INCOME TAXES

Financial Accounting Standards Board ("FASB") authoritative guidance prescribes accounting for and disclosure of uncertain tax positions ("UTP") and requires application of a more likely than not threshold to the recognition and de-recognition of UTP. FASB authoritative guidance permits recognition of the amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement. A change in judgment related to the expected ultimate resolution of UTP is recognized in earnings in the quarter of change. At December 29, 2012 the Company had no gross unrecognized tax positions. During the year the Company's gross unrecognized tax benefits decreased $0.2 million primarily as a result of settlements with taxing authorities and expiration of statute of limitations. The Company does not reasonably expect any material change to the Company's unrecognized tax positions in the next twelve months. The Company recognizes accrued interest and penalties, as appropriate, related to unrecognized tax benefits as a component of income tax expense.

In fiscal 2012, the Company's major taxing jurisdictions include the U.S. (federal and state). The Company is currently under federal examination by the Internal Revenue Service for fiscal 2009 and fiscal 2010. The Company expects the federal examination to be completed in early 2013. The Company is also currently being examined by several state tax agencies. The Company does not anticipate that any of the federal or state examinations will have a significant impact on the Company's results of operations or financial position. The statute of limitations for the Company's federal and material state returns remains open for examination for tax years 2008 to 2011.

Income tax expense attributable to income from continuing operations before income taxes consists of the following (in thousands):



	December 29, 2012		December 31, 2011		January 1, 2011
Current:
Federal	$	54,982	$	58,903	$	21,491
State	10,368		13,461		4,356
Foreign	58		467		—
Total current	65,408		72,831		25,847
Deferred:
Federal	10,015		26,233		256
State	592		3,812		(3		)
Total deferred	10,607		30,045		253
	$	76,015	$	102,876	$	26,100

Income tax expense for the years ended December 29, 2012, December 31, 2011 and January 1, 2011, differed from the amount computed by applying the statutory U.S. federal income tax rate to income from continuing operations before income taxes as a result of the following (in thousands):



	December 29, 2012			December 31, 2011			January 1, 2011
Computed "expected" tax expense	$	72,375		$	95,303		$	24,620
State income taxes, net of federal benefit	7,124			11,226			2,959
Section 199 qualified domestic production deduction	(4,830		)	(5,306		)	(2,079		)
Change valuation allowance	254			1			(130		)
Other, net	1,092			1,652			730
	$	76,015		$	102,876		$	26,100

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 29, 2012 and December 31, 2011 are presented below (in thousands):



	December 29, 2012			December 31, 2011
Deferred tax assets:
Loss contingency reserves	$	10,399		$	8,867
Employee benefits	5,074			3,380
Pension liability	19,734			19,000
Intangible assets amortization, including taxable goodwill	678			2,957
Other	15,721			10,992
Total gross deferred tax assets	51,606			45,196
Less valuation allowance	(300		)	(46		)
Net deferred tax assets	51,306			45,150

Deferred tax liabilities:
Intangible assets amortization, including taxable goodwill	(22,083		)	(14,152		)
Property, plant and equipment depreciation	(53,772		)	(43,472		)
Other	(9,457		)	(11,194		)
Total gross deferred tax liabilities	(85,312		)	(68,818		)
	$	(34,006	)	$	(23,668	)

Amounts reported on Consolidated Balance Sheets:
Current deferred tax asset	$	12,609		$	7,465
Non-current deferred tax liability	(46,615		)	(31,133		)
Net deferred tax liability	$	(34,006	)	$	(23,668	)

At December 29, 2012, the Company had net operating loss carryforwards for federal income tax purposes of approximately $5.5 million expiring through 2020. The availability of the net operating loss carryforwards to reduce future taxable income is subject to various limitations. As a result of the change in ownership which occurred pursuant to the May 2002 recapitalization, utilization of the net operating loss carryforwards is limited to approximately $0.7 million per year for the remaining life of the net operating losses. Also the Company had U.S. foreign tax credit carryforwards of approximately $0.3 million and state tax carryforwards of approximately $0.6 million, which expire through 2022. As of December 29, 2012, the Company had a valuation allowance of $0.3 million due to uncertainties upon the Company's estimates of income in the various jurisdictions in which it operates and the period over which deferred income tax assets will be recoverable. The realization of net deferred income tax assets as of December 29, 2012, is primarily dependent upon the Company's ability to generate future income and foreign source income in the U.S.