Albertsons 2011 Annual Report Download - page 55

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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:
2011 2010
Deferred tax assets:
Compensation and benefits $ 435 $ 505
Self-insurance 241 239
Property, plant and equipment and capitalized lease assets 452 452
Capital and net operating loss carryforwards 38 179
Other 163 194
Gross deferred tax assets 1,329 1,569
Valuation allowance (24) (161)
Total deferred tax assets 1,305 1,408
Deferred tax liabilities:
Property, plant and equipment and capitalized lease assets (345) (385)
Inventories (267) (252)
Debt discount (78) (81)
Intangible assets (342) (473)
Other (26) (34)
Total deferred tax liabilities (1,058) (1,225)
Net deferred tax asset $ 247 $ 183
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 $790 for tax purposes. The NOL carryforwards expire beginning in 2012 and continuing through 2029 and
have a $24 valuation allowance.
Changes in the Company’s unrecognized tax benefits consisted of the following:
2011 2010 2009
Beginning balance $ 133 $ 114 $ 146
Increase based on tax positions related to the current year 18 7 5
Decrease based on tax positions related to the current year (1) (4) —
Increase based on tax positions related to prior years 41 34 22
Decrease based on tax positions related to prior years (9) (14) (37)
Decrease due to lapse of statute of limitations — (4) (22)
Ending balance $ 182 $ 133 $ 114
Included in the balance of unrecognized tax benefits as of February 26, 2011, February 27, 2010 and
February 28, 2009 are tax positions of $82, net of tax, $58, net of tax, and $57, net of tax, respectively, that
would reduce the Company’s effective tax rate if recognized in future periods.
The Company expects to resolve $34, net, of unrecognized tax benefits within the next 12 months,
representing 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 would occur as a result of potential settlements from these negotiations. Based on the information
available as of February 26, 2011, the Company does not anticipate significant additional changes to its
unrecognized tax benefits.
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