Albertsons 2010 Annual Report Download - page 59

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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:
2010 2009
Deferred tax assets:
Compensation and benefits $ 505 $ 575
Self-insurance 239 232
Property, plant and equipment and capitalized lease assets 452 448
Capital and net operating loss carryforwards 179 171
Other 194 229
Gross deferred tax assets 1,569 1,655
Valuation allowance (161) (165)
Total deferred tax assets 1,408 1,490
Deferred tax liabilities:
Property, plant and equipment and capitalized lease assets (385) (275)
Inventories (252) (277)
Debt discount (81) (81)
Intangible assets (473) (471)
Other (34) (39)
Total deferred tax liabilities (1,225) (1,143)
Net deferred tax asset (liability) $ 183 $ 347
The Company has valuation allowances to reduce deferred tax assets to the amount that is more-likely-than-
not to be realized. The Company currently has state net operating loss (“NOL”) carryforwards of $851 for tax
purposes. The NOL carryforwards expire beginning in 2011 and continuing through 2028 and have a $20
valuation allowance. The remaining valuation allowance is for capital loss carryforwards which expire in fiscal
2011.
Changes in the Company’s unrecognized tax benefits consisted of the following:
2010 2009 2008
Beginning balance $114 $146 $ 312
Increase based on tax positions related to the current year 7 5 1
Decrease based on tax positions related to the current year (4) — (2)
Increase based on tax positions related to prior years 34 22 18
Decrease based on tax positions related to prior years (14) (37) (180)
Decrease due to lapse of statute of limitations (4) (22) (3)
Ending balance $133 $114 $ 146
Included in the balance of unrecognized tax benefits as of February 27, 2010, February 28, 2009 and
February 23, 2008 are tax positions of $58, net of tax, $57, net of tax, and $29, net of tax, respectively, that
would reduce the Company’s effective tax rate if recognized in future periods.
The Company expects to resolve $10, net, of unrecognized tax benefits within the next 12 months, represent-
ing several individually insignificant income tax positions. These unrecognized tax benefits represent items in
which the Company may not prevail with certain taxing authorities, based on varying interpretations of the
applicable tax law. The Company is currently in various stages of audits, appeals or other methods of review
with taxing authorities from various taxing jurisdictions. The resolution of these unrecognized tax benefits
53