Income from continuing operations before income taxes consists of the following:

2011 non-U.S. results include a loss from a $9.2 million impairment charge with respect to an investment in a non-U.S. affiliate.

The provision for income taxes on income from continuing operations consists of the following:

(in thousands)	Current		Deferred		Total
2012
U.S. Federal	$	99,424	$	(48,685)	$	50,739
State and Local		14,062		(5,135)		8,927
Non-U.S.		12,631		(697)		11,934
	$	126,117	$	(54,517)	$	71,600
2011
U.S. Federal	$	40,450	$	26,732	$	67,182
State and Local		15,937		10,475		26,412
Non-U.S.		9,129		(823)		8,306
	$	65,516	$	36,384	$	101,900
2010
U.S. Federal	$	137,943	$	12,040	$	149,983
State and Local		28,366		34,011		62,377
Non-U.S.		11,030		(990)		10,040
	$	177,339	$	45,061	$	222,400

The provision for income taxes on continuing operations exceeds the amount of income tax determined by applying the U.S. Federal statutory rate of 35% to income from continuing operations before taxes as a result of the following:

(in thousands)		2012		2011		2010
U.S. Federal taxes at statutory rate		$	42,213	$	86,635	$	202,412
State and local taxes, net of U.S. Federal tax			9,247		4,143		26,689
Valuation allowances against state tax benefits, net of U.S. Federal tax			(3,443)		9,748		13,856
Tax provided on non-U.S. subsidiary earnings and distributions at less
	than the expected U.S. Federal statutory tax rate		(7,320)		(6,882)		(4,327)
Valuation allowances against non-U.S. income tax benefits			15,966		8,072		2,921
Goodwill impairments			12,776		―		―
U.S. Federal Manufacturing Deduction tax (benefit) expense			(3,323)		1,365		(8,419)
Other, net			5,484		(1,181)		(10,732)
Provision for Income Taxes		$	71,600	$	101,900	$	222,400

Results for 2011 include $1.4 million in income tax expense related to the U.S. Federal manufacturing deduction; this amount reflects a 2011 tax benefit, offset by a change in estimate for 2010.

During 2012, 2011 and 2010, in addition to the income tax provision for continuing operations presented above, the Company also recorded tax benefits on discontinued operations. Losses from discontinued operations and gains or losses on sales and dispositions of discontinued operations have been reclassified from previously reported income from operations and reported separately as loss from discontinued operations, net of tax. Tax benefits of $66.7 million, $5.8 million and $14.9 million with respect to discontinued operations were recorded in 2012, 2011 and 2010, respectively.

Deferred income taxes at December 31, 2012 and December 31, 2011, consist of the following:

(in thousands)	2012		2011
Accrued postretirement benefits	$	25,287	$	28,525
Other benefit obligations		123,306		112,646
Accounts receivable		31,073		28,047
State income tax loss carryforwards		34,578		34,506
U.S. Federal income tax loss carryforwards		2,857		6,301
U.S. Federal capital loss carryforwards		10,837		―
U.S. Federal foreign income tax credit carryforwards		6,781		―
Non-U.S. income tax loss carryforwards		27,039		14,906
Other		58,133		60,881
Deferred Tax Assets		319,891		285,812
Valuation allowances		(78,109)		(59,179)
Deferred Tax Assets, Net	$	241,782	$	226,633
Property, plant and equipment		175,025		200,054
Prepaid pension cost		241,846		213,663
Unrealized gain on available-for-sale securities		73,712		53,588
Goodwill and other intangible assets		276,652		291,346
Deferred Tax Liabilities	$	767,235	$	758,651
Deferred Income Tax Liabilities, Net	$	525,453	$	532,018

The Company has approximately $666.7 million of state income tax loss carryforwards available to offset future state taxable income. State income tax loss carryforwards, if unutilized, will start to expire approximately as follows:

The Company has recorded at December 31, 2012, approximately $34.6 million in deferred state income tax assets, net of U.S. Federal income tax, with respect to these state income tax loss carryforwards. The Company has established a full valuation allowance reducing the net recorded amount of deferred tax assets with respect to state tax loss carryforwards, since the Company has determined that it is more likely than not that the state tax losses may not be fully utilized in the future to reduce state taxable income.

The Company has approximately $8.1 million of U.S. Federal income tax loss carryforwards obtained as a result of prior stock acquisitions. U.S. Federal income tax loss carryforwards are expected to be fully utilized as follows:

The Company has established at December 31, 2012 approximately $2.9 million in U.S. Federal deferred tax assets with respect to these U.S. Federal income tax loss carryforwards.

The Company has approximately $27.8 million of U.S. Federal capital loss carryforwards obtained mainly as a result of dispositions during 2012 of the stock of former subsidiaries and an affiliate. U.S. Federal capital loss carryforwards are expected to be fully utilized for U.S. Federal tax purposes in the future, but will expire at the end of 2017 if not utilized. The Company has recorded at December 31, 2012 approximately $10.8 million of deferred tax assets with respect to these U.S. Federal capital loss carryforwards.

For U.S. Federal income tax purposes, the Company has approximately $6.8 million of foreign tax credits available to be credited against future U.S. Federal income tax liabilities. These U.S. Federal foreign tax credits are expected to be fully utilized in the future, but will expire at the end of 2022 if not utilized. The Company has established at December 31, 2012, approximately $6.8 million of U.S. Federal deferred tax assets with respect to these U.S. Federal foreign tax credit carryforwards.

The Company has approximately $93.0 million of non-U.S. income tax loss carryforwards as a result of operating losses and prior stock acquisitions, that are available to offset future non-U.S. taxable income, and has recorded with respect to these losses, approximately $27.0 million in non-U.S. deferred income tax assets. The Company has established approximately $25.2 million in valuation allowances against the deferred tax assets recorded for the portion of non-U.S. tax losses that may not be fully utilized to reduce future non-U.S. taxable income. The $93.0 million of non-U.S. income tax loss carryforwards consist of $84.6 million in losses that may be carried forward indefinitely; $3.0 million of losses that, if unutilized, will expire in varying amounts through 2017; and $5.4 million of losses that, if unutilized, will start to expire after 2017.

Deferred tax valuation allowances and changes in deferred tax valuation allowances were as follows:


			Additions –
	Balance at		Charged to				Balance at
	Beginning		Costs and				End of
(in thousands)	of Period		Expenses		Deductions		Period
Year ended
December 31, 2012	$	59,179	$	18,930		―	$	78,109
December 31, 2011	$	41,359	$	17,820		―	$	59,179
January 2, 2011	$	26,239	$	16,777	$	(1,657)	$	41,359

The Company has established $48.2 million in valuation allowances against deferred state tax assets recognized, net of U.S. Federal tax. As stated above, approximately $34.6 million of the valuation allowances, net of U.S. Federal income tax, relate to state income tax loss carryforwards. The Company has established valuation allowances against state income tax assets recognized, without considering potentially offsetting deferred tax liabilities established with respect to prepaid pension cost and goodwill. Prepaid pension cost and goodwill have not been considered a source of future taxable income for realizing deferred tax assets recognized since these temporary differences are not likely to reverse in the foreseeable future. The valuation allowances established against state income tax assets are recorded at the newspaper publishing division, the corporate office and the education division, and may increase or decrease within the next 12 months, based on operating results or the market value of investment holdings; as a result, the Company is unable to estimate the potential tax impact, given the uncertain operating and market environment. The Company will be monitoring future operating results and projected future operating results on a quarterly basis to determine whether the valuation allowances provided against deferred state tax assets should be increased or decreased, as future circumstances warrant.

The Company has not established valuation allowances against any U.S. Federal deferred tax assets.

The Company has established $29.9 million in valuation allowances against non-U.S. deferred tax assets, and, as stated above, $25.2 million of the non-U.S. valuation allowances relate to non-U.S. income tax loss carryforwards.

Deferred U.S. Federal and state income taxes are recorded with respect to undistributed earnings of investments in non-U.S. subsidiaries to the extent taxable dividend income would be recognized if such earnings were distributed. Deferred income taxes recorded with respect to undistributed earnings of investments in non-U.S. subsidiaries are recorded net of foreign tax credits with respect to such undistributed earnings estimated to be creditable against future U.S. Federal tax liabilities. At December 31, 2012, a net U.S. Federal and state deferred income tax liability of about $1.7 million was recorded with respect to undistributed earnings of investments in non-U.S. subsidiaries based on the year-end position. At December 31, 2011, about $0.7 million of net deferred U.S. Federal income tax assets were recorded since it was apparent that a portion of the temporary differences would reverse in 2012.

Deferred U.S. Federal and state income taxes have not been recorded for the full book value and tax basis differences related to investments in non-U.S. subsidiaries because such investments are expected to be indefinitely held. The book value exceeded the tax basis of investments in non-U.S. subsidiaries by approximately $64.2 million and $60.6 million at December 31, 2012 and 2011, respectively; these differences would result in approximately $14.7 million and $13.4 million of net additional U.S. Federal and state deferred tax liabilities, net of foreign tax credits related to undistributed earnings and estimated to be creditable against future U.S. Federal tax liabilities, at December 31, 2012 and 2011, respectively. If investments in non-U.S. subsidiaries were held for sale instead of expected to be held indefinitely, additional U.S. Federal and state deferred tax liabilities would be required to be recorded, and such deferred tax liabilities, if recorded, may exceed the above estimates.

The Company does not currently anticipate that within the next 12 months there will be any events requiring the establishment of any valuation allowances against U.S. Federal net deferred tax assets. The valuation allowances established against non-U.S. deferred tax assets are recorded at the education division, as this is the only division with significant non-U.S operating activities, and these are largely related to the educations division's operations in Australia. These valuation allowances may increase or decrease within the next 12 months, based on operating results; as a result, the Company is unable to estimate the potential tax impact, given the uncertain operating environment. The Company will be monitoring future education division operating results and projected future operating results on a quarterly basis to determine whether the valuation allowances provided against non-U.S. deferred tax assets should be increased or decreased, as future circumstances warrant.

The Company files income tax returns with the U.S. Federal government and in various state, local and non-U.S. governmental jurisdictions, with the consolidated U.S. Federal tax return filing considered the only major tax jurisdiction. The statute of limitations has expired on all consolidated U.S. Federal corporate income tax returns filed through 2008, and the Internal Revenue Service is not currently examining any of the post-2008 returns filed by the Company.

The Company endeavors to comply with tax laws and regulations where it does business, but cannot guarantee that, if challenged, the Company's interpretation of all relevant tax laws and regulations will prevail and that all tax benefits recorded in the financial statements will ultimately be recognized in full. The Company has taken reasonable efforts to address uncertain tax positions and has determined that there are no material transactions and no material tax positions taken by the Company that would fail to meet the more-likely-than-not threshold for recognizing transactions or tax positions in the financial statements. Accordingly, the Company has not recorded a reserve for uncertain tax positions in the financial statements, and the Company does not expect any significant tax increase or decrease to occur within the next 12 months with respect to any transactions or tax positions taken and reflected in the financial statements. In making these determinations, the Company presumes that taxing authorities pursuing examinations of the Company's compliance with tax law filing requirements will have full knowledge of all relevant information, and, if necessary, the Company will pursue resolution of disputed tax positions by appeals or litigation.