Albertsons 2012 Annual Report Download - page 66

Changes in the Company’s unrecognized tax benefits consisted of the following:
2012 2011 2010
Beginning balance $ 182 $ 133 $ 114
Increase based on tax positions related to the current year 14 18 7
Decrease based on tax positions related to the current year (1) (1) (4)
Increase based on tax positions related to prior years 21 41 34
Decrease based on tax positions related to prior years (46) (9) (14)
Decrease due to lapse of statute of limitations (5) — (4)
Ending balance $ 165 $ 182 $ 133
Included in the balance of unrecognized tax benefits as of February 25, 2012, February 26, 2011 and
February 27, 2010 are tax positions of $67, net of tax, $82, net of tax, and $58, net of tax, respectively, that
would reduce the Company’s effective tax rate if recognized in future periods.
The Company expects to resolve $11, 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 25,
2012, the Company does not anticipate significant additional changes to its unrecognized tax benefits.
The Company recognized (income) expense related to interest and penalties, net of settlement adjustments, of $2,
$10 and ($2) for fiscal 2012, 2011 and 2010, respectively. There was also a reclassification from income taxes
payable of ($12) related to prior year IRS audit settlements for fiscal 2012. In addition to the liability for
unrecognized tax benefits, the Company had a liability of $40 and $50 as of February 25, 2012 and February 26,
2011, respectively, related to accrued interest and penalties for uncertain tax positions recorded in Other current
liabilities and Other long-term liabilities in the Consolidated Balance Sheets. The Company settled various audits
during fiscal 2012 and fiscal 2011 resulting in payments of less than $1 and $4, respectively, for interest and
penalties.
The Company is currently under examination or other methods of review in several tax jurisdictions and remains
subject to examination until the statute of limitations expires for the respective taxing jurisdiction or an
agreement is reached between the taxing jurisdiction and the Company. As of February 25, 2012, the Company is
no longer subject to federal income tax examinations for fiscal years before 2007 and in most states is no longer
subject to state income tax examinations for fiscal years before 2005.
NOTE 9—STOCK-BASED AWARDS
As of February 25, 2012, the Company has stock options, restricted stock awards and performance awards
(collectively referred to as “stock-based awards”) outstanding under the following plans: 2007 Stock Plan, 2002
Stock Plan, 1997 Stock Plan, 1993 Stock Plan, SUPERVALU/Richfood Stock Incentive Plan, Albertsons
Amended and Restated 1995 Stock-Based Incentive Plan and the Albertsons 2004 Equity and Performance
Incentive Plan. The Company’s 2007 Stock Plan, as approved by stockholders in May 2007, is the only plan
under which stock-based awards may be granted. The 2007 Stock Plan provides that the Board of Directors or the
Leadership Development and Compensation Committee of the Board (the “Compensation Committee”) may
determine at the time of grant whether each stock-based award granted will be a non-qualified or incentive stock-
based award under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). The terms of
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