VI. Ratio Analysis of Financial Statements Prepare a ratio analysis using ALL of the ratios learned in chapter 17 to analyze your company. You should calculate the ratios for two years to be able to compare one year to another by telling if they improved or deteriorated from one year to another. For this section you will include a discussion of the ratios in the paper portion and the actual formula AND calculation will be in an appendix at the end of your paper. You need to show calculations IN AN APPENDIX to earn credit. (Review APA to see where an Appendix goes in a paper). Working Capital Working capital is the amount of current assets minus current liabilities. Current assets Current liabilities = Working capital More working capital suggests a strong liquidity position and an ability to pay debts or continue operating Current Ratio Current ratio = Current assets Current liabilities This ratio measures the short-term debt- paying ability of the company. A higher current ratio suggests a strong ability to meet current obligations. . Acid-Test Ratio Acid-test ratio = Cash + Short-term investments + Current receivables Current liabilities Referred to as Quick Assets This ratio is like the current ratio but excludes current assets such as inventories and prepaid expenses that may be difficult to quickly convert into cash. Accounts Receivable Turnover Accounts receivable turnover Net sales Average accounts receivable, net Average accounts receivable = (Beg Accts. Rec. + End Accts. Rec.) 2. This ratio measures how many times a company converts its receivables into cash. Inventory Turnover Inventory turnover = Cost of goods sold Average inventory Average inventory = (Beginning inventory + Ending inventory) 2 This ratio measures the how long a company holds inventory before selling it. Days' Sales Uncollected Accounts receivable, net Day's sales = uncollected x 365 Net sales This ratio measures how frequently a company collects its accounts receivable. Days' Sales in Inventory = Day's sales in Ending inventory x 365 Inventory Cost of goods sold This ratio is a useful measure in evaluating inventory liquidity. Used to evaluate inventory liquidity. a Total Asset Turnover Total asset turnover = Net sales Average total assets Average assets (Beginning assets + Ending assets) 2 This ratio measures a company's ability to use its assets to generate sales. It is an important indication of operating efficiency. Debt-to-Equity Ratio Debt-to-equity ratio = Total liabilities Total equity This ratio measures what portion of a company's assets are contributed by creditors. A larger debt-to- equity ratio implies less opportunity to expand through use of debt financing. Times Interest Earned Times interest earned Income before interest and taxes = Interest expense Net income + Interest expense + Income taxes Income before interest and taxes This is the most common measures a company's ability to pay interest. Profit Margin Profit margin = Net income Net sales This ratio measures a company's ability to earn net income from each sales dollar. Return on Total Assets Return on total asset = Net income Average total assets Return on total assets measures how well assets are utilized by the company. Return on Common Stockholders' Equity Return on common stockholders' equity = Net income Preferred dividends Average common stockholders' equity This measure indicates how the company's ability to earn income for common stockholders. Price-Earnings Ratio Price-earnings ratio = Market price per common share Earnings per share This measure measures market expectations for future growth Dividend Yield Dividend yield = Annual cash dividends per share Market price per share This ratio is used to compare the dividend- paying performance of different companies. THE KROGER CO. CONSOLIDATED BALANCE SHEETS January 30, 2021 February 1. 2020 S S (in millions, except par amounts) ASSETS Current assets Cash and temporary cash investments Store deposits in-transit Receivables FIFO inventory LIFO reserve Prepaid and other current assets Total current assets Property, plant and equipment, net Operating lease assets Intangibles, net Goodwill Other assets 1,687 1.096 1,781 8.436 (1.373) 876 12,503 399 1,179 1,706 8,464 (1,380) 522 10.890 22,386 6,796 997 3,076 2.904 21,871 6,814 1,066 3,076 1.539 Total Assets s 48.662 S 45,256 S LIABILITIES Current liabilities Current portion of long-term debt including obligations under finance leases Current portion of operating lease Liabilities Trade accounts payable Accrued salaries and wages Other current liabilities Total current liabilities 911 667 6,679 1,413 8.696 15,366 1.965 597 6.149 1.168 4.164 14,243 Long-term debt including obligations under finance leaves Noncurrent operating lease liabilities Deferred income taxes Pension and postretirement benefit obligations Other long-term liabilities 12.02 6,507 1.54 333 2.660 12,111 6,505 1.466 608 1.750 Total Liabilities 19.112 16,68 Commitments and contingencies see Note 13 SITAREHOLDERS' EQUITY Preferred shares S100 per share. 3 shares authorized and unissued Common hore, Sinar por share, 2.000 shares thorized: 1918 shares i ved in 2020 and 2010 Additional paid Cantal 1.918 46 1.918 11 Receivables FIFO inventory LIFO reserve Prepaid and other current assets Total current assets 1,781 8,436 (1.373) 876 12,503 1.706 8,464 (1,380) 522 10.890 Property, plant and equipment, net Operating lease assets Intangibles, net Goodwill Other assets 22,386 6,796 997 3,076 2,904 21,871 6,814 1,066 3,076 1.539 Total Assets 48,662 $ 45,256 s LIABILITIES Current liabilities Current portion of long-term debt including obligations under finance leases Current portion of operating lease liabilities Trade accounts payable Accrued salaries and wages Other current liabilities Total current liabilities Long-term debt including obligations under finance leases Noncurrent operating lease liabilities Deferred income taxes Pension and postretirement benefit obligations Other long term liabilities Total Liabilities 911 667 6,679 1.413 5,696 15,366 1.965 597 6,349 1,168 4,164 14.243 12.502 6,507 1.542 $35 2.660 12,111 6.SOS 1.466 608 1.750 39,112 36,683 Commitments and contingencies see Note 13 SHAREHOLDERS' EQUITY Preferred shares S100 par per share, shares authorized and unissued Common shares. Si par per share. 2,000 shares authorized; 1.918 shares issued in 2020 and 2019 Additional paid.in capital Accumulated other comprehensive loss Accumulated earnings Common shares in treasury, at cost 1.160 shares in 2020 and 1.130 shares in 2019 1.918 3.461 (630) 23.018 (18.191) 1.918 3,337 (640) 20,978 (16,991) Total Shareholders Equity. The Kroger Co. Noncontrolling interests 9,576 126) 8.602 29 Total Equity 9.550 8.573 Total Liabilities and Equity 48,662 3 15.250 THE KROGER CO. CONSOLIDATED STATEMENTS OF OPERATIONS Years Ended January 30, 2021, February 1, 2020 and February 2, 2019 (In millions, except per share amounts) Sales 2020 (52 weeks) S 132.498 2019 (52 weeks) S 122,286 2018 (52 weeks) $ 121,852 101,597 24,500 874 2,747 95,294 21,208 884 2,649 95,103 20,786 884 2.465 2,780 2,251 2,614 (603) (544) 29 1.105 (620) (26) 228 1.782 157 176 Operating expenses Merchandise costs, including advertising, warehousing, and transportation, cxcluding items shown separately below Operating, general and administrative Rent Depreciation and amortization Operating profit Other income (expense) Interest expense Non-service component of company sponsored pension plan costs Gain on investments Gain on sale of businesses Net earnings before income tax expense Income tax expense Net carnings including noncontrolling interests Net income (los) attributable to noncontrolling interests Net earnings attributable to The Kroger Co. Ner earnings attributable to The Kroger Co per basic conmon share Average number of common shares used in basio calculation Net earnings attebutable to The Kroger Coper diluted common share 3,370 1,981 3.978 782 469 900 2,588 3 1.512 (147) 3,078 (32) $2.585 S1659 S 3.110 5 131 S 205 S 3.80 773 799 810 327 s 2.04 S 3.76 Average number of comunon shares used in diluted calculation 781 805 818 The accompanying notes are an integral part of the consolidated financial statements. THE KROGER CO. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years Ended January 30, 2021. February 1, 2020 and February 2, 2019 2020 2019 (52 weeks 52 weeks) $ 2.588 $ 1,512 2018 (52 weeks) $ 3,078 (In millions) Net earnings including noncontrolling interests Other comprehensive income (oss) Realized gains on available for sale securities, net of income tax!! Change in pension and other postretirement defined benefit plans, net of income tax Unrealized gains and losses on cash flow hedging activities, net of income tax Amortization of unrealized gains and losses on cash flow hedging activities, net of income tax Cumulative effect of accounting change Total other comprehensive income (loss) 22 (14) (105) (47) 147 (23) N 2 5 4 (146) 10 (294) 125 Comprehensive income Comprehensive income (loss) attributable to noncontrolling interests Comprehensive income attributable to The Kroger Co. 2.598 1,218 3.203 (32) $12.595 S11365 $13235 (147) (1) Amount is net of tax benefit of (SI) in 2018. (2) Amount is net of tax expense (benefit) of S7 in 2020. (833) in 2019 and S45 in 2018 (3) Amount is net of tax benefit of (S8) in 2020. ($17) in 2019 and (58) in 2018. (4) Amount is net of tax expense of S2 in 2020, S3 in 2019 und $3 in 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 18 for additional details). The accompanying notes are an integral part of the consolidated financial statements, THE KROGER CO. CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended January 30, 2021, February 1, 2020 and February 2, 2019 2020 52 weeks) 2019 (52 weeks) 2018 (52 weeks) $ 2.588 5 1.512 S 3,078 2,747 70 626 2,465 56 185 (9) 73 2.649 120 640 105 155 39 (56) (176) (158) (137) 412 (109) 29 154 76 (45) (1.782) 2 (228) (59) (1.105) 165 58 (90) 7 (In millions) Cash Flows from Operating Activities Net earnings including noncontrolling interests Adjustments to reconcile net eamings including noncontrolling interests to net cash provided by operating activities Depreciation and amortization Asset impairment charges Operating lease asset amortization LIFO (credit) charge Stock-based employee compensation Expense (credit) for company sponsored pension plans Deferred income taxes Gain on sale of businesses (Gain) loss on the sale of assets Gain on investments Loss on deconsolidation and impairment of Lucky's Market Other Changes in operating assets and liabilities net of effects from mergers and disposal of businesses Store deposits in-transit Receivables Inventories Prepaid and other current acts Trodde accounts payable Accred expenses Income taxes receivable and payable Contribution to company sponsored pension plan Operating lease liabilities Proceeds from contact sciated with sale of business Other Net cash provided by operating activities Cash Flows from Investing Activities Payments for property and equipment, including payments for lease buyouts Proceeds from sale of aucta Procres on selement of financial instrument Payments for one of cash acquired Purchase of ons Net proceeds from sale of businesses Purchase or securities Other Na caused by activities 3 (36) (351) (33) 142 302 (142) (203 (208) (354) 244 213 330 1.382 24 416 289 (185) 1552 (639) 295 699 6,815 4,664 4.164 (3.865) (3.128) 273 (2.967 85 215 (197 337 2.169 (1923 (3 (2611 (1.16 330 1.382 24 342 302 (142) Trade accounts payable Accried expenses Income taxes receivable and payable Contribution to company sponsored pension plan Operating lease liabilities Proceeds from contract associated with sale of business Other 213 416 289 (185) (552) (639) 295 (53) 699 (94) 6,815 4,664 4,1644 (2.865) 165 (3,128) 273 Net cash provided by operating activities Cash Flows from Investing Activities Payments for property and equipment, including payments for lease buyouts Proceeds from sale of assets Proceeds on settlement of financial instrument Payments for acquisitions, net of cash acquired Purchases of stores Net proceeds from sale of businesses Purchases of Ocado securities Other (2.967) 85 235 (197) (44) 2.169 (392) (75) 327 (114) (83) 2,814 (2611) 1.186) Net cash used by investing activities Cash Flows from Financing Activities Proceeds from stance of long-term debt Payments on long term debt including obligations under financeme Net proceeds (payments) on commercial paper Dividends paid Proceeds from ise of capital Mock Treasury stock purchase Other Net cash used by financing activities Net increase (decrease) in cash and temporary Cash Investments Cash and temporary clash investments: Bei ole End of year 1.009 (147) (1.150) (334) 127 (1.334) (134) 813 2.304) 350 (486) 35 (465) (416 2,236 (1.372) (1.3213 (437) 65 0.010) 153 (2713) (2.890 1.28 (301) 82 429 342 429 1.687 5 s Reconciliation of capital investment Payments for property and equipment, including payments for lease buyout Payments for lease buyouts Chunges in construction in proces payable Total capital investments, excluding can buyouts $ 0.18 82 (2.967) 5 1.865 58 (350) S1166 S (2014) 5 ON Duclosca w information Cuba during the year forint Cidad during the year for me 639 700 600 THE KROGER CO. TEMENT OF CHANGES IN SHAREHOLDERS' EQUITY mon Stock Additional Paid in Capital S 3.161 Treasury Suck Shares Amon 1,048 5 (145) Acumulated Other Comprehensive Income (Less) (471) Accumulated Earnings $ 17,007 Noncontrolling Interest (26) s Total 6,905 1918 (4) (3) 65 74 65 (45) (119) 76 3 (1.927) (83) (1.927) (83) 154 154 125 49 (57 (1) (436) 3,078 3.110 (32) 1918 $ 3.245 1.120 S (16,612) s (346) s 19,681 - IIIIIIIIIIIII (51) $ 7.835 3) 3) 55 92 55 (36) (128 14 2 (400) (65) 155 (400) (65) 155 (294) 146 168 (294) 146 65 (61) (5) (503) 1.659 (147) (503) 1.512 1.918 S 3.337 1.130 S (16,991) 5 (640) $ 20,978 (29) $ 8,573 (7) 3) 127 71 (134 127 (63) 36 4 (1.196) (128) 185 (1.196) (128) 185 10 (1) (545) 2.588 73 (74) (545) 2.585 3 1,918 53.461 1.160 S (18.191) 5 (630) 23.018 S (26) S 9.550 sare an integral part of the consolidated financial statements THE KROGER CO. CONSOLIDATED STATEMENT OF CHANGES IN Years Ended January 30, 2021, February 1, 2020 and February 2, 2019 Common Stock Shams Amunt 1.918 1918 Additional Paid in Capital s 3.161 S (119) Is harca) Ralat February 3, 2018 e a common stock: Stock options escrised Restricted stock issued Trendy stock activity Treasury stock purchases, ut cost Stock options exchanged Sharehasal employee comptation Oder mense income net of tax of $39 154 LILIT Oh 49 Cash dividida declared (S0.545 per common share) Net amnib including non-controlling interest 1.918 $ 1918 S 3.245 (128) 155 Other 65 Bulexes at February 20 2019 cmce of common stock Stock options exerced Restricted stock oed Trasy stock activity To dock purchasat cost Stock options changed Shane employee compation Other comprehensive lounict of tax of (547) Cumulative detecting as see note 18) Deconsolidation of Lucky's Market Canh dividends declared (5062 per common the Net arning cluding non-controlling interest Balaceat February 1, 2020 ce of common stock Stock options exercised Restricted sack Trawy stock activity Tryck purchasest Stock options exchanged Show as amplover compensation Other comprchive income net oftax of Si Othe Cash dividends declared (50.70 per common share Net carmingsinduding non-controllo interests Banesat 30, 2021 1.918 1.918 S 3,337 (134) III 185 73 1918 $ 1.918 S 3.461 The accompanying notes are an integral part of the cons Property, Plant and Equipment Property, plant and equipment are recorded at cost or, in the case of assets acquired in a business combination, at fair value. Depreciation and amortization expense, which includes the depreciation of assets recorded under finance leases, is computed principally using the straight-line method over the estimated useful lives of individual assets. Buildings and land improvements are depreciated based on lives varying from 10 to 40 years. All new purchases of store equipment are assigned lives varying from three to nine years. Leasehold improvements are amortized over the shorter of the lease term to which they relate, which generally varies from four to 25 years, or the useful life of the asset. Food production plant and distribution center equipment is depreciated over lives varying from three to 15 years. Information technology assets are generally depreciated over three to five years. Depreciation and amortization expense was $2,747 in 2020. 62,649 in 2019 and $2,465 in 2018. Interest costs on significant projects constructed for the Company's own use are capitalized as part of the costs of the newly constructed facilities. Upon retirement or disposal of assets, the cost and related accumulated depreciation and amortization are removed from the balance sheet and any gain or loss is reflected in net earnings. Refer to Note 4 for further information regarding the Company's property, plant and equipment, Store Closing Costs The Company regularly evaluates the performance of its stores and periodically closes those stores that are underperforming. Related liabilities arise, such as severance, contractual obligations and other accruals associated with store closings. The Company records a liability for costs associated with an exit or disposal activity when the liability is incurred, usually in the period the store closes. Adjustments to closed store liabilities primarily relate to actual exit costs differing from original estimates. Adjustments are made for changes in estimates in the period in which the change becomes known Owned stores held for disposal are reduced to their estimated net realizable value. Costs to reduce the carrying values of property, plant, equipment and operating lease assets are accounted for in accordance with the Company's policy on impairment of long-lived assets. Inventory write-downs, if any, in connection with store closings, are classified in the Consolidated Statements of Operations as "Merchandise costs." Costs to transfer inventory and equipment from closed stores are expensed as incurred. The assessment of the Company's tax position relies on the judgment of management to estimate the exposures associated with the Company's various filing positions. Self-Insurance Costs The Company is primarily self-insured for costs related to workers' compensation and general liability claims. Liabilities are actuarially determined and are recognized based on claims filed and an estimate of claims incurred but not reported. The liabilities for workers' compensation claims are accounted for on a present value basis. The Company has purchased stop-loss coverage to limit its exposure to any significant exposure on a per claim basis. The Company is insured for covered costs in excess of these per claim limits. The following table summarizes the changes in the Company's self-insurance liability through January 30, 2021. 2020 2019 2018 Beginning balance S 689 S 696 S 695 Expense 262 209 229 Claim payments (220) (216) (228) Ending balance 731 689 696 Less: Current portion (220) (216) (228) Long-term portion S 5 $ 473 $ 468 The current portion of the self-insured liability is included in "Other current liabilities, and the long-term portion is included in "Other long-term liabilities in the Consolidated Balance Sheets. The Company maintains surety bonds related to self-insured workers' compensation claims. These bonds are required by most states in which the Company is self-insured for workers' compensation and are placed with third-party insurance providers to insure payment of the Company's obligations in the event the Company is unable to meet its claim payment obligations up to its self-insured retention levels. These bonds do not represent liabilities of the Company, as the Company has recorded reserves for the claim costs. The Company also maintains insurance coverages for some risks, including cyber exposure and property-related losses. The Company's insurance coverage begins for these exposures ranging from $25 to $50. Revenue Recognition Sales The Company recognizes revenues from the retail sale of products, net of sales taxes, at the point of sale. Pharmacy sales are recorded when the product is provided to the customer. Digital channel originated sales are recognized either upon pickup in store or upon delivery to the customer. Amounts billed to a customer related to shipping and delivery represent revenues earned for the goods provided and are classified as sales. When shipping is discounted, it is recorded as an adjustment to sales. Discounts provided to customers by the Company at the time of sale, including those provided in connection with loyalty cards, are recognized as a reduction in sales as the products are sold. Discounts provided by vendors, usually in the form of coupons, are not recognized as a reduction in sales provided the coupons are redeemable at any retailer that accepts coupons. The Company records a receivable from the vendor for the difference in sales price and cash received. For merchandise sold in one of the Company's stores or online, tender is accepted at the point of sale. The Company acts as principal in certain vendor arrangements where the purchase and sale of inventory are virtually simultaneous. The Company records revenue and related costs on a gross basis for these arrangements. For pharmacy sales, collection of third-party receivables is typically expected within three months or less from the time of purchase. The third-party receivables from pharmacy sales are recorded in Receivables in the Company's Consolidated Balance Sheets and were $672 as of January 30, 2021 and 5646 as of February 1, 2020. Disaggregated Revenues The following table presents sales revenue by type of product for the year-ended January 30, 2021, February 1, 2020, and February 2, 2019: 2020 2019 2018 Amount % of total Amount % of total Amount % of total Non Perishable $ 71.434 53.9 % S 61,464 50.3% $ 60,649 49.8 % Fresh) 33,449 25.2 % 29,452 24.1 % 29,089 23.9% Supermarket Fuel 9,486 7.2 % 14,052 11.5% 14,903 12.2 % Pharmacy 11.388 8.6% 11,015 9.0 % 10.617 8.7% Convenience Stores 0 % 944 0.8 % Other 6,741 5.1 % 6,303 5.1 % 5,650 4.696 Total Sales $ 132.498 100% S 122,286 100% S121,852 100 % - % (1) Consists primarily of grocery, general merchandise, health and beauty care and natural foods, (2) Consists primarily of produce, floral, meat, seafood, deli, bakery and fresh prepared. (3) The Company completed the sale of its convenience store business unit during the first quarter of 2018, (4) Consists primarily of sales related to food production plants to outside parties, data analytic services, third-party media revenue, other consolidated entities, specialty pharmacy, in-store health clinics, digital coupon services and other online sales not included in the categories above Merchandise Costs The "Merchandise costs" line item of the Consolidated Statements of Operations includes product costs, net of discounts and allowances; advertising costs (see separate discussion below); inbound freight charges; warehousing costs, including receiving and inspection costs; transportation costs; and food production and operational costs. Warehousing. transportation and manufacturing management salaries are also included in the "Merchandise costs" line item; however, purchasing management salaries and administration costs are included in the OG&A line item along with most of the Company's other managerial and administrative costs. Shipping and delivery costs associated with the Company's digital offerings originating from non-retail store locations are included in the "Merchandise costs" line item. Rent expense and depreciation and amortization expense are shown separately in the Consolidated Statements of Operations. Warehousing and transportation costs include distribution center direct wages, transportation direct wages, repairs and maintenance, utilities, inbound freight and, where applicable, third-party warehouse management fees. These costs are recognized in the periods the related expenses are incurred. The Company believes the classification of costs included in merchandise costs could vary widely throughout the industry. The Company's approach is to include in the "Merchandise costs" line item the direct, net costs of acquiring products and making them available to customers in its stores. The Company believes this approach most accurately presents the actual costs of products sold. The Company recognizes all vendor allowances as a reduction in merchandise costs when the related product is sold. When possible, vendor allowances are applied to the related product cost by item and therefore, reduce the carrying value of inventory by item. When the items are sold, the vendor allowance is recognized. When it is not possible, due to systems constraints, to allocate vendor allowances to the product by item, vendor allowances are recognized as a reduction in merchandise costs based on inventory turns and, therefore, recognized as the product is sold. 3. GOODWILL AND INTANGIBLE ASSETS The following table summarizes the changes in the Company's net goodwill balance through January 30, 2021. 2020 2019 Balance beginning of year Goodwill Accumulated impairment losses Subtotal Activity during the year Mergers Impairment losses $ 5,737 S 5,729 (2,661) (2.642) 3,076 3,087 8 (19) Balance end of year Goodwill 5.737 5.737 Accumulated impairment losses (2.661) (2,661) Total Goodwill $ 3.076 $ 3.076 In 2019, the Company finalized the purchase accounting for the Home Chef acquisition resulting in an increase of goodwill and deferred taxes of S8. The Company also recorded an impairment charge of S19 as a result of the Lucky's Market impairment Testing for impairment must be performed annually, or on an interim basis upon the occurrence of a triggering event or a change in circumstances that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The annual evaluation of goodwill and indefinite-lived intangible assets was performed during the fourth quarter of 2020, 2019 and 2018 and did not result in impairment. The following table summarizes the Company's intangible assets balance through January 30, 2021. Definite-lived pharmacy prescription files Definite-lived customer relationships Definite-lived other Indefinite-lived trade name Indefinite-lived liquor licenses 2020 2019 Gross carrying Accumulated Gross carrying Accumulated amount amortization amount amortization's 315 (167) 320 (133) 186 (143) 186 (120) 110 (78) 106 (68) 685 89 90 685 Total $ 1,385 $ (388) $ 1,387 $ (321) (1) Pharmacy prescription files are amortized to merchandise costs, customer relationships are amortized to depreciation and amortization expense and other intangibles are amortized to OG&A expense and depreciation and amortization expense, Amortization expense associated with intangible assets totaled approximately $67, $85 and $80, during fiscal years 2020, 2019 and 2018, respectively. Future amortization expense associated with the net carrying amount of definite- lived intangible assets for the years subsequent to 2020 is estimated to be approximately: 2021 2022 2023 2024 2025 Thereafter 58 51 38 34 30 12 Total future estimated amortization associated with definite-lived intangible assets $ 223 4. PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consists of Land Buildings and land improvements Equipment Leasehold improvements Construction-in-progress Leased property under finance leases 2020 2019 3,373 $3,299 13,149 12,553 14,928 15,031 10,516 10,832 2,892 3.166 1.165 966 Total property, plant and equipment 46,023 45,847 Accumulated depreciation and amortization (23.637) (23,976) Property, plant and equipment, net $ 22.386 $ 21,871 Accumulated depreciation and amortization for leased property under finance lenses was $321 at January 30, 2021 and S276 at February 1, 2020, Approximately 51 52 and 162, net book value of property, plant and equipment collateralized certain mortgages at January 30, 2021 and February 1, 2020, respectively, 5. TAXES BASED ON INCOME The provision for taxes based on income consists of: 2020 2019 2018 Federal Current Deferred $ 577 $ 454 $ 775 75 (50) (3) Subtotal federal 652 404 772 State and local Current Deferred 133 (3) 70 (5) 108 20 Subtotal state and local 130 65 128 Total S 782 S 469 $ 900 A reconciliation of the statutory federal rate and the effective rate follows: 2.6 2.6 Statutory rate State income taxes, net of federal tax benefit Credits Resolution of issues Excess tax benefits from share-based payments Impairment losses attributable to noncontrolling interest Other changes, net 2020 2019 2018 21.0% 21.0% 21.0% 3.0 (0.7) (1.5) (1.3) (0.1) 0.5 (0.8) (0.2) (0.3) 1.2 0.7 0.7 0.1 23.2% 23.7% 22.6 % The 2020 tax rate differed from the federal statutory rate primarily due to the effect of state income taxes, partially offset by the utilization of tax credits and deductions. The 2019 tax rate differed from the federal statutory rate primarily due to the effect of state income taxes and Lucky's Market losses attributable to the noncontrolling interest which reduced pre-tax income but did not impact tax expense. The tax effects of significant temporary differences that comprise tax balances were as follows: 2020 2019 $ Deferred tax assets: Compensation related costs Lease liabilities Closed store reserves Net operating loss and credit carry forwards Deferred income Allowance for uncollectible receivables Other 766 $ 406 1.932 1.872 38 55 86 100 149 172 23 93 46 Subtotal 3.040 2,698 Valuation allowance (53) (55) Total deferred tax assets 2.987 2.643 Deferred tax liabilities: Depreciation and amortization (2,115) (1.942) Operating lease assets (1.794) (1.782) Insurance related costs (28) Inventory related costs (264) (252) Equity investments in excess of tax basis (356) (94) Other (11) Total deferred tax liabilities (4.529) (4,109) Deferred taxes S (1.542) S (1.466) At January 30, 2021, the Company had net operating loss carryforwards for state income tax purposes of S1,081 These net operating loss carryforwards expire from 2021 through 2040. The utilization of certain of the Company's stato net operating loss carryforwards may be limited in a given year. Further, based on the analysis described below, the Company has recorded a valuation allowance against some of the deferred tax assets resulting from its state net operating losses A reconciliation of the beginning and ending amount of unrecognized tax benefits, including positions impacting only the timing of tax benefits, is as follows: 2- Salsed (1) 2020 2019 2018 Beginning balance $ 174 $ 174 $ 180 Additions based on tax positions related to the current year 7 13 Reductions based on tax positions related to the current year (1) Additions for tax positions of prior years 16 8 23 Reductions for tax positions of prior years (1) (22) Settlements (19) (10) Lapse of statute (4) (3) Ending balance $ 193 $ 174 S 174 As of January 30, 2021. February 1, 2020 and February 2, 2019 the amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was $85, 874 and 872 respectively. To the extent interest and penalties (recoveries) would be assessed by taxing authorities on any underpayment of income tax, such amounts have been accrued and classified as a component of income tax expense. During the years ended January 30, 2021, February 1, 2020 and February 2, 2019, the Company recognized approximately 57, 57 and $2, respectively, in interest and penalties (recoveries). The Company had accrued approximately 538, S30 and $30 for the payment of interest and penalties as of January 30, 2021. February 1, 2020 and February 2, 2019. As of January 30, 2021, the Internal Revenue Service had concluded its examination of all federal tax returns up to and including the return for the year ended January 30, 2016. The Company anticipates resolution in the next twelve to eighteen months of Internal Revenue Service audits for tax years ending January 28, 2017 and February 3, 2018. 6. DEBT OBLIGATIONS Long-term debt consists of: 1.70% to 8.00% Senior Notes due through 2049 1.77% Commercial paper borrowings Other January 30, February 1, 2021 2020 $ 11,899 S 11,598 1,150 511 508 Total debt, excluding obligations under finance leases Less current portion Total long-term debt, excluding obligations under finance leases 12,410 (844) 13,256 (1,926) $ 11.566 $ 11.330 In 2020, the Company issued $500 of senior notes due in fiscal year 2030 bearing an interest rate of 2.20% and $500 of senior notes due in fiscal year 2030 bearing interest rate of 1.70%. In connection with the senior note issuances, the Company also terminated forward-starting interest rate swap agreements with an aggregate notional amount of $450 due in fiscal year 2030. These forward-starting interest rate swap agreements were hedging the variability in future benchmark interest payments attributable to changing interest rates on the forecasted issuance of fixed-rate debt issued during the fourth quarter of 2020. Since these forward-starting interest rate swap agreements were classified as cash flow hedges, the unamortized loss of $41, $31 net of tax, has been deferred in Accumulated Other Comprehensive Loss and will continue to amortize to earnings as the interest payments are made. The Company repaid $700 of senior notes bearing an interest rate of 3.30% with proceeds from the senior notes issuances. On March 18, 2020, the Company proactively borrowed $1,000 under the revolving credit facility. This was a precautionary measure in order to preserve financial flexibility, reduce reliance on the commercial paper market and maintain liquidity in response to the COVID-19 pandemic. During 2020, the Company fully repaid the $1,000 borrowed under the revolving credit facility and the entire $1,150 in outstanding commercial paper obligations using cash generated by operations. In 2019, the Company issued $750 of senior notes due in fiscal year 2049 bearing an interest rate of 3.95%. In connection with the senior note issuances, the Company also terminated forward-starting interest rate swap agreements with an aggregate notional amount of $300. These forward-starting interest rate swap agreements were hedging the variability in future benchmark interest payments attributable to changing interest rates on the forecasted issuance of fixed-rate debt issued during the fourth quarter of 2019. Since these forward-starting interest rate swap agreements were classified as cash flow hedges, the unamortized loss of $12, S10 net of tax, has been deferred in Accumulated Other Comprehensive Loss and will continue to amortize to earnings as the interest payments are made. The Company repaid $750 of senior notes bearing an interest rate of 6.15%, with proceeds from the senior notes issuances. During 2019, the Company also repaid, upon maturity, $1,000 term loan bearing an interest rate of 3.37% and $500 of senior notes bearing an interest rate of 1.50%, using cash generated by operations and proceeds from issuing commercial paper. On August 29, 2017, the Company entered into an amended, extended and restated $2,750 unsecured revolving credit facility (the "Credit Agreement"), with a termination date of August 29, 2022, unless extended as permitted under the Credit Agreement. The Company has the ability to increase the size of the Credit Agreement by up to an additional $1,000, subject to certain conditions. Borrowings under the Credit Agreement bear interest, at the Company's option, at either () LIBOR plus a market spread, based on the Company's Public Debt Rating or (ii) the base rate, defined as the highest of (a) the Federal Funds Rate plus 0.5%, (b) the Bank of America prime rate, and (c) one-month LIBOR plus 1.0%, plus a market rate spread based on the Company's Public Debt Rating. The Company will also pay a Commitment Fee based on its Public Debt Rating and Letter of Credit fees equal to a market rate spread based on the Company's Public Debt Rating. "Public Debt Rating" means, as of any date, the rating that has been most recently announced by either S&P or Moody's, as the case may be for any class of non-credit enhanced long-term senior unsecured debt issued by the Company The Credit Agreement contains covenants, which, among other things, require the maintenance of a Leverage Ratio of not greater than 3.50:1.00 and a Fixed Charge Coverage Ratio of not less than 1.70-1.00. The Company may repay the Credit Agreement in whole or in part at any time without premium or penalty. The Credit Agreement is not guaranteed by the Company's subsidiaries. As of January 30, 2021, the Company had no commercial paper borrowings and no borrowings under the Credit Agreement. As of February 1, 2020, the Company had $1,150 of commercial paper borrowings, with a weighted average interest rate of 1.77% and no borrowings under the Credit Agreement As of January 30, 2021, the Company had outstanding letters of credit in the amount of $381, of which $2 reduces funds available under the Credit Agreement. As of February 1, 2020, the Company had outstanding letters of credit in the amount of $362, of which $2 reduces funds available under the Credit Agreement. The letters of credit are maintained primarily to support performance, payment, deposit or surety obligations of the Company. 66 Most of the Company's outstanding public debt is subject to carly redemption at varying times and premiums, at the option of the Company. In addition, subject to certain conditions, some of the Company's publicly issued debt will be subject to redemption, in whole or in part, at the option of the holder upon the occurrence of a redemption event, upon not less than five days' notice prior to the date of redemption, at a redemption price equal to the default amount, plus a specified premium. "Redemption Event" is defined in the indentures as the occurrence of (1) any person or group, together with any affiliate thereof, beneficially owning 50% or more of the voting power of the Company, (ii) any one person or group, or affiliate thereof, succeeding in having a majority of its nominees elected to the Company's Board of Directors, in each case, without the consent of a majority of the continuing directors of the Company or (iii) both a Change of control and below investment orade ratino payments of long-term deo, as LULU. 11 C e aggregate subsequent to 2020 are: 2021 2022 2023 2024 2025 Thereafter 844 894 617 494 575 8,986 Total debt S 12,410 Fair Value Interest Rate Swaps The Company did not have any outstanding interest rate derivatives classified as fair value hedges as of January 30, 2021 and February 1, 2020. Cash Flow Forward-Starting Interest Rate Swaps The Company did not have any outstanding forward-starting interest rate swap agreements as of January 30, 2021. As of February 1, 2020, the Company had seven forward-starting interest rate swap agreements with a maturity date of January 2021 with an aggregate notional amount totaling $350. A forward-starting interest rate swap is an agreement that effectively hedges the variability in future benchmark interest payments attributable to changes in interest rates on the forecasted issuance of fixed-rate debt. The Company entered into these forward-starting interest rate swaps in order to lock in fixed interest rates on its forecasted issuance of debt in January 2021. Accordingly, the forward-starting interest rate swaps were designated as cash-flow hedges as defined by GAAP. As of February 1, 2020, the fair value of the interest rate swaps was recorded in other long-term liabilities for $19 and accumulated other comprehensive loss for $17 net of tax During 2020, the Company terminated nine forward-starting interest rate swaps with maturity dates of January 2021 with an aggregate notional amount totaling $450. These forward-starting interest rate swap agreements were hedging the variability in future benchmark interest payments attributable to changing interest rates on the forecasted issuance of fixed-rate debt issued during the fourth quarter of 2020. Since these forward-starting interest rate swap agreements were classified as cash flow hedges, the unamortized loss of $41, 831 net of tax, has been deferred in AOCI and will be amortized to earnings as the interest payments are made. In addition, the Company terminated and discontinued hedge accounting for one forward-starting interest rate swap with a maturity date of January 2021 with an aggregate notional amount totaling $50. The gain of $7 from the termination of this forward starting interest rate swap was record in interest income in the fourth quarter of 2020. During 2019, the Company terminated six forward-starting interest rate swaps with maturity dates of January 2020 with an aggregate notional amount totaling $300. These forward-starting interest rate swap agreements were hedging the variability in future benchmark interest payments attributable to changing interest rates on the forecasted issuance of fixed-rate debt issued during the fourth quarter of 2019. Since these forward-starting interest rate swap agreements were classified as cash flow hedges, the unamortized loss of S12. $10 net of tax, has been deferred in AOCI and will be amortized to earnings as the interest payments are made. The following table summarizes the effect of the Company's derivative instruments designated as cash flow hedges for 2020, 2019 and 2018: Derivatives in Cash Flow Hedging Relationships Forward-Starting Interest Rate Swaps, net of tax Year To Date Amount of Gain (Los) in Amount of Gain/(Loss) AOCI on Derivative Reclassified from AOCI Into Location of Gain (Loss) (Effective Portion) Income (Effective Portion) Rechwified into Income 2020 2019 2018 2020 2019 2018 (Effective Portion) S (54 S (42) 6.5 (2) (5) 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 2020, 2019 and 2018, respectively. For the above 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 February 1, 2020, 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 February 1, 2020: Gross Amounts Not Offset in the Balance Sheet Net Amount Gross Amount Gross Amounts Offset Presented in the Recognized in the Balance Sheet Balance Sheet Financial Instruments Cash Collateral Net Amount February 1, 2020 Liabilities Cash Flow Forward-Starting Interest Rate Swaps 195 19 $ 19 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. For items carried at (or adjusted to) fair value in the consolidated financial statements, the following tables summarize the fair value of these instruments at January 30, 2021 and February 1, 2020: January 30, 2021 Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1) 1.882 Significant Unobservable Inputs (Level 3) S Trading Securities Other Investment Total 160 160 Total 1.882 160 2.042 1.882 February 1, 2020 Fair Value Measurements Using Quoted Prices in Active Markets Significant for Identical Significant Other Unobservable Assets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Total Trading Securities 840 840 Other Investment 41 Interest Rate Hedges (19 (19) Total 840 (19) S 41 862 in 2018, realized gains on Level 1 available-for-sale securities totaled $5. The Company values interest rate hedges using observable forward yield curves. These forward yield curves are classified as Level 2 inputs. 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 $1,808 and $776 as of January 30, 2021 and February 1, 2020, respectively, and is included in "Other assets" in the Company's Consolidated Balance Sheets. The unrealized gain for this level 1 investment was approximately $1,032 and 157 for 2020 and 2019, respectively, and is included in "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 $160 and $41 at January 30, 2021 and February 1, 2020, 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 2020 and is included in "Gain on investments" in the Company's Consolidated Statements of Operations. Fair value measurements of non-financial assets and non-financial liabilities are primarily used in the impairment analysis of goodwill, other intangible assets, long-lived assets and in the valuation of store lease exit costs. The Company reviews goodwill and indefinite-lived intangible assets for impairment annually, during the fourth quarter of cach fiscal year, and as circumstances indicate the possibility of impairment. See Note 3 for further discussion related to the Company's carrying value of goodwill. Long-lived assets and store lease exit costs were measured at fair value on a nonrecurring basis using Level 3 inputs as defined in the fair value hierarchy. See Note 1 for further discussion of the Company's policies for impairments of long-lived assets and valuation of store lease exit costs. In 2020, long-lived assets with a carrying amount of $72 were written down to their fair value of S2, resulting in an impairment charge of $70. In 2019, long-lived assets with a carrying amount of S152 were written down to their fair value of $32, resulting in an impairment charge of $120, which included the 35 planned store closures. Mergers are necounted for using the acquisition method of accounting, which requires that the purchase price paid for a merger be allocated to the assets and liabilities acquired based on their estimated fair values as of the effective date of the merger, with the excess of the purchase price over the net assets being recorded as goodwill 9. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following table represents the changes in AOCI by component for the years ended January 30, 2021 and February 1, 2020 Pension and Cash Flow Postretirement Hedging Defined Benefit Activities Plans Total Balance at February 2, 2019 6 S (352) $ (346) Cumulative effect of accounting change? (5) OCI before reclassifications) (141) (146) (47) (134) (181) Amounts reclassified out of AOC 4 29 33 Net current-period OCI (48) (246) Balance at February 1, 2020 (294) (42) S (598) S (640) Balance at February 1, 2020 (42) $ (598) S (640) OCI before reclassifications) (14) 8 (6) Amounts reclassified out of AOCH 2 14 16 Net current period OCI (12) 22 10 Balance at January 30, 2021 (54) S (576) S (630) (1) All amounts are net of tax (2) Related to the adoption of ASU 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income." (see Note 18 for additional details). (3) Net of tax of ($17) and (542) for cash flow hedging activities and pension and postretirement defined benefit plans, respectively, as of February 1, 2020. Net of tax of (88) and $2 for cash flow hedging activities and pension and postretirement defined benefit plans, respectively, as of January 30, 2021 (4) Net of tax of S9 and 3 for pension and postretirement defined benefit plans and cash flow hedging activities, respectively, as of February 1, 2020. Net of tax of S5 and 2 for pension and postretirement ed benefit plans and cash flow hedging activities, respectively, as of January 30, 2021 February 1, 2020 February 2, 2019 8 The following table represents the items reclassified out of AOCI and the related tax effects for the years ended January 30, 2021, February 1, 2020 and February 2, 2019: For the year ended For the year ended For the year ended January 30, 2021 Cash flow hedging activity items Amortization of gains and losses on cash flow hedging activities! s 4 S 7 S Tax expense (2) (3) (3) Net of tax Pension and postretirement defined benefit plan items Amortization of amounts included in net periodic pension cost(2) 19 38 56 Tax expense (5) (9) (13) Net of tax Total reclassifications, net of tax 16 S 33 2 4 5 14 29 43 48 S (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 expense. The following table provides supplemental balance sheet classification information related to leases: January 30, 2021 Classification February 1. 2020 Assets Operating Finance Operating lease assets Property, plant and equipment, net 6,796 S 844 6,814 690 7.640 7,504 Total leased assets Liabilities Current Operating 667 597 Current portion of operating lease liabilities Current portion of long-term debt including obligations under finance leases Finance 67 39 Noncurrent Operating Finance Total lense liabilities Noncurrent operating lease liabilities Long-term debt including obligations under finance lenses 6,507 936 6,505 781 s 8,177 s 7.922 (1) Finance lease assets are recorded net of accumulated amortization of S321 and S276 as of January 30, 2021 and February 1, 2020 The following table provides the components of lease cost: Year. To-Date January 30, 2021 981 (107) Classification Rent Expense Rent Expense Year To-Date February 1, 2020 1.000 (116) Lease Cost Operating lease cose Sublease and other rental income Finance lease cost Amortization of leased assets Interest on lease liabilities Depreciation and Amortization Interest Expense 55 45 53 48 Not lense cost 974 983 Leases Maturities of operating and finance lease liabilities are listed below. Amounts in the table include options to extend lease terms that are reasonably certain of being exercised. Operating Finance Leases Total 2021 947 109 $ 1,056 2022 865 97 962 2023 790 95 885 2024 717 93 810 2025 653 92 745 Thereafter 6,260 935 7.195 Total lease payments 10.232 1,421 11,653 Less amount representing interest 3,058 418 Present value of lease liabilities S 7.174 $ 1,003 (1) Includes the current portion of $667 for operating leases and $67 for finance lenses, Total future minimum rentals under non-cancellable subleases at January 30, 2021 were $261. The following table provides the weighted average lease term and discount rate for operating and finance leases: January 30, 2021 February 1, 2020 15.3 16.2 16.0 15.3 Weighted average remaining lease term (years) Operating leases Finance leases Weighted average discount rate Operating leases Finance leases 4.2 4.4 % 4.3% 5.4% 11. EARNINGS PER COMMON SHARE Net earnings attributable to The Kroger Co. per basic common share equals 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 equals 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: For the year raded For the year ended January 30, 2021 February 2010 Per Earning Shares Share Earning Share ( Nor) Dominator) Am (Numerator) esaminata) 773 5 3.315 1.540 79 5 For the year ended February 2019 Per Per Share Karies Shares Share Amat Numer) am Am 2015 3076 1053 in millions charm Net The Korper huone Dilutive effect of stock option Nel caming the to The Kroger Coper dulcowe share 3.556 5 3.27.5 160 5 5 2045 3.076 51.70 The Company had combined undistributed and distributed earnings to participating securities totaling $29, S19 and S34 in 2020, 2019 and 2018, respectively. The Company had stock options outstanding for approximately 9.1 million, 18.4 million and 10.1 million shares, respectively, for the years ended January 30, 2021. February 1, 2020, and February 2, 2019, which 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 diluted share. Changes in options outstanding under the stock option plans are summarized below: Shares subject to option (in millions) 36.7 $ 2.7 $ (4.4) $ (0.9) $ Weighted- average exercise price 22.23 27.88 15.34 28.05 Outstanding. year-end 2017 Granted Exercised Canceled or Expired Outstanding, year-end 2018 Granted Exercised Canceled or Expired Outstanding, year-end 2019 Granted Exercised Canceled or Expired Outstanding, year-end 2020 34.1 S 3.1 S (4.0) $ (1.0) $ 23.42 24.63 14.17 28.87 32.2 S 2.9 $ (7.3) S (1.0) 24.52 29.31 17.72 30.53 26.8 $ 26.65 A summary of options outstanding, exercisable and expected to vest at January 30, 2021 follows: Weighted average remaining contractual life Weighted average exercise price Number of shares (in millions) 26.8 18.5 8.2 Options Outstanding Options Exercisable Options Expected to Vest Aggregate intrinsic value (in millions) 231 168 62 5.43 S 4.34 S 7.82S 26.63 26.42 27.16 Restricted stock Changes in restricted stock outstanding under the restricted stock plans are summarized below: Outstanding, year-end 2017 Granted Lapsed Canceled or Expired Restricted shares Weighted average outstanding grant-date (in millions) fair value 9.2 S 26.78 4.6 S 27.99 (4.4) $ 25.93 (0.6) $ 26.57 Outstanding, year-end 2018 Granted Lapsed Canceled or Expired 8.8 $ 5.4 S (4.1) S (0.8) S 27.86 22.72 28.07 25.68 Outstanding, year-end 2019 Granted Lapsed Canceled or Expired Outstanding, year-end 2020 9.3 S 4.0 $ (4.9) S (0.6) S 24.85 31.99 24.69 26.71 7.8 S 28.46 VI. Ratio Analysis of Financial Statements Prepare a ratio analysis using ALL of the ratios learned in chapter 17 to analyze your company. You should calculate the ratios for two years to be able to compare one year to another by telling if they improved or deteriorated from one year to another. For this section you will include a discussion of the ratios in the paper portion and the actual formula AND calculation will be in an appendix at the end of your paper. You need to show calculations IN AN APPENDIX to earn credit. (Review APA to see where an Appendix goes in a paper). Working Capital Working capital is the amount of current assets minus curr