ASSETS AND LIABILITIES HELD FOR SALE AND DISCONTINUED OPERATIONS

Assets and liabilities held for sale at September 6, 2014 and December 28, 2013 were as follows (in millions):



			September 6, 2014		December 28, 2013
Assets held for sale:
	Dominick's property, held for sale		$	51.9	$	136.7
	Other United States real estate assets held for sale		9.8		7.2
	Total assets held for sale		$	61.7	$	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	8.7		1.4
	Total liabilities held for sale*		$	8.7	$	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 36 weeks ended September 6, 2014 and September 7, 2013 were as follows (in millions):



		12 Weeks Ended						36 Weeks Ended
		September 6, 2014			September 7, 2013			September 6, 2014			September 7, 2013
Sales and other revenue:
	Blackhawk	$	—		$	194.4		$	305.6		$	582.8
	CSL	—			1,454.1			—			4,469.6
	Dominick's	—			328.4			7.3			991.9
	Total	$	—		$	1,976.9		$	312.9		$	6,044.3

(Loss) income from discontinued operations, before income taxes:
	Blackhawk	$	—		$	3.8		$	(4.4	)	$	9.6
	CSL	—			74.5			—			238.2
	Dominick's	(2.9		)	(13.4		)	(65.7		)	(34.4		)
	Total	(2.9		)	64.9			(70.1		)	213.4

Gain (loss) on sale or disposal of operations, net of lease exit costs and transaction costs, before income taxes:
	Blackhawk	0.3			—			(5.2		)	—
	CSL	(1.2		)	—			(6.4		)	—
	Dominick's	26.0			—			81.5			—
	Total	25.1			—			69.9			—

Total income (loss) from discontinued operations before income taxes		$	22.2		$	64.9		$	(0.2	)	$	213.4
Income tax benefit (expense) on discontinued operations		8.5			(21.9		)	31.1			(164.9		)
Income from discontinued operations, net of tax		$	30.7		$	43.0		$	30.9		$	48.5

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. Based on Safeway’s preliminary estimates and after the application of $82 million 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 liability of approximately $360 million, which Safeway will be required to fund. In accordance with generally accepted accounting principles, Safeway did not consider the probability of the Merger occurring and, therefore, has not recorded a liability for its obligation to fund Blackhawk’s tax obligation. Subsequent to the third quarter through the date of this filing, Safeway paid approximately $251 million of the incremental tax liability and expects to pay the remainder before year-end.

In addition, through the third quarter of 2014, Blackhawk has made certain estimated tax payments to certain state tax jurisdictions. Safeway advanced approximately $8.5 million to Blackhawk to fund these estimated tax payments ($24.5 million through the date of this filing). Safeway recorded these advances as receivables on the condensed consolidated balance sheet. In the event the Merger does not occur, Blackhawk will be required to repay these advances to Safeway.

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 third quarter of 2014, cash proceeds on the sale of Dominick’s stores were $150.7 million, with a pre-tax gain of $81.5 million.

As previously reported, Dominick’s participated in certain multiemployer pension plans on which withdrawal liabilities have been or we expect will be incurred due to the Dominick’s closure. Generally, the Company may pay such withdrawal liabilities in installment payments. Withdrawal liabilities are generally subject to a 20-year payment cap, but may extend into perpetuity if a mass withdrawal from the plan occurs.

During the fourth quarter of 2013, Safeway recorded a liability of $310.8 million, which represented the present value of estimated installment payments to be made to the plans based on the best information available at the time, without having yet received demand letters from the multiemployer pension plans. In April 2014 and September 2014, the Company received demand letters from three of the plans. These demand letters called for installment payments greater than Safeway’s original actuarial estimate based on calculations Safeway disputes. The Company has requested a review by the plan trustee of the demands made by the three plans. The Company's estimate is in accordance with ASC 450, "Contingencies."

The following is a reconciliation of the estimated multiemployer pension withdrawal liability (in millions):



Balance at year-end 2013	$	310.8
Accrued interest	9.3
Adjustment to estimated liability	38.3
Installment payments	(3.7		)
Balance at September 6, 2014	$	354.7

Accrued interest expense and adjustments to the estimated liability are recorded in discontinued operations. The $338.5 million long-term portion of the estimated liability is included in Accrued Claims and Other Liabilities, and the $16.2 million current portion is included in Other Accrued Liabilities in the condensed consolidated balance sheet.

Pending review of the demand letters received, receipt of a final demand letter, or any negotiated lump sum settlements, the final amount of the withdrawal liability may be greater than or less than the amount recorded, and this difference could be significant. The Company currently estimates the range of potential withdrawal liability to be between $355 million and $475 million.