Safeway 2013 Annual Report Download - page 76

Table of Contents
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At December 29, 2012, the Company had foreign tax credit carryforwards of $37.9 million which would normally expire in 2021. A valuation
allowance was recorded against $27.1 million of these carryforwards. The valuation allowance is recorded when it becomes more likely than
not that a portion of the deferred tax asset will not be realized. As a result of the sale of its Canadian operations the Company was able to
utilize the foreign tax credit carryforwards in 2013.
At year-end 2013, no deferred tax liability has been recognized for the $170.0 million of unremitted foreign earnings because the Company
intends to utilize those earnings in the foreign operations for an indefinite period of time. If Safeway did not consider these earnings to be
indefinitely reinvested, the deferred tax liability would have been in the range of $25 million to $75 million at year-end 2013.
A reconciliation of the beginning and ending amount of unrecognized tax benefits follows (in millions):
 2012 2011
Balance at beginning of year  $161.3 $159.9
Additions based on tax positions related to the current year  2.7 17.8
Reduction for tax positions of current year — —
Additions for tax positions of prior years  2.2 0.5
Reductions for tax positions of prior years (46.9)(3.5)
Foreign currency translation 0.1 (0.1)
Expiration of statute of limitations — —
Settlements —(13.3)
Balance at end of year  $119.4 $161.3
As of December 28, 2013, December 29, 2012 and December 31, 2011, the balance of unrecognized tax benefits included tax positions of
$60.1 million (net of tax), $42.9 million (net of tax) and $43.1 million (net of tax), respectively, that would reduce the Company’s effective
income tax rate if recognized in future periods.
Continuing operations income tax expense in 2013, 2012 and 2011 included benefits of $5.9 million (net of tax), $5.6 million (net of tax) and
expense of $0.2 million (net of tax), respectively, related to interest and penalties. As of December 28, 2013 and December 29, 2012, the
Company’s accrual for net interest and penalties were receivables of $5.2 million and $3.3 million, respectively.
The Company and its domestic subsidiaries file income tax returns with federal, state and local tax authorities within the United States. The
Company’s foreign affiliates file income tax returns in various foreign jurisdictions, the most significant of which are Canada and certain of
its provinces. The Company expects that it will no longer be subject to federal income tax examinations for fiscal years before 2007, and is no
longer subject to state and local income tax examinations for fiscal years before 2006. With limited exceptions, including proposed
deficiencies which the Company is protesting, Safeway’s Canadian affiliates are no longer subject to examination by Canada and certain of
its provinces for fiscal years before 2006.
The Company does not anticipate that total unrecognized tax benefits will change significantly in the next 12 months.
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Pension Plans The Company maintains defined benefit, non-contributory retirement plans for substantially all of its employees not
participating in multiemployer pension plans. Safeway recognizes the funded status of its retirement plans on its consolidated balance sheet.
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