Albertsons 2009 Annual Report Download - page 64

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Deferred income taxes reflect the net tax effects of temporary differences between the bases of assets and
liabilities for financial reporting and income tax purposes. The Company’s deferred tax assets and liabilities
consisted of the following:
2009 2008
Deferred tax assets:
Compensation and benefits $ 575 $ 330
Self-insurance 232 278
Property, plant and equipment and capital leases 448 399
Capital and net operating loss carryforwards 171 172
Other 229 203
Gross deferred tax assets 1,655 1,382
Valuation allowance (165) (165)
Total deferred tax assets 1,490 1,217
Deferred tax liabilities:
Property, plant and equipment and capital leases (275) (170)
Inventories (277) (290)
Debt discount (81) (78)
Intangible assets (471) (669)
Other (39) (57)
Total deferred tax liabilities (1,143) (1,264)
Net deferred tax asset (liability) $ 347 $ (47)
The Company currently has state net operating loss (“NOL”) carryforward of $444 for tax purposes. The NOL
carryforward expires beginning in 2011 and continuing through 2027. The Company also has capital loss
carryforward which expires in fiscal 2011.
The Company records valuation allowances to reduce deferred tax assets to the amount that is more-likely-
than-not to be realized. The Company recorded a valuation allowance of $18 against a portion of its NOL
carryforward deferred tax asset and a full valuation allowance of $147 against its capital loss carryforward
deferred tax asset, as realization of the deferred tax asset in future years is uncertain. Based on the Company’s
carryback potential, reversing taxable differences, and projected future earnings, the Company has evaluated
the remaining deferred tax assets and has determined that it is more-likely-than-not that all of the deferred tax
assets will be realized.
Changes in the Company’s unrecognized tax benefits during fiscal 2009 consisted of the following:
2009 2008
Beginning balance $146 $ 312
Increase based on tax positions related to the current year 5 1
Decrease based on tax positions related to the current year — (2)
Increase based on tax positions related to prior years 22 18
Decrease based on tax positions related to prior years (37) (180)
Decrease due to lapse of statute of limitations (22) (3)
Ending balance $114 $ 146
Included in the balance of unrecognized tax benefits as of February 28, 2009 and February 23, 2008 are tax
positions of $57, net of tax, and $29, net of tax, respectively, that would reduce the Company’s effective tax
rate if recognized in future periods.
60