11. Income Taxes

The income tax provision consisted of the following for the years ended December 31:

(in thousands)	2012		2011			2010

Current
Federal	$	14,856	$	10,047		$	6,349
State		2,885		2,038			1,151

		17,741		12,085			7,500

Deferred
Federal		2,396		(1,039	)		1,421
State		291		(287	)		322

		2,687		(1,326	)		1,743

Income tax expense	$	20,428	$	10,759		$	9,243

The differences between the U.S. federal statutory tax rate and the Company's effective tax rate for continuing operations were as follows for the years ended December 31:



U.S federal statutory rate	35.0	%	35.0	%	35.0	%
State income taxes, net of U.S. federal income tax expense	3.8		4.5		4.6
Provision to return adjustments, net	(0.2	)	(0.3	)	(1.1	)
Deferred tax adjustments, net	—		(0.1	)	0.2
Domestic production/manufacturing deduction	(2.0	)	(2.7	)	(2.4	)
Refund of fine related to OSHA violation	—		—		(0.1	)
Non-deductible meals and entertainment	0.4		0.7		0.6
Research and development credit	(0.1	)	(0.1	)	(0.3	)
Other, net	0.5		—		(0.1	)

	37.4	%	37.0	%	36.4	%

The net deferred tax assets and (liabilities) arising from temporary differences was as follows at December 31:

(in thousands)	2012			2011

Deferred income tax assets:
Self insurance reserves	$	9,439		$	9,772
Contract loss reserves		49			254
Stock-based awards		5,099			5,262
Other		3,253			3,245

Total deferred income tax assets		17,840			18,533

Deferred income tax liabilities:
Property and equipment—tax over book depreciation		(22,572	)		(20,449	)
Intangible assets—tax over book amortization		(4,056	)		(4,185	)

Total deferred income tax liabilities		(26,628	)		(24,634	)

Net deferred income taxes	$	(8,788	)	$	(6,101	)

The balance sheet classification of deferred income taxes is as follows:

(in thousands)	2012			2011

Current deferred income tax assets	$	12,742		$	13,253
Non-current deferred income tax liabilities		(21,530	)		(19,354	)

	$	(8,788	)	$	(6,101	)

The Company is subject to taxation in various jurisdictions. The Company's federal tax returns for 2009 and 2010 are currently under examination by the Internal Revenue Service. The Company remains subject to examination by U.S. federal authorities for the remaining open tax year (2011) and by various state authorities for the years 2008 through 2011.

The Company has recorded a liability for unrecognized tax benefits related to tax positions taken on its various income tax returns. If recognized, the entire amount of unrecognized tax benefits would favorably impact the effective tax rate that is reported in future periods. The Company anticipates that total unrecognized tax benefits will be reduced within the next 12 months due to the lapses in the applicable statutes of limitations, as well as pending federal tax settlements for the two years under examination. The adjustment related to these items is estimated at approximately $0.3 million.

The following is a reconciliation of the beginning and ending liabilities for unrecognized tax benefits at December 31:

(in thousands)	2012			2011

Balance at beginning of period	$	567		$	392
Gross increases in current period tax positions		186			194
Gross increases in prior period tax positions		134			31
Gross decreases in prior period tax positions		(232	)		(34	)
Lapse of applicable statutes of limitations		—			(16	)

Balance at end of period		655			567
Accrued interest and penalties at end of period		185			113

Total liability for unrecognized tax benefits	$	840		$	680

The liability for unrecognized tax benefits, including accrued interest and penalties, were included in other liabilities in the accompanying consolidated balance sheets. The amount of interest and penalties charged or credited to income tax expense as a result of the unrecognized tax benefits was $0.2 million for the year ended December 31, 2012 and $0.1 million or less for each of the years ended December 31, 2011 and 2010.