Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

The components of the Company’s income tax expense are as follows:

years ended December 31 (in millions)	2020		2019			2018
Federal income taxes:
Current	$	91.9	$	83.9		$	15.3
Deferred		45.4		31.1			69.6
Total federal income taxes		137.3		115.0			84.9
State income taxes:
Current		21.0		20.5			6.0
Deferred		8.7		(1.5	)		14.1
Total state income taxes		29.7		19.0			20.1
Foreign income taxes:
Current		1.2		2.8			(1.4	)
Deferred		—		(0.5	)		2.1
Total foreign income taxes		1.2		2.3			0.7
Income tax expense	$	168.2	$	136.3		$	105.7

Summary of Effective Income Tax Rate

The Company’s effective income tax rate varied from the statutory United States income tax rate because of the following
tax differences:

years ended December 31	2020			2019			2018
Statutory income tax rate		21.0	%		21.0	%		21.0	%
(Reduction) increase resulting from:
Effect of statutory depletion		(2.8	)		(3.4	)		(3.4	)
State income taxes, net of federal tax benefit		2.6			2.0			2.8
Railroad track maintenance credits		(1.3	)		—			—
Change in tax status of subsidiary		—			(1.7	)		—
Impact from 2017 Tax Cuts and Jobs Act		—			—			(3.3	)
Other items		(0.6	)		0.3			1.2
Effective income tax rate		18.9	%		18.2	%		18.3	%

Components of Deferred Tax Assets and Liabilities

The principal components of the Company’s deferred tax assets and liabilities are as follows:

December 31	Deferred Assets (Liabilities)
(in millions)	2020			2019
Deferred tax assets related to:
Inventories	$	69.6		$	62.6
Valuation and other reserves		34.7			22.3
Net operating loss carryforwards		9.0			10.5
Accumulated other comprehensive loss		89.4			85.2
Lease liabilities		105.6			114.7
Other items, net		2.3			2.9
Gross deferred tax assets		310.6			298.2
Valuation allowance on deferred tax assets		(8.1	)		(9.0	)
Total net deferred tax assets		302.5			289.2
Deferred tax liabilities related to:
Property, plant and equipment		(743.3	)		(700.8	)
Goodwill and other intangibles		(154.6	)		(151.7	)
Right-of-use assets		(111.3	)		(112.1	)
Partnerships and joint ventures		(27.4	)		(27.4	)
Employee benefits		(47.4	)		(30.2	)
Total deferred tax liabilities		(1,084.0	)		(1,022.2	)
Deferred income taxes, net	$	(781.5	)	$	(733.0	)

Schedule of Unrecognized Tax Benefits Excluding Interest Correlative Effects

The following table summarizes the Company’s unrecognized tax benefits, excluding interest and correlative effects of $0.2 million, $1.7 million and $0.6 million for the years ended December 31, 2020, 2019 and 2018 respectively:

years ended December 31 (in millions)	2020			2019			2018
Unrecognized tax benefits at beginning of year	$	25.5		$	24.1		$	22.4
Gross increases – tax positions in prior years		0.2			0.4			0.9
Gross decreases – tax positions in prior years		—			—			—
Gross increases – tax positions in current year		0.1			1.8			1.8
Gross decreases – tax positions in current year		(0.2	)		(0.8	)		(1.0	)
Lapse of statute of limitations		(17.4	)		—			—
Unrecognized tax benefits at end of year	$	8.2		$	25.5		$	24.1

Amount that, if recognized, would favorably impact the effective tax rate	$	6.4		$	15.5		$	12.8