EFTA01382489.pdf

Amendment No. 3 to Form S-1 Tabk of Contents SAFEWAY INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Total share-based compensation expenses for continuing operations recognized as a component of operating and administrative expense is as follows (in millions): 2014 2013 2012 Share-based compensation expense $24.7 $ 50.4 $ 48.4 Income tax benefit (9.7) (19.6) (18.7) Share-based compensation expense recognized in earnings, net of tax $15.0 $ 30.8 $ 29.7 Note M: Taxes on Income The components of income before income tax expense are as follows (in millions): 2014 2013 2012 Domestic $159.5 $258.3 $370.7 Foreign 5.5 (6.7) (8.5) $165.0 $251.6 $362.2 The components of income tax expense are as follows (in millions): 2014 2013 2012 Current: Federal $ (33.9) $ 301.7 $146.9 State 4.2 11.8 5.1 Foreign 1.9 (2.4) (2.9) (27.8) 311.1 149.1 Deferred: Federal 78.5 (273.9) (35.4) State 11.2 (2.7) (0.7) Foreign (0.1) 89.6 (276.6) (36.1) $ 61.8 $ 34.5 $113.0 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): 2014 2013 2012 Statutory rate 36% 35% 35% Income tax expense using federal statutory rate $57.8 $ 88.1 $126.8 State taxes on income net of federal benefit 9.9 5.9 2.9 Charitable donations of inventory (9.2) (9.6) (4.3) Federal tax credits (4.0) (11.2) (2.2) Reversal of deferred tax liability on life insurance — (17.2) — Equity earnings of foreign affiliate 3.6 (13.3) (8.4) Other 3.7 (8.2) (1.8) $61.8 $ 34.5 $113.0 F-121 (Continued) hill). wwa.sccgo% Arai% es edgar data 1646972 000119312515335826'd900395dslahtm110 142015 9:03:02 Ab41 CONFIDENTIAL - PURSUANT TO FED. R. GRIM. P. 6(e) DB-SDNY-0081871 CONFIDENTIAL SDNY_GM_00228055 EFTA01382489