Income Tax Provision

The provision (benefit) for income taxes consisted of the following:



	2015		2014			2013
Current
Federal	$	35	$	30		$	(98	)
State	7		5			(9		)
Total current	42		35			(107		)
Deferred	16		(30		)	(56		)
Total income tax provision (benefit)	$	58	$	5		$	(163	)

The difference between the actual tax provision (benefit) and the tax provision computed by applying the statutory federal income tax rate to Earnings (loss) from continuing operations before income taxes is attributable to the following:



	2015			2014			2013
Federal taxes (benefit) based on statutory rate	$	62		$	4		$	(149	)
State income taxes, net of federal benefit	12			—			(13		)
Tax contingency	(1		)	(1		)	1
Change in valuation allowance	—			(1		)	(3		)
Pension	(8		)	—			—
Other	(7		)	3			1
Total income tax provision (benefit)	$	58		$	5		$	(163	)

Deferred Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the bases of assets and liabilities for financial reporting and income tax purposes. The Company’s deferred tax assets and liabilities consisted of the following:



	2015			2014
Deferred tax assets:
Compensation and benefits	$	234		$	224
Self-insurance	25			24
Property, plant and equipment and capitalized lease assets	72			132
Loss on sale of discontinued operations	1,387			1,339
Net operating loss carryforwards	19			23
Other	69			80
Gross deferred tax assets	1,806			1,822
Valuation allowance	(1,404		)	(1,356		)
Total deferred tax assets	402			466
Deferred tax liabilities:
Property, plant and equipment and capitalized lease assets	(88		)	(147		)
Inventories	(14		)	(40		)
Intangible assets	(27		)	(25		)
Other	(23		)	(16		)
Total deferred tax liabilities	(152		)	(228		)
Net deferred tax asset	$	250		$	238

Net deferred tax assets are recorded in the Consolidated Balance Sheets as follows:



	2015			2014
Deferred tax assets	$	265		$	287
Other current liabilities	(15		)	(49		)
Net deferred tax asset	$	250		$	238

The Company has valuation allowances to reduce deferred tax assets to the amount that is more-likely-than-not to be realized. The Company currently has state net operating loss (“NOL”) carryforwards of $414 for tax purposes. The NOL carryforwards expire beginning in 2016 and continuing through 2034 and have a $16 valuation allowance. The sale of NAI resulted in an allocation of tax expense between continuing and discontinued operations. Included in discontinued operations is the recognition of the additional tax basis in the shares of NAI offset by a valuation allowance on the capital loss that resulted from the sale of shares. The Company has recorded a valuation allowance against the projected capital loss because there is no clear evidence that the capital loss will be used prior to its expiration in fiscal 2019.

Uncertain Tax Positions

Changes in the Company’s unrecognized tax benefits consisted of the following:



	2015			2014			2013
Beginning balance	$	76		$	187		$	165
Increase based on tax positions related to the current year	15			15			5
Decrease based on tax positions related to the current year	—			—			(1		)
Increase based on tax positions related to prior years	15			8			82
Decrease based on tax positions related to prior years	(4		)	(2		)	(58		)
Decrease related to settlements with taxing authorities	(3		)	(128		)	(3		)
Decrease due to lapse of statute of limitations	(5		)	(4		)	(3		)
Ending balance	$	94		$	76		$	187

Included in the balance of unrecognized tax benefits as of February 28, 2015, February 22, 2014 and February 23, 2013 are tax positions of $36 net of tax, $48 net of tax, and $60 net of tax, respectively, which would reduce the Company’s effective tax rate if recognized in future periods.

The Company expects to resolve $6, net, of unrecognized tax benefits within the next 12 months, representing several individually insignificant income tax positions. These unrecognized tax benefits represent items in which the Company may not prevail with certain taxing authorities, based on varying interpretations of the applicable tax law. The Company is currently in various stages of audits, appeals or other methods of review with authorities from various taxing jurisdictions. The resolution of these unrecognized tax benefits would occur as a result of potential settlements from these negotiations. Based on the information available as of February 28, 2015, the Company does not anticipate significant additional changes to its unrecognized tax benefits.

The Company recognized income related to interest, net of penalties and settlement adjustments, of $7 and $4 in fiscal 2015 and 2014, respectively. No amounts were recognized related to interest and penalties in fiscal 2013. In addition to the liability for unrecognized tax benefits, the Company had a liability of $26 and $31 as of February 28, 2015 and February 22, 2014, respectively, related to accrued interest and penalties for uncertain tax positions recorded in Other current liabilities and Long-term tax liabilities in the Consolidated Balance Sheets. The Company settled various audits during fiscal 2015 and fiscal 2014 resulting in payments of $2 and $14 for interest and penalties in fiscal 2015 and fiscal 2014, respectively.

The Company is currently under examination or other methods of review in several tax jurisdictions and remains subject to examination until the statute of limitations expires for the respective taxing jurisdiction or an agreement is reached between the taxing jurisdiction and the Company. As of February 28, 2015, the Company is no longer subject to federal income tax examinations for fiscal years before 2011 and in most states is no longer subject to state income tax examinations for fiscal years before 2006.