Albertsons 2016 Annual Report Download - page 85

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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 $315 for tax purposes. The NOL carryforwards
expire beginning in fiscal 2017 and continuing through fiscal 2035 and have a $6 valuation allowance. In fiscal 2014, the sale
of NAI resulted in an allocation of tax expense between continuing and discontinued operations and the recognition of the
additional tax basis in the shares of NAI offset by a valuation allowance on the capital loss that resulted from the sale of shares.
The Company has recorded a valuation allowance against the projected capital loss as there is no evidence that the capital loss
will be used prior to its expiration in fiscal 2019.
Uncertain Tax Positions
Changes in the Company’s unrecognized tax positions consisted of the following:
2016 2015 2014
Beginning balance $ 94 $ 76 $ 187
Increase based on tax positions related to the current year 5 15 15
Decrease based on tax positions related to the current year — — —
Increase based on tax positions related to prior years — 15 8
Decrease based on tax positions related to prior years (23)(4)(2)
Decrease related to settlements with taxing authorities — (3)(128)
Decrease due to lapse of statute of limitations (6)(5)(4)
Ending balance $ 70 $ 94 $ 76
Included in the balance of unrecognized tax benefits as of February 27, 2016, February 28, 2015 and February 22, 2014 are tax
positions, net of tax, of $34, $36 and $48, respectively, which would reduce the Company’s effective tax rate if recognized in
future periods.
Because existing tax positions will continue to generate increased liabilities for the Company for unrecognized tax benefits
over the next 12 months, and since the Company is routinely under audit by various taxing authorities, it is reasonably possible
that the amount of unrecognized tax benefits will change during the next 12 months. An estimate of the amount or range of
such change cannot be made at this time. However, the Company does not expect the change, if any, to have a material effect
on the Company's Consolidated Balance Sheets, Consolidated Statements of Operations, or Consolidated Statements of Cash
Flows within the next 12 months.
The Company recognized interest income of $9, $7 and $4 in fiscal 2016, 2015 and 2014 in Interest expense, respectively, and
penalty expense of $5 in fiscal 2016 in Selling and administrative expenses, in the Consolidated Statements of Operations. At
February 27, 2016 and February 28, 2015, the Company had accrued interest of $16 and $26, respectively, related to uncertain
tax positions recorded in Other current liabilities, and Long-term tax liabilities in the Consolidated Balance Sheets. At February
27, 2016 and February 28, 2015, the Company had accrued penalties of $5 and $0, respectively, related to uncertain tax
positions recorded in Long-term tax liabilities in the Consolidated Balance Sheets.
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 27, 2016, the Company is no longer subject to federal income tax
examinations for fiscal years before 2014 and in most states is no longer subject to state income tax examinations for fiscal
years before 2006.
NOTE 10—STOCK-BASED AWARDS
As of February 27, 2016, the Company has stock options, restricted stock awards and restricted stock units (collectively
referred to as “stock-based awards”) outstanding under the 2012 Stock Plan and 2007 Stock Plan. The Company’s amended and
restated 2012 Stock Plan (the "2012 Stock Plan"), as approved by stockholders in fiscal 2015, is the only plan under which
stock-based awards may be granted. The 2012 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 each stock-based award will be determined by the Board of Directors or
the Compensation Committee. Generally, stock-based awards granted prior to fiscal 2006 have a term of ten years, stock-based
awards granted from fiscal 2006 to fiscal 2012 generally have a term of seven years, and starting in fiscal 2013 stock-based
awards granted generally have a term of ten years.