Income Taxes

The Company’s provision for income taxes, all of which relates to its continuing operations, consists of the following:



	Fiscal Year Ended					Six Months Ended		Fiscal Year Ended
For the period ended	December 29, 2013		December 30, 2012			January 1, 2012		July 3, 2011
Current
Federal	$	—	$	—		$	—	$	—
State	—		45			—		—
Foreign	87		101			48		(219		)
Deferred
Federal	926		955			477		953
State and foreign	3		(5		)	24		(104		)
Provision for income taxes	$	1,016	$	1,096		$	549	$	630

The Company did not record any provision for income taxes related to its discontinued operations for fiscal years 2013 or 2012, transition period 2011, or for fiscal year 2011, as the Company has a full valuation allowance and available net operating losses.

A reconciliation of the Company's effective tax rate for continuing operations to the statutory Federal tax rate follows:



	Fiscal Year Ended										Six Months Ended					Fiscal Year Ended
	December 29, 2013					December 30, 2012					January 1, 2012					July 3, 2011
	Amount			%		Amount			%		Amount			%		Amount			%
Provision (benefit) computed at the statutory rate	$	1,670		35.0		$	2,808		35.0		$	1,708		35.0		$	1,906		35.0
Losses not benefited	—			—		—			—		—			—		—			—
Use of net operating losses	(622		)	(13.0	)	(1,652		)	(20.2	)	(1,124		)	(23.0	)	(896		)	(16.5	)
Foreign tax rate differential	(32		)	(0.7	)	(60		)	(0.8	)	(35		)	(0.7	)	(380		)	(7.0	)
Total provision for income taxes	$	1,016		21.3		$	1,096		14.0		$	549		11.3		$	630		11.5

Income before provision for income taxes of the Company's foreign subsidiaries (located in Canada and the United Kingdom) included in continuing operations was approximately $368, $447, $305, and $341 for fiscal years 2013 and 2012, the six-month transition period 2011, and fiscal year 2011, respectively.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the Company's deferred tax liabilities and assets as of December 29, 2013, and December 30, 2012, follow:



	December 29, 2013			December 30, 2012
Deferred tax liabilities
Depreciation and amortization (including differences in the basis of acquired assets)	$	(9,125	)	$	(8,204	)
Total deferred tax liabilities	(9,125		)	(8,204		)

Deferred tax assets
Inventory and other reserves	2,329			2,152
Pension benefit obligation	19,055			40,240
Net operating loss and capital loss carryforwards	88,784			85,080
Total gross deferred tax assets	110,168			127,472
Less valuation allowance	(110,090		)	(127,386		)
Deferred tax assets less valuation allowance	78			86
Net deferred tax liability	$	(9,047	)	$	(8,118	)

The Company records valuation allowances against its deferred tax assets, when necessary, in accordance with ASC Topic 740, Income Taxes. Realization of deferred tax assets (such as net operating loss carryforwards) is dependent on future taxable earnings and may therefore be uncertain. To the extent the Company believes that recovery is unlikely, a valuation allowance is established against its deferred tax asset, which increases the Company’s income tax expense in the period such determination is made. Due to the uncertainty surrounding the timing of realizing the benefits of its deferred tax assets in future tax returns, the Company has recorded a valuation allowance against its otherwise recognizable deferred tax assets.

The Company had net operating loss (“NOL”) carryforwards for U.S. federal tax purposes of $227 million and $212 million as of December 29, 2013, and December 30, 2012, respectively. The potential tax benefit of all carryforwards has been fully reserved with a valuation allowance and therefore there is no net tax asset on the consolidated balance sheets related to this asset at December 29, 2013, or at December 30, 2012. The Company’s NOLs have a carryforward period of 20 years with expiration dates ranging from 2019 to 2033. As the balance sheet reflects no benefit of such NOLs, the Company anticipates that no federal tax liability, other than alternative minimum tax, would be recorded when U.S. taxable income is generated and such carryforwards are utilized.

The Company regularly completes internal evaluations as to whether ordinary transfers of the Company’s common stock between shareholders have resulted in an ownership change as defined in Section 382 of the Internal Revenue Code. Based on available information, the Company has determined that no such ownership change has occurred as of the end of December 29, 2013. If such ownership change had occurred, utilization of the Company’s NOLs would be subject to annual limitation provisions per the Internal Revenue Code and similar state laws.