Balance at February 1, 2020	​	$	(42)	​	$	(598)	​	$	(640)
OCI before reclassifications(2)	​	​	(12)	​	​	21	​		9
Amounts reclassified out of AOCI(3)	​	​	3	​		7	​		10
Net current-period OCI	​	​	(9)	​		28	​		19
Balance at November 7, 2020	​	$	(51)	​	$	(570)	​	$	(621)
​	​	​	​	​	​	​	​	​	​
Balance at January 30, 2021	​	$	(54)	​	$	(576)	​	$	(630)
OCI before reclassifications(2)	​		—	​		131	​		131
Amounts reclassified out of AOCI(3)	​		5	​		3	​		8
Net current-period OCI	​		5	​		134	​		139
Balance at November 6, 2021	​	$	(49)	​	$	(442)	​	$	(491)

(1)	All amounts are net of tax.

(2)	Net of tax of ($9) for cash flow hedging activities for the first three quarters of 2020. Net of tax of $37 for pension and post retirement defined benefit plans for the first three quarters of 2021.

(3)	Net of tax of $1 for cash flow hedging activities and $5 for pension and postretirement defined benefit plans for the first three quarters of 2020. Net of tax of $4 for cash flow hedging activities and $2 for pension and postretirement defined benefit plans for the first three quarters of 2021.

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The following table represents the items reclassified out of AOCI and the related tax effects for the third quarters and first three quarters of 2021 and 2020:

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​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Third Quarter Ended					​	Three Quarters Ended
​		November 6,			November 7,			November 6,			November 7,
​	​	2021		​	2020		​	2021		​	2020		​
Cash flow hedging activity items	​	​	​	​	​	​	​	​	​	​	​	​	​
Amortization of gains and losses on cash flow hedging activities(1)	​	$	2	​	$	1	​	$	9	​	$	4	​
Tax expense	​		—	​		—	​		(4)	​		(1)	​
Net of tax	​		2	​		1	​		5	​		3	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pension and postretirement defined benefit plan items	​	​	​	​	​	​	​	​	​	​	​	​	​
Amortization of amounts included in net periodic pension cost(2)	​		1	​		3			5			12	​
Tax expense			—			(2)			(2)			(5)	​
Net of tax			1			1			3			7	​
Total reclassifications, net of tax		$	3		$	2		$	8		$	10	​

(1)	Reclassified from AOCI into interest expense.

(2)	Reclassified from AOCI into non-service component of company-sponsored pension plan costs. These components are included in the computation of net periodic pension cost (see Note 3 for additional details).

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9.	INCOME TAXES

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The effective income tax rate was 13.8% and 24.2% for the third quarters of 2021 and 2020, respectively. The effective income tax rate was 17.9% and 23.4% for the first three quarters of 2021 and 2020, respectively. The effective income tax rate for the third quarter and the first three quarters of 2021 differed from the federal statutory rate due to a discrete benefit of $47 which was primarily from the favorable outcome of income tax audit examinations covering multiple years, the benefit from share-based payments and the utilization of tax credits, partially offset by the effect of state income taxes.

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The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020, includes measures to assist companies in response to the COVID-19 pandemic. These measures include deferring the due dates of tax payments and other changes to income and non-income-based tax laws. As permitted under the CARES Act, the Company deferred the remittance of the employer portion of the social security tax. The social security tax provision requires that the deferred employment tax be paid over two years, with half of the amount required to be paid by December 31, 2021 and the other half by December 31, 2022. During 2020, the Company deferred the employer portion of social security tax of $622. Of the total, $311 is included in “Other current liabilities” and $311 is included in “Other long-term liabilities” in the Company’s Consolidated Balance Sheets.

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