Income Taxes

Reconciliations between the effective tax rate on income/(loss) from continuing operations before income taxes and the federal statutory rate are presented below.



	December 28, 2014					December 29, 2013					December 30, 2012
(In thousands)	Amount			% of Pre-tax		Amount			% of Pre-tax		Amount			% of Pre-tax
Tax at federal statutory rate	$	10,448		35.0		$	33,180		35.0		$	90,494		35.0
State and local taxes, net	4,620			15.5		8,312			8.8		11,507			4.4
Effect of enacted changes in tax laws	1,393			4.7		—			—		—			—
Reduction in uncertain tax positions	(21,147		)	(70.8	)	(1,803		)	(1.9	)	(6,721		)	(2.6	)
Gain on Company-owned life insurance	(1,250		)	(4.2	)	(3,673		)	(3.9	)	(2,690		)	(1.0	)
Nondeductible expense, net	1,847			6.2		2,039			2.2		866			0.3
Other, net	548			1.8		(163		)	(0.2	)	1,161			0.5
Income tax (benefit)/expense	$	(3,541	)	(11.8	)	$	37,892		40.0		$	94,617		36.6

The components of income tax expense as shown in our Consolidated Statements of Operations were as follows:



(In thousands)	December 28, 2014			December 29, 2013		December 30, 2012
Current tax (benefit)/expense
Federal	$	17,397		$	18,903	$	51,836
Foreign	583			681		1,154
State and local	(25,625		)	8,371		(6,680		)
Total current tax (benefit)/expense	(7,645		)	27,955		46,310
Deferred tax expense
Federal	4,014			5,426		38,845
Foreign	—			—		—
State and local	90			4,511		9,462
Total deferred tax expense	4,104			9,937		48,307
Income tax (benefit)/expense	$	(3,541	)	$	37,892	$	94,617

State tax operating loss carryforwards totaled $7.5 million as of December 28, 2014 and $9.3 million as of December 29, 2013. Such loss carryforwards expire in accordance with provisions of applicable tax laws and have remaining lives generally ranging from 1 to 20 years.

The components of the net deferred tax assets and liabilities recognized in our Consolidated Balance Sheets were as follows:



(In thousands)	December 28, 2014			December 29, 2013
Deferred tax assets
Retirement, postemployment and deferred compensation plans	$	320,174		$	251,082
Accruals for other employee benefits, compensation, insurance and other	42,294			35,596
Accounts receivable allowances	1,746			1,478
Net operating losses	46,726			57,885
Other	41,186			63,821
Gross deferred tax assets	452,126			409,862
Valuation allowance	(41,136		)	(42,295		)
Net deferred tax assets	$	410,990		$	367,567
Deferred tax liabilities
Property, plant and equipment	$	64,056		$	75,661
Intangible assets	11,607			11,902
Investments in joint ventures	13,971			19,625
Other	5,129			14,531
Gross deferred tax liabilities	94,763			121,719
Net deferred tax asset	$	316,227		$	245,848
Amounts recognized in the Consolidated Balance Sheets
Deferred tax asset – current	$	63,640		$	65,859
Deferred tax asset – long-term	252,587			179,989
Net deferred tax asset	$	316,227		$	245,848

We assess whether a valuation allowance should be established against deferred tax assets based on the consideration of both positive and negative evidence using a “more likely than not” standard. In making such judgments, significant weight is given to evidence that can be objectively verified. We evaluated our deferred tax assets for recoverability using a consistent approach that considers our three-year historical cumulative income/(loss), including an assessment of the degree to which any such losses were due to items that are unusual in nature (e.g., impairments of nondeductible goodwill and intangible assets).

We had a valuation allowance totaling $41.1 million as of December 28, 2014 and $42.3 million as of December 29, 2013 for deferred tax assets primarily associated with net operating losses of non-U.S. operations, as we determined these assets were not realizable on a more-likely-than-not basis. The valuation allowance was allocated in proportion to the related current and noncurrent gross deferred tax asset balances.

Income tax benefits related to the exercise or vesting of equity awards reduced current taxes payable by $3.1 million in 2014, $3.4 million in 2013 and $2.4 million in 2012.

As of December 28, 2014 and December 29, 2013, “Accumulated other comprehensive loss, net of income taxes” in our Consolidated Balance Sheets and for the years then ended in our Consolidated Statements of Changes in Stockholders’ Equity was net of deferred tax assets of approximately $369 million and $283 million, respectively.

A reconciliation of unrecognized tax benefits is as follows:



(In thousands)	December 28, 2014			December 29, 2013			December 30, 2012
Balance at beginning of year	$	46,058		$	45,308		$	47,971
Gross additions to tax positions taken during the current year	2,116			2,249			5,241
Gross additions to tax positions taken during the prior year	—			127			258
Gross reductions to tax positions taken during the prior year	(12,109		)	(833		)	(922		)
Reductions from settlements with taxing authorities	(7,114		)	—			—
Reductions from lapse of applicable statutes of limitations	(12,627		)	(793		)	(7,240		)
Balance at end of year	$	16,324		$	46,058		$	45,308

The total amount of unrecognized tax benefits that would, if recognized, affect the effective income tax rate was approximately $10.7 million as of December 28, 2014 and $30.0 million as of December 29, 2013.

We also recognize accrued interest expense and penalties related to the unrecognized tax benefits within income tax expense or benefit. The total amount of accrued interest and penalties was approximately $4.0 million as of December 28, 2014 and $18 million as of December 29, 2013. The total amount of accrued interest and penalties was a net benefit of $8.6 million in 2014, a net detriment of $1.7 million in 2013 and a net benefit of $0.3 million in 2012.

With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years prior to 2007. Management believes that our accrual for tax liabilities is adequate for all open audit years. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events.

It is reasonably possible that certain income tax examinations may be concluded, or statutes of limitation may lapse, during the next 12 months, which could result in a decrease in unrecognized tax benefits of $6.1 million that would, if recognized, impact the effective tax rate.