Income Tax Provision

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



	2016			2015		2014
Current
Federal	$	77		$	35	$	30
State	10			7		5
Total current	87			42		35
Deferred	(2		)	16		(30		)
Total income tax provision	$	85		$	58	$	5

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



	2016			2015			2014
Federal taxes based on statutory rate	$	92		$	62		$	4
State income taxes, net of federal benefit	6			12			—
Tax contingency	(6		)	(1		)	(1		)
Change in valuation allowance	4			—			(1		)
Pension	(4		)	(8		)	—
Other	(7		)	(7		)	3
Total income tax provision	$	85		$	58		$	5

Deferred Income Taxes

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



	2016			2015
Deferred tax assets:
Compensation and benefits	$	235		$	234
Self-insurance	27			25
Property, plant and equipment and capitalized lease assets	47			72
Loss on sale of discontinued operations	1,388			1,387
Net operating loss carryforwards	15			19
Other	83			69
Gross deferred tax assets	1,795			1,806
Valuation allowance	(1,408		)	(1,404		)
Total deferred tax assets	387			402
Deferred tax liabilities:
Property, plant and equipment and capitalized lease assets	(108		)	(88		)
Inventories	(6		)	(14		)
Intangible assets	(24		)	(27		)
Other	(21		)	(23		)
Total deferred tax liabilities	(159		)	(152		)
Net deferred tax assets	$	228		$	250

During the fourth quarter of fiscal 2016, the Company early adopted ASU 2015-17, which requires that all deferred taxes be presented as non-current on the Consolidated Balance Sheet. Refer to Note 1—Summary of Significant Accounting Policies, for further information on this balance sheet reclassification.

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 $315 for tax purposes. The NOL carryforwards expire beginning in fiscal 2017 and continuing through fiscal 2035 and have a $6 valuation allowance. In fiscal 2014, the sale of NAI resulted in an allocation of tax expense between continuing and discontinued operations and 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 as there is no 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 positions consisted of the following:



	2016			2015			2014
Beginning balance	$	94		$	76		$	187
Increase based on tax positions related to the current year	5			15			15
Decrease based on tax positions related to the current year	—			—			—
Increase based on tax positions related to prior years	—			15			8
Decrease based on tax positions related to prior years	(23		)	(4		)	(2		)
Decrease related to settlements with taxing authorities	—			(3		)	(128		)
Decrease due to lapse of statute of limitations	(6		)	(5		)	(4		)
Ending balance	$	70		$	94		$	76

Included in the balance of unrecognized tax benefits as of February 27, 2016, February 28, 2015 and February 22, 2014 are tax positions, net of tax, of $34, $36 and $48, respectively, which would reduce the Company’s effective tax rate if recognized in future periods.

Because existing tax positions will continue to generate increased liabilities for the Company for unrecognized tax benefits over the next 12 months, and since the Company is routinely under audit by various taxing authorities, it is reasonably possible that the amount of unrecognized tax benefits will change during the next 12 months. An estimate of the amount or range of such change cannot be made at this time. However, the Company does not expect the change, if any, to have a material effect on the Company's Consolidated Balance Sheets, Consolidated Statements of Operations, or Consolidated Statements of Cash Flows within the next 12 months.

The Company recognized interest income of $9, $7 and $4 in fiscal 2016, 2015 and 2014 in Interest expense, respectively, and penalty expense of $5 in fiscal 2016 in Selling and administrative expenses, in the Consolidated Statements of Operations. At February 27, 2016 and February 28, 2015, the Company had accrued interest of $16 and $26, respectively, related to uncertain tax positions recorded in Other current liabilities, and Long-term tax liabilities in the Consolidated Balance Sheets. At February 27, 2016 and February 28, 2015, the Company had accrued penalties of $5 and $0, respectively, related to uncertain tax positions recorded in Long-term tax liabilities in the Consolidated Balance Sheets.

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 27, 2016, the Company is no longer subject to federal income tax examinations for fiscal years before 2014 and in most states is no longer subject to state income tax examinations for fiscal years before 2006.