NOTE E — INCOME TAXES

The Company’s statutory federal tax rate is 35%. State tax rates vary among states and average approximately 6.0% to 6.5%, although some state rates are higher and a small number of states do not impose an income tax. The effective tax rate for the three months ended June 30, 2013 was 38.0%. The effective tax benefit rate for the six months ended June 30, 2013 was 44.8%, due primarily to the alternative fuel tax credit. The effective tax benefit rate for the three and six months ended June 30, 2012 was 94.6% and 61.6%, respectively, reflecting an $8.0 million decrease in the valuation allowance for deferred tax assets in the second quarter and a $3.3 million net decrease in the valuation allowance for deferred tax assets for the year-to-date period based on management’s judgment regarding the realization of deferred tax assets as affected by the purchase of Panther in June 2012.

A reconciliation of the 2013 and 2012 rates to the statutory federal rates is shown in the table within this Note. Due to the retroactive reinstatement in January 2013 of the alternative fuel tax credit that had previously expired on December 31, 2011, the $0.9 million benefit of the 2012 credit and the $0.5 million benefit of the year-to-date credit as of June 30, 2013 were recognized in the first six months of 2013. In addition to the effect of the alternative fuel tax credit on the effective tax benefit rate in 2013, for both 2013 and 2012, the difference between the Company’s effective tax rate and the federal statutory rate primarily results from state income taxes, nondeductible expenses, changes in the cash surrender value of life insurance and policy proceeds, and changes in valuation allowances for deferred tax assets.

As of June 30, 2013, the Company’s deferred tax liabilities which will reverse in future years exceeded deferred tax assets. Due to the nonunion defined benefit pension plan curtailment, which was recorded in second quarter 2013 (see Note G), the related pension liability was reduced by $46.3 million and associated deferred tax assets were reduced by $18.0 million (reflected as a net increase in long-term deferred tax liabilities in the accompanying consolidated balance sheet as of June 30, 2013).

Net decreases in valuation allowances of $0.3 million were recorded in the first six months of 2013. The decreases relate primarily to valuation allowances for deferred tax assets for state net operating loss and depreciation carryovers of ABF.

During the six months ended June 30, 2013, the Company received refunds of $2.2 million of federal and state taxes that were paid in prior years, primarily from loss carrybacks, and the Company paid state and foreign income taxes of $0.9 million.

Reconciliation between the effective income tax rate, as computed on income (loss) before income taxes, and the statutory federal income tax rate for the six months ended June 30, 2013 and 2012 is presented in the following table:

	Three Months Ended										Six Months Ended
	June 30										June 30
	2013					2012					2013					2012
	(in thousands)

Income tax expense (benefit) at the statutory federal rate	$	2,753		35.0	%	$	2,129		35.0	%	$	(5,403	)	(35.0	)%	$	(5,758	)	(35.0	)%
Federal income tax effects of:
Net reversal in valuation allowances	(528		)	(6.7	)	(7,973		)	(131.0	)	(216		)	(1.4	)	(3,333		)	(20.3	)
Alternative fuel tax credit	(241		)	(3.0	)	—			—		(1,421		)	(9.2	)	—			—
Effect of permanent differences and other	703			8.9		(635		)	(10.4	)	721			4.7		(871		)	(5.3	)
State income taxes	300			3.8		722			11.8		(602		)	(3.9	)	(169		)	(1.0	)
Total income tax expense (benefit)	$	2,987		38.0	%	$	(5,757	)	(94.6	)%	$	(6,921	)	(44.8	)%	$	(10,131	)	(61.6	)%