INCOME TAXES

Income tax expense consists of the following:



	2013			2012		2011
Current:
Federal	$	(59	)	$	—	$	—
Foreign	717			413		629
State and local	192			68		(264		)
	$	850		$	481	$	365
Deferred:
Federal	$	(4,936	)	$	—	$	75,068
Foreign	27			53		(104		)
State and local	(1,290		)	—		16,366
	$	(6,199	)	$	53	$	91,330
Total	$	(5,349	)	$	534	$	91,695

Consolidated pretax (loss) income is comprised of the following sources:



	2013			2012			2011
U.S. pretax loss	$	(14,104	)	$	(29,326	)	$	(35,538	)
Non-U.S. pretax income	1,342			1,384			1,800
Total	$	(12,762	)	$	(27,942	)	$	(33,738	)

The amount of tax benefit on the loss from continuing operations considers all items including the net actuarial gain included in other comprehensive income for 2013. Intraperiod tax allocation rules require us to consider the income recorded in other comprehensive income when determining the amount of tax benefit to be recorded on the loss in continuing operations. Accordingly, a tax benefit is recorded in continuing operations and tax expense is allocated to other comprehensive income. Because the amount of income tax expense allocated to other comprehensive income under this intraperiod allocation requirement is equal to the amount of income tax benefit recorded in continuing operations, our overall tax position at December 29, 2013, including the amount of our deferred tax asset and valuation allowance, is not impacted by this tax allocation.

The components of the net current deferred tax liability and net long-term deferred tax asset consist of the following:



	December 29, 2013			December 30, 2012
Current deferred tax:
Allowance for doubtful accounts	$	1,026		$	886
Inventories	(694		)	(4,031		)
Compensation and benefits	2,102			4,375
Other	6,049			3,404
Total current tax asset	8,483			4,634
Less: valuation allowance	(10,061		)	(6,343		)
Net current deferred tax liability	$	(1,578	)	$	(1,709	)

Long-term deferred tax:
Depreciation	$	187		$	(1,524	)
Goodwill and intangible assets	4,383			550
Pension	73,517			97,755
Capital loss carryforwards	19,289			20,575
Net operating loss carryforward	38,745			33,859
Federal tax credit	1,541			1,600
Other	7,473			6,238
Total long-term tax asset	145,135			159,053
Less: valuation allowance	(135,829		)	(136,288		)
Net long-term deferred tax asset	$	9,306		$	22,765
Net deferred tax asset	$	7,728		$	21,056

At December 29, 2013, the Company has unused U.S. federal and state net operating loss carryforwards of $102,048 and $70,964, generally expiring from 2014 through 2033. In addition, we have a U.S. capital loss carryforward of $2,425 that expires in 2014.

We review the potential realization of future tax benefits of all deferred tax assets. The Company concluded after evaluating all positive and negative evidence regarding the potential realization of the Company's deferred tax assets, a valuation allowance is necessary primarily based on cumulative losses in recent years, (defined as the current and two preceding years) and recent actuarial pension losses. A valuation allowance is recorded against the entire U.S. net deferred tax asset except for $7,700 related to the pension liability. We are forecasting that the pension liability will be reduced by future actuarial gains prior to funding the related liability; therefore, the deferred tax asset will be realized without the need for future taxable income from operations. Because of the cumulative losses in recent years, the Company is not relying on forecasts of future taxable income from operations to realize any U.S. deferred tax assets.

We also have a Canadian capital loss carryforward of $118,302 that has an indefinite carryforward period. A full valuation allowance has been provided for the tax benefit associated with this capital loss as it is more likely than not that this capital loss will not be utilized.

The reconciliation of the statutory federal income tax rate and the effective tax rate follows:



	2013		2012		2011
Statutory federal income tax rate	35.0	%	35.0	%	35.0	%
State and local income taxes	3.6		(0.6	)	4.8
Meals and entertainment	(1.2	)	(0.4	)	(0.6	)
Deficiencies on equity awards	(2.4	)	(2.4	)	(0.4	)
Valuation allowance	8.9		(34.7	)	(309.3	)
Permanent and other items	(2.0	)	1.2		(1.3	)
Effective tax rate	41.9	%	(1.9	)%	(271.8	)%

State tax expense reflects state tax liabilities derived primarily from a tax base other than net income.

The Company and its subsidiaries file income tax returns in the U.S. federal, various state, and Mexican jurisdictions. With few exceptions, based on expiration of statutes of limitation, the Company is no longer subject to federal income tax examinations by tax authorities for years before 2010 or state, local, or non-U.S. income tax examinations by tax authorities for years before 2009. However, federal and state net operating and capital loss carryforwards generated from 2001 through 2012 are subject to review by taxing authorities in the year utilized.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



	2013			2012			2011
Balance at beginning of year	$	1,629		$	1,375		$	1,912
Adjustments for tax positions of current year	—			490			—
Reductions from lapse of applicable statute of limitations	(37		)	(236		)	(486		)
Settlements	—			—			(51		)
Balance at end of year	$	1,592		$	1,629		$	1,375

These unrecognized tax benefits, if recognized, would not affect the effective income tax rate of a future period or periods because the benefits are in deferred taxes and reserved with a valuation allowance. We do not anticipate any material change in the total amount of unrecognized tax benefits to occur within the next 12 months. Our continuing policy is to recognize interest and penalties related to income tax matters in tax expense.

Income taxes have not been provided on undistributed earnings of certain foreign subsidiaries as the Company considers such earnings to be permanently reinvested outside of the United States. The additional U.S. taxable income and tax that would arise on repatriation of the remaining undistributed earnings could be wholly or partially offset by net operating loss carryforwards and foreign tax credits on repatriation. However, it is impractical to estimate the amount of net income and withholding tax that might be payable.