Income Taxes

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



	December 27, 2015					December 28, 2014					December 29, 2013
(In thousands)	Amount			% of Pre-tax		Amount			% of Pre-tax		Amount			% of Pre-tax
Tax at federal statutory rate	$	33,863		35.0		$	10,448		35.0		$	33,180		35.0
State and local taxes, net	5,093			5.2		4,620			15.5		8,312			8.8
Effect of enacted changes in tax laws	1,801			1.8		1,393			4.7		—			—
Reduction in uncertain tax positions	(2,545		)	(2.6	)	(21,147		)	(70.8	)	(1,803		)	(1.9	)
Loss/(gain) on Company-owned life insurance	75			0.1		(1,250		)	(4.2	)	(3,673		)	(3.9	)
Nondeductible expense, net	880			0.9		1,847			6.2		2,039			2.2
Domestic manufacturing deduction	(2,651		)	(2.7	)	—			—		—			—
Other, net	(2,606		)	(2.7	)	548			1.8		(163		)	(0.2	)
Income tax expense/(benefit)	$	33,910		35.0		$	(3,541	)	(11.8	)	$	37,892		40.0

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



(In thousands)	December 27, 2015			December 28, 2014			December 29, 2013
Current tax expense/(benefit)
Federal	$	41,199		$	17,397		$	18,903
Foreign	485			583			681
State and local	5,919			(25,625		)	8,371
Total current tax expense/(benefit)	47,603			(7,645		)	27,955
Deferred tax expense
Federal	(14,554		)	4,014			5,426
Foreign	—			—			—
State and local	861			90			4,511
Total deferred tax (benefit)/expense	(13,693		)	4,104			9,937
Income tax expense/(benefit)	$	33,910		$	(3,541	)	$	37,892

State tax operating loss carryforwards totaled $3.8 million as of December 27, 2015 and $7.5 million as of December 28, 2014. Such loss carryforwards expire in accordance with provisions of applicable tax laws and have remaining lives up to 18 years.

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



(In thousands)	December 27, 2015			December 28, 2014
Deferred tax assets
Retirement, postemployment and deferred compensation plans	$	309,711		$	320,174
Accruals for other employee benefits, compensation, insurance and other	32,731			42,294
Accounts receivable allowances	1,690			1,746
Net operating losses	38,703			46,726
Other	44,099			41,186
Gross deferred tax assets	426,934			452,126
Valuation allowance	(36,204		)	(41,136		)
Net deferred tax assets	$	390,730		$	410,990
Deferred tax liabilities
Property, plant and equipment	$	57,065		$	64,056
Intangible assets	10,790			11,607
Investments in joint ventures	11,694			13,971
Other	2,039			5,129
Gross deferred tax liabilities	81,588			94,763
Net deferred tax asset	$	309,142		$	316,227
Amounts recognized in the Consolidated Balance Sheets
Deferred tax asset – current	$	—		$	63,640
Deferred tax asset – long-term	309,142			252,587
Net deferred tax asset	$	309,142		$	316,227

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 $36.2 million as of December 27, 2015 and $41.1 million as of December 28, 2014 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. In 2014, 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 $4.4 million in 2015, $3.1 million in 2014 and $3.4 million in 2013.

As of December 27, 2015 and December 28, 2014, “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 $353 million and $369 million, respectively.

A reconciliation of unrecognized tax benefits is as follows:



(In thousands)	December 27, 2015			December 28, 2014			December 29, 2013
Balance at beginning of year	$	16,324		$	46,058		$	45,308
Gross additions to tax positions taken during the current year	1,151			2,116			2,249
Gross additions to tax positions taken during the prior year	282			—			127
Gross reductions to tax positions taken during the prior year	(37		)	(12,109		)	(833		)
Reductions from settlements with taxing authorities	—			(7,114		)	—
Reductions from lapse of applicable statutes of limitations	(3,779		)	(12,627		)	(793		)
Balance at end of year	$	13,941		$	16,324		$	46,058

The total amount of unrecognized tax benefits that would, if recognized, affect the effective income tax rate was approximately $9.2 million as of December 27, 2015 and $10.7 million as of December 28, 2014.

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 million as of December 27, 2015 and December 28, 2014. The total amount of accrued interest and penalties was a net benefit of $0.1 million in 2015, a net benefit of $8.6 million in 2014 and a net detriment of $1.7 million in 2013.

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 $4.9 million that would, if recognized, impact the effective tax rate.