Albertsons Companies, Inc.ACI
Albertsons Companies, Inc. Income Taxes Disclosure
INCOME TAXES
The components of income tax expense consisted of the following (in millions):
| Fiscal 2025 | Fiscal 2024 | Fiscal 2023 | |||||||||||||||
| Current | |||||||||||||||||
| Federal (1) | $ | 206.4 | $ | 228.9 | $ | 348.2 | |||||||||||
| State (2) | 51.3 | 46.0 | 56.4 | ||||||||||||||
| Foreign | 1.4 | 1.3 | 1.0 | ||||||||||||||
| Total Current | 259.1 | 276.2 | 405.6 | ||||||||||||||
| Deferred | |||||||||||||||||
| Federal | (174.2) | (11.8) | (83.1) | ||||||||||||||
| State | (34.0) | (92.9) | 31.7 | ||||||||||||||
| Foreign | (0.5) | (0.4) | (61.2) | ||||||||||||||
| Total Deferred | (208.7) | (105.1) | (112.6) | ||||||||||||||
| Income tax expense | $ | 50.4 | $ | 171.1 | $ | 293.0 | |||||||||||
(1) Federal current tax expense is net of $0.3 million, $0.3 million and $0.3 million tax benefit of net operating losses ("NOL") in fiscal 2025, fiscal 2024 and fiscal 2023, respectively.
(2) There were no state tax benefits of NOLs in fiscal 2025 and fiscal 2023. In fiscal 2024, state current tax expense is net of $1.0 million tax benefit of NOLs.
The difference between the actual tax provision and the tax provision computed by applying the statutory federal income tax rate of 21.0% to Income before income taxes was attributable to the following (in millions):
| Fiscal 2025 | Fiscal 2024 | Fiscal 2023 | |||||||||||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||
| U.S. federal tax at statutory rate | $ | 56.2 | 21.0 | % | $ | 237.3 | 21.0 | % | $ | 333.7 | 21.0 | % | |||||||||||||||||||||||
| State and local income taxes, net of federal income tax effect (1) | 10.4 | 3.9 | 51.9 | 4.6 | 66.3 | 4.2 | |||||||||||||||||||||||||||||
| Tax credits | |||||||||||||||||||||||||||||||||||
| Research and development credit | (11.9) | (4.4) | (12.9) | (1.1) | (20.6) | (1.3) | |||||||||||||||||||||||||||||
| Employee tax credits | (8.5) | (3.2) | (12.3) | (1.1) | (20.6) | (1.3) | |||||||||||||||||||||||||||||
| Other credits | (0.5) | (0.2) | (0.6) | (0.1) | (0.6) | — | |||||||||||||||||||||||||||||
| Changes in federal valuation allowances | 2.2 | 0.8 | 2.7 | 0.2 | — | — | |||||||||||||||||||||||||||||
| Non-taxable or non-deductible items | |||||||||||||||||||||||||||||||||||
| Non-deductible legal settlements (2) | 20.4 | 7.6 | — | — | — | — | |||||||||||||||||||||||||||||
| Non-deductible executive compensation | 11.0 | 4.1 | 10.1 | 0.9 | 10.1 | 0.6 | |||||||||||||||||||||||||||||
| Charitable donations | (12.2) | (4.6) | (12.7) | (1.1) | (12.7) | (0.8) | |||||||||||||||||||||||||||||
| Other non-taxable or non-deductible items | 1.6 | 0.6 | 2.6 | 0.2 | 6.6 | 0.4 | |||||||||||||||||||||||||||||
| Changes in unrecognized tax benefits | (9.2) | (3.4) | (95.2) | (8.4) | (67.3) | (4.2) | |||||||||||||||||||||||||||||
| Other adjustments | |||||||||||||||||||||||||||||||||||
| Gain on purchase of transferable credits | (9.4) | (3.5) | — | — | (2.5) | (0.2) | |||||||||||||||||||||||||||||
| Other | 0.3 | 0.1 | 0.2 | — | 0.6 | — | |||||||||||||||||||||||||||||
| Income tax expense | $ | 50.4 | 18.8 | % | $ | 171.1 | 15.1 | % | $ | 293.0 | 18.4 | % | |||||||||||||||||||||||
(1) State taxes in California and Oregon made up the majority (greater than 50 percent) of the tax effect in this category.
(2) Represents the estimated future non-deductible payments related to the Opioid Settlement Framework. Refer to Note 12 for additional information.
The amounts of cash paid (refunds received) for income taxes was as follows:
| Fiscal 2025 | Fiscal 2024 | Fiscal 2023 | |||||||||||||||
| Federal | $ | 214.7 | $ | 209.6 | $ | 321.2 | |||||||||||
| California | 15.8 | (87.4) | 20.7 | ||||||||||||||
| Oregon | * | 11.2 | * | ||||||||||||||
| Illinois | * | 10.0 | * | ||||||||||||||
| Other States | 23.7 | 23.7 | 62.5 | ||||||||||||||
| Foreign | 1.4 | 1.3 | 1.0 | ||||||||||||||
| Net cash paid for income taxes | $ | 255.6 | $ | 168.4 | $ | 405.4 | |||||||||||
* The disclosure threshold of 5% was applied separately to each year. Amounts for these jurisdictions are below the threshold for the period presented.
Deferred income taxes reflect the net tax effects of temporary differences between the bases of assets and liabilities for financial reporting and income tax purposes. The Company's deferred tax assets and liabilities consisted of the following (in millions):
| February 28, 2026 | February 22, 2025 | ||||||||||
| Deferred tax assets: | |||||||||||
| Lease obligations | $ | 1,768.2 | $ | 1,775.3 | |||||||
| Self-Insurance | 315.5 | 312.8 | |||||||||
| Compensation and benefits | 199.9 | 192.2 | |||||||||
| Pension & postretirement benefits | 181.3 | 194.5 | |||||||||
| Legal settlements (1) | 176.2 | — | |||||||||
| Net operating loss | 58.5 | 63.7 | |||||||||
| Tax credits | 6.5 | 5.7 | |||||||||
| Other | 83.1 | 71.3 | |||||||||
| Gross deferred tax assets | 2,789.2 | 2,615.5 | |||||||||
| Less: valuation allowance | (61.9) | (63.7) | |||||||||
| Total deferred tax assets | 2,727.3 | 2,551.8 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Operating lease assets | 1,569.8 | 1,587.4 | |||||||||
| Depreciation and amortization | 1,320.9 | 1,302.3 | |||||||||
| Inventories | 382.7 | 401.7 | |||||||||
| Other | 84.5 | 84.5 | |||||||||
| Total deferred tax liabilities | 3,357.9 | 3,375.9 | |||||||||
| Net deferred tax liability | $ | (630.6) | $ | (824.1) | |||||||
| Noncurrent deferred tax asset | $ | — | $ | — | |||||||
| Noncurrent deferred tax liability | (630.6) | (824.1) | |||||||||
| Total | $ | (630.6) | $ | (824.1) | |||||||
(1) Represents the estimated future deductible payments related to the Opioid Settlement Framework. Refer to Note 12 for additional information.
The valuation allowance activity on deferred tax assets was as follows (in millions):
| February 28, 2026 | February 22, 2025 | February 24, 2024 | |||||||||||||||
| Beginning balance | $ | 63.7 | $ | 65.6 | $ | 102.3 | |||||||||||
| Additions charged to income tax expense | 2.7 | 5.1 | 6.0 | ||||||||||||||
| Reductions credited to income tax expense | (1.4) | (1.9) | (2.8) | ||||||||||||||
| Changes to other comprehensive income or loss and other | (3.1) | (5.1) | (39.9) | ||||||||||||||
| Ending balance | $ | 61.9 | $ | 63.7 | $ | 65.6 | |||||||||||
The Company assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. On the basis of this evaluation, as of February 28, 2026, a valuation allowance of $61.9 million has been recorded for the portion of the deferred tax asset that is not more likely than not to be realized, consisting primarily of tax credits and carryovers in jurisdictions where the Company has minimal presence or does not expect to have future taxable income. The Company will continue to evaluate the
need to adjust the valuation allowance. The amount of the deferred tax asset considered realizable, however, could be adjusted depending on the Company's performance in certain subsidiaries or jurisdictions.
The Company currently has federal and state NOL carryforwards of $14.8 million and $1,154.5 million, respectively, which will begin to expire in 2026 and continue through fiscal 2046. As of February 28, 2026, the Company had $6.5 million of state credit carryforwards, which will begin to expire in 2026 and continue through fiscal 2038. The Company had no federal credit carryforwards as of February 28, 2026. As of February 28, 2026, the Company has federal charitable contribution carryforwards of $23.3 million, which begin to expire in 2029 and continue through fiscal 2030.
Changes in the Company's unrecognized tax benefits consisted of the following (in millions):
| Fiscal 2025 | Fiscal 2024 | Fiscal 2023 | |||||||||||||||
| Beginning balance | $ | 57.4 | $ | 178.8 | $ | 216.0 | |||||||||||
| Increase related to tax positions taken in the current year | 6.1 | 6.4 | 9.6 | ||||||||||||||
| Decrease related to tax position taken in prior years | — | (111.8) | (0.9) | ||||||||||||||
| Decrease related to settlements with taxing authorities | — | (2.1) | (5.6) | ||||||||||||||
| Decrease related to lapse of statute of limitations | (2.3) | (13.9) | (40.3) | ||||||||||||||
| Ending balance | $ | 61.2 | $ | 57.4 | $ | 178.8 | |||||||||||
Included in the balance of unrecognized tax benefits as of February 28, 2026, February 22, 2025 and February 24, 2024 are tax positions of $25.2 million, $22.4 million and $118.1 million, respectively, which would reduce the Company's effective tax rate if recognized in future periods. As of February 28, 2026, the Company is no longer subject to federal income tax examinations for the fiscal years prior to 2022 and in most states, is no longer subject to state income tax examinations for fiscal years before 2013. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. The Company recognized expense related to interest and penalties, net of settlement adjustments, of $1.7 million for fiscal 2025 and a benefit of $2.7 million and $27.2 million for fiscal 2024 and fiscal 2023, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Apr 27, 2026 | Showing above |
| 2025 | Apr 21, 2025 | |
| 2024 | Apr 22, 2024 | |
| 2023 | Apr 25, 2023 | |
| 2022 | Apr 26, 2022 | |
| 2021 | Apr 28, 2021 | |
| 2020 | May 13, 2020 | |
| 2019 | Apr 24, 2019 | |
| 2018 | May 11, 2018 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.