Safeway 2013 Annual Report Download - page 74
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Table of Contents
The components of income tax expense are as follows (in millions):
2012 2011
Current:
Federal $168.7 $108.2
State 12.4 39.0
Foreign 1.4 1.0
182.5 148.2
Deferred:
Federal (36.5)(38.6)
State (3.5)(17.4)
Foreign (0.7)(1.0)
(40.7)(57.0)
$141.8 $91.2
Reconciliation of the provision for income taxes at the U.S. federal statutory income tax rate to the Company’s income taxes is as follows
(dollars in millions):
2012 2011
Statutory rate 35%35%
Income tax expense using federal statutory rate $152.8 $160.4
State taxes on income net of federal benefit 5.8 14.0
Charitable donations of inventory (4.3)(12.0)
U.S. repatriation tax —(53.8)
Federal tax credits (2.2)(12.1)
Reversal of deferred tax liability on life insurance — —
Investment in Blackhawk — —
Equity earnings of foreign affiliate (8.4)(4.6)
Other (1.9)(0.7)
$141.8 $91.2
In 2013, Safeway withdrew $68.7 million from the accumulated cash surrender value of corporate-owned life insurance ("COLI") policies
purchased in the early 1980s and determined that a majority of the remaining cash surrender value would be received in the future through
tax-free death benefits. Consequently, Safeway reversed deferred taxes on that remaining cash surrender value and reduced tax expense by
$17.2 million.
Income tax expense increased by $23.7 million in 2013 related to Safeway’s investment in Blackhawk, one of its subsidiaries. During 2013,
Blackhawk completed its initial public offering of stock and as a result of the IPO Blackhawk is no longer included in Safeway’s consolidated
federal income tax return. This required Safeway to record current and deferred taxes related to its investment in Blackhawk.
Income tax expense decreased by $53.8 million in 2011 as a result of a change in repatriation policy regarding the Company’s investment in
Casa Ley.
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