11. INCOME TAXES

Income (loss) from continuing operations before income taxes by jurisdiction is as follows:

	2013		2012		2011
	(In thousands)
U.S.	$	469,395	$	62,332	$	(481,048	)
Foreign		104,545		90,730		(6,078	)
Total	$	573,940	$	153,062	$	(487,126	)

The components of income tax expense (benefit) are set forth below:

	2013			2012			2011
	(In thousands)
Current:
Federal	$	(427	)	$	(28,883	)	$	741
Foreign		26,206			9,279			13,132
State and other		3,512			(211	)		1,914
Total current		29,291			(19,815	)		15,787
Deferred:
Federal		22,923			(293	)		(9,128	)
Foreign		(3,648	)		(835	)		1,033
State and other		(24,339	)		(37	)		872
Total deferred		(5,064	)		(1,165	)		(7,223	)
	$	24,227		$	(20,980	)	$	8,564

The effective tax rate for continuing operations for 2013 was 4.2% compared to (13.7)% for 2012. The effective tax rate for 2013 differed from 2012 primarily as a result of smaller decreases in the valuation allowance and reserves for unrecognized tax benefits during 2013 compared to decreases in the valuation allowance and reserves for unrecognized tax benefits during 2012.

The effective tax rate for continuing operations for 2011 was (1.8)%. The effective tax rate for 2012 differed from 2011 primarily as a result of decreases in the valuation allowance and reserves for unrecognized tax benefits during 2012 and increases in the valuation allowance and reserves for unrecognized tax benefits during 2011.

The following table reconciles the statutory U.S. federal income tax rate to the Company's effective income tax rate:

	2013		2012		2011
Federal income tax rate	35.0	%	35.0	%	35.0	%
State tax rate, net	2.3		2.5		2.6
Permanent items	1.4		1.5		(0.8	)
Permanent items - reorganization costs	-		-		0.1
Domestic production activity	(1.2	)	-		(0.8	)
Difference in U.S. statutory tax rate and foreign country effective tax rate	(1.0	)	(3.3	)	-
Tax credits	(3.0	)	(2.3	)	1.8
Change in reserve for unrecognized tax benefits	-		(10.4	)	(2.5	)
Change in valuation allowance	(31.0	)	(34.4	)	(35.3	)
Change in tax legislation	-		-		0.9
Other	1.7		(2.3	)	(2.8	)
Total	4.2	%	(13.7	)%	(1.8	)%

Significant components of the Company's deferred tax liabilities and assets are as follows:

	December 29,			December 30,
	2013			2012
		(In thousands)
Deferred tax liabilities:
PP&E and identified intangible assets	$	125,197		$	124,921
Inventories		74,287			107,420
Insurance claims and losses		33,625			28,701
All other current		9,453			24,857
All other noncurrent		9,031			9,957
Total deferred tax liabilities		251,593			295,856
Deferred tax assets:
Net operating losses		20,907			244,151
Foreign net operating losses		15,437			19,113
Credit carry forwards		79,555			60,129
Allowance for doubtful accounts		4,510			5,583
Accrued liabilities		47,384			41,808
All other current		12,282			581
All other noncurrent		10,292			3,627
Workers compensation		42,951			45,320
Pension and other postretirement benefits		20,364			56,847
Total deferred tax assets		253,682			477,159
Valuation allowance		(10,400	)		(188,354	)
Net deferred tax assets		243,282			288,805
Net deferred tax liabilities	$	8,311		$	7,051

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carry back and carry forward periods), projected future taxable income and tax-planning strategies in making this assessment.

As of December 29, 2013, the Company believes it has sufficient positive evidence to conclude that realization of its federal and state net deferred tax assets is more likely than not to be realized. The decrease in valuation allowance of $178.0 million during 2013 was primarily due to a decrease in federal, state and foreign net operating losses. As of December 29, 2013, the Company's valuation allowance is $10.4 million, of which $1.9 million relates to capital loss carry forwards and $8.5 million relates to its Mexico operations.

As of December 29, 2013, the Company had state net operating loss carry forwards of approximately $459.6 million that will begin to expire in 2014. The Company also had Mexico net operating loss carry forwards at December 29, 2013 of approximately $51.5 million that begin to expire in 2014.

As of December 29, 2013, the Company had approximately $63.2 million of federal tax credit carry forwards that will begin to expire in 2024 and $2.7 million of state tax credit carry forwards that begin to expire in 2014.

On November 6, 2009, H.R. 3548 was signed into law and included a provision that allowed most business taxpayers an increased carry back period for net operating losses incurred in 2008 or 2009. As a result, during 2009 the Company utilized $547.7 million of its U.S. federal net operating losses under the expanded carry back provisions of H.R. 3548 and filed a claim for refund of $169.7 million. The Company received $122.6 million in refunds from the Internal Revenue Service ("IRS") from the carry back claims during 2010. The Company anticipates receipt of the remainder of its claim pending resolution of its litigation with the IRS. See "Note 17. Commitments and Contingencies" for additional information.

Section 382 of the Internal Revenue Code of 1986, as amended (the "IRC"), imposes an annual limit on the ability of a corporation that undergoes an "ownership change" to use its U.S. net operating losses and tax credits to reduce its tax liability. The Company experienced an ownership change in December 2009, but believes that utilization of the U.S. net operating losses and tax credits will not be hindered by the Section 382 limitation.

The Company has not provided any deferred income taxes on the undistributed earnings of its Mexico subsidiaries as of December 29, 2013 based upon the determination that such earnings will be indefinitely reinvested. It is not practicable to determine the amount of incremental taxes that might arise if these earnings were to be remitted. For activity after 2008, the Company is not permanently reinvesting its earnings in Puerto Rico. Therefore, the earnings generated in Puerto Rico have U.S. taxes provided on the earnings as if the earnings were distributed.

During 2011, the Company completed its deconsolidation of its Mexico operations from a tax perspective to help minimize the impact of the Mexico tax reform that became effective January 1, 2010. As a result, all of the Mexico subsidiaries started filing separate returns in 2011. The deconsolidation reduced the accrued taxes that had been previously recognized under the consolidated filing status as it eliminated recapturing certain taxes required under the new consolidation laws. As a result of the deconsolidation, the Company recognized a benefit of $4.3 million and $29.5 million during 2011 and 2010, respectively, which reduced the additional taxes that had been previously accrued as of December 27, 2009, resulting in a total net benefit of $18.4 million.

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

	December 29,			December 30,
	2013			2012
		(In thousands)
Unrecognized tax benefits, beginning of year	$	16,643		$	64,808
Increase as a result of tax positions taken during the current year		978			926
Increase as a result of tax positions taken during prior years		232			119
Decrease as a result of tax positions taken during prior years		-			(27,619	)
Decrease for lapse in statute of limitations		(736	)		(13,670	)
Decrease relating to settlements with taxing authorities		-			(7,921	)
Unrecognized tax benefits, end of year	$	17,117		$	16,643

Included in unrecognized tax benefits of $17.1 million at December 29, 2013, was $10.9 million of tax benefits that, if recognized, would reduce the Company's effective tax rate. It is not practicable at this time to estimate the amount of unrecognized tax benefits that will change in the next twelve months.

The Company recognizes interest and penalties related to unrecognized tax benefits in its provision for income taxes. As of December 29, 2013, the Company had recorded a liability of $9.9 million for interest and penalties. During 2013, accrued interest and penalty amounts related to uncertain tax positions remained unchanged from 2012.

The Company operates in the U.S. (including multiple state jurisdictions), Puerto Rico and Mexico. With few exceptions, the Company is no longer subject to U.S. federal, state or local income tax examinations for years prior to 2008 and is no longer subject to Mexico income tax examinations by taxing authorities for years prior to 2008.

The Company is currently working with the IRS through the normal processes and procedures that are available to all taxpayers outside of bankruptcy to resolve the IRS' proof of claim. In connection, the Company has filed various petitions in the United States Tax Court ("Tax Court") in response to the Notices of Deficiency that were issued to the Company. On December 12, 2012, the Company entered into two Stipulation of Settled Issues ("Stipulation" or "Stipulations") with the IRS that resolved a portion of the IRS' proof of claim. The Company is pursuing the IRS' amended proof of claim relating to the tax year ended June 20, 2004 for Gold Kist Inc. ("Gold Kist"). See "Note 17. Commitments and Contingencies" for additional information.

On September 13, 2013, the IRS issued the final, revised Tangible Property Repair Regulations for IRC Sections 162(a) and 263(a) which modify and supersede the Temporary Regulations that were issued on December 23, 2011. In addition, the IRS also released new proposed regulations for dispositions of tangible property under IRC Section 168. These final and proposed regulations are effective for tax years beginning January 1, 2014. The Company assessed the applicability of the regulations and concluded there was no significant impact to the Company's tax fixed assets.