Assets and Liabilities Held for Sale and Discontinued Operations

6 Months Ended

Jun. 14, 2014

Discontinued Operations and Disposal Groups [Abstract]

Assets and Liabilities Held for Sale and Discontinued Operations

ASSETS AND LIABILITIES HELD FOR SALE AND DISCONTINUED OPERATIONS

Assets and liabilities held for sale at June 14, 2014 and December 28, 2013 were as follows (in millions):

			June 14, 2014		December 28, 2013
Assets held for sale:
	Dominick's property, net, held for sale		$	71.5	$	136.7
	Other United States real estate assets held for sale		8.1		7.2
	Total assets held for sale		$	79.6	$	143.9
Liabilities held for sale:
	Dominick's:
		Deferred gain on property dispositions	$	—	$	9.0
		Obligations under capital leases	—		5.2
		Deferred rent	—		2.6
		Other liabilities	8.8		1.4
	Total liabilities held for sale*		$	8.8	$	18.2

*Included in Other Accrued Liabilities on the consolidated balance sheet.

The notes to the consolidated financial statements exclude discontinued operations, unless otherwise noted. Historical financial information for Canada Safeway Limited ("CSL"), Dominick's and Blackhawk presented in the consolidated income statements has been reclassified to discontinued operations to conform to current-year presentation.

The financial results of discontinued operations for the 12 and 24 weeks ended June 14, 2014 and June 15, 2013 were as follows (in millions):

		12 Weeks Ended						24 Weeks Ended
		June 14, 2014			June 15, 2013			June 14, 2014			June 15, 2013
Sales and other revenue:
	Blackhawk	$	82.4		$	212.7		$	305.6		$	388.4
	CSL	—			1,522.3			—			3,015.5
	Dominick's	—			333.6			7.3			663.5
	Total	$	82.4		$	2,068.6		$	312.9		$	4,067.4
Income (loss) from discontinued operations, before income taxes:
	Blackhawk	$	1.3		$	5.5		$	(4.4	)	$	5.8
	CSL	—			87.4			—			163.7
	Dominick's	(1.1		)	(9.7		)	(62.9		)	(21.0		)
	Total	0.2			83.2			(67.3		)	148.5
(Loss) gain on sale or disposal of operations, net of lease exit costs and transaction costs, before income taxes:
	Blackhawk	(5.5		)	—			(5.5		)	—
	CSL	(0.2		)	—			(5.2		)	—
	Dominick's	13.5			—			55.6			—
	Total	7.8			—			44.9			—
Total income (loss) from discontinued operations before income taxes		$	8.0		$	83.2		$	(22.4	)	$	148.5
Income taxes on discontinued operations		7.0			(136.9		)	22.5			(143.0		)
Income (loss) from discontinued operations, net of tax		$	15.0		$	(53.7	)	$	0.1		$	5.5

Distribution of Blackhawk Shares On March 24, 2014, Safeway's Board of Directors declared a special stock dividend to its stockholders of all of the 37.8 million shares of Class B common stock of Blackhawk owned by Safeway, representing approximately 94.2% of the total outstanding shares of Blackhawk's Class B common stock and approximately 72% of the total number of shares of Blackhawk common stock of all classes outstanding.  On April 14, 2014, Safeway distributed the special stock dividend to all Safeway stockholders of record on April 3, 2014 (the "Record Date").  The distribution took place in the form of a pro rata dividend of Blackhawk Class B common stock to each Safeway stockholder of record on the Record Date.  Safeway stockholders received 0.164291 of a share of Blackhawk Class B common stock for every share of Safeway common stock held as of the Record Date, less any shares withheld in respect of applicable withholding taxes.  No fractional shares of Blackhawk stock were distributed.  Instead, Safeway stockholders received cash in lieu of any fraction of a share of Blackhawk stock.

Assuming the acquisition by AB Acquisition is completed as contemplated by the Merger Agreement (see Note A), it is expected that Safeway’s distribution of Blackhawk shares will be taxable to Safeway and Safeway’s stockholders. Based on Safeway’s preliminary estimates and after the application of tax payments previously made in connection with Safeway's sale of shares in the initial public offering of Blackhawk's Class A common stock in April 2013, Safeway expects that the distribution of Blackhawk shares will result in an incremental tax to Safeway of approximately $360 million.

Dominick's During the fourth quarter of 2013, the Company sold or closed all stores in the Dominick’s division. In 2013, cash proceeds on the sale of Dominick’s stores were $72.2 million, with a pre-tax loss of $493.1 million (including a $310.8 million charge described in the succeeding paragraph). Year-to-date through the second quarter of 2014, cash proceeds on the sale of Dominick’s stores were $107.5 million, with a pre-tax gain of $55.6 million.

As previously reported, Safeway participated in four multiemployer pension plans on which withdrawal liability is expected to be incurred due to the Dominick's closure. During the fourth quarter of 2013, the Company recorded expense of $310.8 million to discontinuedoperations, which represented the estimated multiemployer pension plan withdrawal liability. The withdrawal liability recorded during 2013 was based on information available to the Company at the time, without having yet received demand letters from the related multiemployer pension plans.  In April 2014, the Company received two demand letters, which resulted in the Company increasing the multiemployer pension plan withdrawal liability by $33.8 million ($21.1 million after tax) in the first quarter of 2014 (included in loss from discontinued operations in the condensed consolidated statement of operations). As of June 14, 2014, the estimated multi-employer pension plan withdrawal liability (included in Accrued Claims and Other Liabilities with a current portion in Other Accrued Liabilities in the condensed consolidated balance sheet) was $348.8 million, as compared to $310.8 million at December 28, 2013. Withdrawal liability is generally paid over time, and as such, the Company expects to pay in the range of $10 million to $20 million per year, varying by year, for approximately 20 years. The final amount of the withdrawal liability due will be adjusted once final assessments have been received from the plans and the amounts of the related payments are known. Such adjustment may be significantly greater than the amount recorded based on the Company's actuarial estimate. Demand letters from the other two multiemployer pension plans may be received in 2014, or later.