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Income Taxes | 12 Months Ended
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Dec. 31, 2012
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The components of earnings from continuing operations before income taxes and the provision for income taxes from continuing operations were as follows:
|  | Years ended December 31,
|  | 2012 |  | 2011 |  | 2010
|  | (In thousands)
Earnings from continuing operations before income taxes: |  |  |  |  |  |
United States |  | $ | 241,672 |  |  | 223,209 |  |  | 156,123 |
Foreign |  | 61,445 |  |  | 56,178 |  |  | 30,182 |
Total |  | $ | 303,117 |  |  | 279,387 |  |  | 186,305 |
Current tax expense (benefit) from continuing operations: |  |  |  |  |  |
Federal (1) |  | $ | (4,157 | ) |  | 1,615 |  |  | 4,536 |
State (1) |  | 11,514 |  |  | 7,785 |  |  | 4,468 |
Foreign |  | 7,759 |  |  | 8,603 |  |  | 11,596 |
|  | 15,116 |  |  | 18,003 |  |  | 20,600 |
Deferred tax expense (benefit) from continuing operations: |  |  |  |  |  |
Federal |  | 77,819 |  |  | 67,849 |  |  | 38,179 |
State |  | 3,871 |  |  | 17,247 |  |  | 7,198 |
Foreign |  | 5,412 |  |  | 4,920 |  |  | (4,280 | )
|  | 87,102 |  |  | 90,016 |  |  | 41,097 |
Provision for income taxes from continuing operations |  | $ | 102,218 |  |  | 108,019 |  |  | 61,697 |
______________
(1) | Excludes federal and state tax benefits resulting from the exercise of stock options and vesting of restricted stock awards, which were credited directly to “Additional paid-in capital.”
A reconciliation of the federal statutory tax rate with the effective tax rate from continuing operations follows:
|  | Years ended December 31,
|  | 2012 |  | 2011 |  | 2010
|  | (Percentage of pre-tax earnings)
Federal statutory tax rate |  | 35.0 |  |  | 35.0 |  |  | 35.0 |
Impact on deferred taxes for changes in tax rates |  | 0.5 |  |  | 2.6 |  |  | 0.4 |
State income taxes, net of federal income tax benefit |  | 4.4 |  |  | 3.9 |  |  | 4.6 |
Tax reviews and audits |  | (2.9 | ) |  | (0.9 | ) |  | (7.0 | )
Miscellaneous items, net |  | (3.3 | ) |  | (1.9 | ) |  | 0.1 |
Effective tax rate |  | 33.7 |  |  | 38.7 |  |  | 33.1 |
Tax Law Changes The effects of changes in tax laws on deferred tax balances are recognized in the period the new legislation is enacted. The following provides a summary of the impact of changes in tax laws on net earnings from continuing operations by tax jurisdiction:
Tax Jurisdiction |  | Enactment Date |  | Net Earnings
|  |  |  | (in thousands)
2012 |  |  |  |
United Kingdom |  | July 17, 2012 |  | $(856)
Canada |  | June 20, 2012 |  | $(671)
2011 |  |  |  |
State of Michigan |  | May 25, 2011 |  | $(5,350)
State of Illinois |  | January 13, 2011 |  | $(1,221)
2010 |  |  |  |
United Kingdom |  | July 27, 2010 |  | $400
Deferred Income Taxes The components of the net deferred income tax liability were as follows:
|  | December 31,
|  | 2012 |  | 2011
|  | (In thousands)
Deferred income tax assets: |  |  |  |
Self-insurance accruals |  | $ | 52,177 |  |  | 37,296 |
Net operating loss carryforwards |  | 258,808 |  |  | 275,124 |
Alternative minimum taxes |  | 9,679 |  |  | 9,679 |
Accrued compensation and benefits |  | 61,095 |  |  | 67,323 |
Federal benefit on state tax positions |  | 17,925 |  |  | 18,847 |
Pension benefits |  | 204,069 |  |  | 179,159 |
Miscellaneous other accruals |  | 39,708 |  |  | 38,588 |
|  | 643,461 |  |  | 626,016 |
Valuation allowance |  | (38,182 | ) |  | (41,324 | )
|  | 605,279 |  |  | 584,692 |
Deferred income tax liabilities: |  |  |  |
Property and equipment bases difference |  | (1,734,508 | ) |  | (1,649,494 | )
Other items |  | (18,716 | ) |  | (25,265 | )
|  | (1,753,224 | ) |  | (1,674,759 | )
Net deferred income tax liability (1) |  | $ | (1,147,945 | ) |  | (1,090,067 | )
______________
(1) | Deferred tax assets of $29 million and $31 million have been included in “Prepaid expenses and other current assets” at December 31, 2012 and 2011, respectively.
We do not provide for U.S. deferred income taxes on temporary differences related to our foreign investments that are considered permanent in duration. These temporary differences consist primarily of undistributed foreign earnings of $544 million at December 31, 2012. A full foreign tax provision has been made on these undistributed foreign earnings. Determination of the amount of deferred taxes on these temporary differences is not practicable due to foreign tax credits and exclusions. At December 31, 2012, we had U.S. federal tax effected net operating loss carryforwards of $178 million and various U.S. subsidiaries had state tax effected net operating loss carryforwards of $47 million both expiring through tax year 2029. We also had foreign tax effected net operating losses of $34 million that are available to reduce future income tax payments in several countries, subject to varying expiration rules. A valuation allowance has been established to reduce deferred income tax assets, principally foreign tax loss carryforwards to amounts more likely than not to be realized. We had unused alternative minimum tax credits, for tax purposes, of $10 million at December 31, 2012 available to reduce future income tax liabilities. The alternative minimum tax credits may be carried forward indefinitely. Uncertain Tax Positions We are subject to tax audits in numerous jurisdictions in the U.S. and foreign countries. Tax audits by their very nature are often complex and can require several years to complete. In the normal course of business, we are subject to challenges from the IRS and other tax authorities regarding amounts of taxes due. These challenges may alter the timing or amount of taxable income or deductions, or the allocation of income among tax jurisdictions. As part of our calculation of the provision for income taxes on earnings, we recognize the tax benefit from uncertain tax positions that are at least more likely than not of being sustained upon audit based on the technical merits of the tax position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Such calculations require management to make estimates and judgments with respect to the ultimate outcome of a tax audit. Actual results could vary materially from these estimates. The following is a summary of tax years that are no longer subject to examination: Federal — audits of our U.S. federal income tax returns are closed through fiscal year 2008. State — for the majority of states, tax returns are closed through fiscal year 2008. Foreign — we are no longer subject to foreign tax examinations by tax authorities for tax years before 2005 in Canada, 2006 in Brazil, 2007 in Mexico and 2010 in the U.K., which are our major foreign tax jurisdictions. The following table summarizes the activity related to unrecognized tax benefits (excluding the federal benefit received from state positions):
|  | December 31,
|  | 2012 |  | 2011 |  | 2010
|  | (In thousands)
Balance at January 1 |  | $ | 62,247 |  |  | 61,236 |  |  | 69,494 |
Additions based on tax positions related to the current year |  | 3,980 |  |  | 3,776 |  |  | 4,233 |
Settlements |  | — |  |  | — |  |  | (8,280 | )
Reductions due to lapse of applicable statute of limitations |  | (13,956 | ) |  | (2,765 | ) |  | (4,211 | )
Gross balance at December 31 |  | 52,271 |  |  | 62,247 |  |  | 61,236 |
Interest and penalties |  | 5,319 |  |  | 6,933 |  |  | 5,858 |
Balance at December 31 |  | $ | 57,590 |  |  | 69,180 |  |  | 67,094 |
Of the total unrecognized tax benefits, $40 million (net of the federal benefit on state issues) represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate in future periods. The total amount includes $4 million and $5 million of interest and penalties, at December 31, 2012 and 2011, respectively, net of the federal benefit on state issues. For the years ended December 31, 2012, 2011 and 2010, we recognized an income tax benefit related to interest and penalties of $1 million, $1 million, and $2 million, respectively, within “Provision for income taxes” in our Consolidated Statements of Earnings. Unrecognized tax benefits related to federal, state and foreign tax positions may decrease by $2 million by December 31, 2013, if audits are completed or tax years close during 2013. Like-Kind Exchange Program We have a like-kind exchange program for certain of our revenue earning equipment located in the U.S. Pursuant to the program, we dispose of vehicles and acquire replacement vehicles in a form whereby tax gains on disposal of eligible vehicles are deferred. To qualify for like-kind exchange treatment, we exchange, through a qualified intermediary, eligible vehicles being disposed of with vehicles being acquired allowing us to generally carryover the tax basis of the vehicles sold (“like-kind exchanges”). The program results in a material deferral of federal and state income taxes. As part of the program, the proceeds from the sale of eligible vehicles are restricted for the acquisition of replacement vehicles and other specified applications. Effective April 1, 2012, we temporarily suspended the like-kind exchange program. Due to the structure utilized to facilitate the like-kind exchanges, the qualified intermediary that holds the proceeds from the sales of eligible vehicles and the entity that holds the vehicles to be acquired under the program are required to be consolidated in the accompanying Consolidated Financial Statements in accordance with U.S. GAAP. At December 31, 2012 and 2011, these consolidated entities had total assets, primarily revenue earning equipment, and total liabilities, primarily accounts payable of $26 million and $142 million, respectively.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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