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 25, 2016					December 27, 2015					December 28, 2014
(In thousands)	Amount			% of Pre-tax		Amount			% of Pre-tax		Amount			% of Pre-tax
Tax at federal statutory rate	$	10,685		35.0		$	33,863		35.0		$	10,448		35.0
State and local taxes, net	3,095			10.1		5,093			5.2		4,620			15.5
Effect of enacted changes in tax laws	—			—		1,801			1.8		1,393			4.7
Reduction in uncertain tax positions	(4,534		)	(14.9	)	(2,545		)	(2.6	)	(21,147		)	(70.8	)
Loss/(gain) on Company-owned life insurance	(736		)	(2.4	)	75			0.1		(1,250		)	(4.2	)
Nondeductible expense, net	1,115			3.7		880			0.9		1,847			6.2
Domestic manufacturing deduction	(1,820		)	(6.0	)	(2,651		)	(2.7	)	—			—
Foreign Earnings and Dividends	(2,418		)	(7.9	)	(1,214		)	(1.3	)	453			1.5
Other, net	(966		)	(3.2	)	(1,392		)	(1.4	)	95			0.3
Income tax expense/(benefit)	$	4,421		14.4		$	33,910		35.0		$	(3,541	)	(11.8	)

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



(In thousands)	December 25, 2016			December 27, 2015			December 28, 2014
Current tax expense/(benefit)
Federal	$	22,864		$	41,199		$	17,397
Foreign	312			485			583
State and local	(3,295		)	5,919			(25,625		)
Total current tax expense/(benefit)	19,881			47,603			(7,645		)
Deferred tax expense
Federal	(16,625		)	(14,554		)	4,014
State and local	1,165			861			90
Total deferred tax (benefit)/expense	(15,460		)	(13,693		)	4,104
Income tax expense/(benefit)	$	4,421		$	33,910		$	(3,541	)

State tax operating loss carryforwards totaled $3.4 million as of December 25, 2016 and $3.8 million as of December 27, 2015. Such loss carryforwards expire in accordance with provisions of applicable tax laws and have remaining lives up to 17 years.

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



(In thousands)	December 25, 2016		December 27, 2015
Deferred tax assets
Retirement, postemployment and deferred compensation plans	$	275,611	$	309,711
Accruals for other employee benefits, compensation, insurance and other	34,466		32,731
Accounts receivable allowances	2,450		1,690
Net operating losses	2,598		38,703
Investment in joint ventures	5,329		—
Other	39,943		44,099
Gross deferred tax assets	360,397		426,934
Valuation allowance	—		(36,204		)
Net deferred tax assets	$	360,397	$	390,730
Deferred tax liabilities
Property, plant and equipment	$	46,284	$	57,065
Intangible assets	11,975		10,790
Investments in joint ventures	—		11,694
Other	796		2,039
Gross deferred tax liabilities	59,055		81,588
Net deferred tax asset	$	301,342	$	309,142

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 (i.e., impairments of nondeductible goodwill and intangible assets).

As of December 27, 2015, we had a full valuation allowance on net operating losses of $36.2 million associated with non-U.S. operations, as we determined those losses were not realizable on a more-likely-than-not basis. As of December 25, 2016, following the streamlining of the Company's international print operations, those net operating losses were no longer available for use and accordingly both the net operating losses and the associated full valuation allowance have been removed from the Consolidated Balance Sheets.

Accrued income taxes were $1.9 million and $21.9 million as of December 25, 2016 and December 27, 2015, respectively.

Income tax benefits related to the exercise or vesting of equity awards reduced current taxes payable by $8.6 million in 2016, $4.4 million in 2015 and $3.1 million in 2014.

As of December 25, 2016 and December 27, 2015, “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 $331 million and $353 million, respectively.

A reconciliation of unrecognized tax benefits is as follows:



(In thousands)	December 25, 2016			December 27, 2015			December 28, 2014
Balance at beginning of year	$	13,941		$	16,324		$	46,058
Gross additions to tax positions taken during the current year	997			1,151			2,116
Gross additions to tax positions taken during the prior year	—			282			—
Gross reductions to tax positions taken during the prior year	(3,042		)	(37		)	(12,109		)
Reductions from settlements with taxing authorities	—			—			(7,114		)
Reductions from lapse of applicable statutes of limitations	(1,868		)	(3,779		)	(12,627		)
Balance at end of year	$	10,028		$	13,941		$	16,324

In 2016 and 2015, we recorded a $4.5 million and $2.5 million income tax benefit, respectively, primarily due to a reduction in the Company’s reserve for uncertain tax positions.

The total amount of unrecognized tax benefits that would, if recognized, affect the effective income tax rate was approximately $7 million as of December 25, 2016 and $9 million as of December 27, 2015.

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 $3 million and $4 million as of December 25, 2016 and December 27, 2015, respectively. The total amount of accrued interest and penalties was a net benefit of $0.9 million in 2016, a net benefit of $0.1 million in 2015 and a net benefit of $8.6 million in 2014.

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 2008. 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 $3.6 million that would, if recognized, impact the effective tax rate.