Safeway 2008 Annual Report Download - page 80

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SAFEWAY INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Significant components of the Company’s net deferred tax liability at year end were as follows (in millions):
2008 2007
Deferred tax assets:
Pension liability $ 203.6 $ 32.7
Workers’ compensation and other claims 194.4 190.1
Employee benefits 136.9 121.9
Accrued claims and other liabilities 62.8 24.8
Charitable contribution carryforwards 49.4 74.7
Reserves not currently deductible 44.6 61.8
Operating loss carryforwards 2.9 3.7
Other assets 9.1 33.9
703.7 543.6
Valuation allowance –(12.2)
$ 703.7 $ 531.4
2008 2007
Deferred tax liabilities:
Property $ (736.3) $ (560.1)
Inventory (282.5) (264.6)
Investments in foreign operations (41.7) (49.4)
(1,060.5) (874.1)
Net deferred tax liability (356.8) (342.7)
Less current liability (107.2) (88.0)
Long-term portion $ (249.6) $ (254.7)
At January 3, 2009, the Company had federal and state charitable contribution carryforwards of $134.9 million which
expire from 2009 through 2012. The valuation allowance against $33.2 million of these carryforwards was reversed in
2008 as a result of the Company’s determination that such carryforwards were more likely than not to be utilized.
The Company had net operating loss carryforwards for federal income tax purposes of approximately $8.3 million which
expire at various dates from 2022 to 2026. The Company also had state tax credit carryforwards of $19.7 million which
have no expiration date.
At January 3, 2009, certain undistributed earnings of the Company’s foreign operations totaling $1,351.5 million were
considered to be permanently reinvested. No deferred tax liability has been recognized for the remittance of such
earnings to the U.S., since it is the Company’s intention to utilize those earnings in the foreign operations for an
indefinite period of time, or to repatriate such earnings only when tax-efficient to do so. Determination of the amount of
unrecognized deferred U.S. income tax liability is not practicable; however, unrecognized foreign tax credits may be
available to reduce some portion of the U.S. income tax liability.
The Company adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”) on
December 31, 2006, the first day of the 2007 fiscal year. The Company recorded the cumulative effect of adopting FIN 48
by increasing stockholders’ equity by $139.7 million.
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