INCOME TAXES

6 Months Ended

Jun. 30, 2011

INCOME TAXES

INCOME TAXES

NOTE C — INCOME TAXES

The Company’s statutory federal tax rate is 35%. Federal tax benefits can be recorded for losses at the effective tax rate provided the benefits are more likely than not to be realized by the Company through loss carrybacks, offset against future taxable income or offset against reversing temporary differences which result in taxable income in excess of financial reporting income. State tax rates vary among states and average approximately 6.0% to 6.5% although some state rates are much higher and some states do not impose an income tax. The Company can record state tax benefits for losses if the same criteria as described above for federal tax benefits are met. The effective tax benefit rates for the six months ended June 30, 2011 and 2010 were 36.3% and 37.9%, respectively. The difference between the Company’s effective tax rate and the federal statutory rate primarily results from the effect of state income taxes, nondeductible expenses, changes in the cash surrender value of life insurance and policy proceeds, the alternative fuel tax credit and changes in valuation allowances primarily for deferred state income tax assets. The alternative fuel tax credit expired on December 31, 2009 and in December 2010 was retroactively reinstated to January 1, 2010. The alternative fuel tax credit recorded for the six months ended June 30, 2011 amounted to $0.5 million with no comparable credit recorded in the same period of 2010. During the six months ended June 30, 2011, the Company received refunds of $1.0 million of federal and state taxes paid in prior years, primarily from loss carrybacks, and the Company paid federal, state and foreign income taxes of $0.8 million.