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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2018

INCOME TAXES

Schedule of significant components of the provision or benefit for income taxes

Significant components of the provision or benefit for income taxes for the years ended December 31 were as follows:

		2018(1)			2017(1)			2016
		(in thousands, except percentages)
Current provision (benefit):
Federal		$	9,750		$	(1,969)		$	(604)
State			3,264			3,701			(335)
Foreign			2,238			331			1,052
			15,252			2,063			113
Deferred provision (benefit):
Federal			1,157			(9,312)			8,161
State			737			(867)			1,354
Foreign			(22)			(34)			7
			1,872			(10,213)			9,522
Total provision (benefit) for income taxes		$	17,124		$	(8,150)		$	9,635

⁽¹⁾ For 2018 and 2017, the income tax provision (benefit) reflects the impact of the Tax Reform Act, as previously disclosed in this Note. Deferred income tax liabilities were reduced by $3.8 million and $24.5 million for 2018 and 2017, respectively, as a result of the decrease in the U.S. corporate statutory tax rate from 35% to 21% effective January 1, 2018. Current tax expense was reduced by $0.1 million and $1.3 million for 2018 and 2017, respectively, as a result of the tax law change and the Company’s application of a blended rate due to the use of a fiscal year other than the calendar year for U.S. income tax filing purposes.

Schedule of components of the deferred tax provision or benefit

Components of the deferred tax provision or benefit for the years ended December 31, were as follows:

		2018(2)			2017(1)(2)			2016(1)
		(in thousands)
Amortization, depreciation, and basis differences for property, plant and equipment and other long-lived assets		$	23,153		$	21,876		$	12,182
Amortization of intangibles			(763)			(1,030)			(3,623)
Changes in reserves for workers’ compensation, third-party casualty, and cargo claims			469			(812)			362
Revenue recognition			(2,524)			332			1,862
Allowance for doubtful accounts			(115)			(719)			(295)
Nonunion pension and other retirement plans			(2,810)			(1,977)			3,861
Multiemployer pension fund withdrawal(3)			(5,818)			—			—
Federal net operating loss carryforwards utilized			125			28			161
State net operating loss carryforwards utilized (generated)			621			229			(304)
State depreciation adjustments			(1,761)			(1,244)			(758)
Share-based compensation			(529)			352			(681)
Valuation allowance increase (decrease)			(744)			401			(61)
Other accrued expenses			(4,881)			(852)			(4,108)
Impact of the Tax Reform Act(2)			(3,772)			(24,542)			—
Other			1,221			(2,255)			924
Deferred tax provision (benefit)		$	1,872		$	(10,213)		$	9,522

⁽¹⁾ The components of the deferred tax provision above reflect the statutory U.S. income tax rate in effect for the applicable year, which is 35% for 2017 and 2016.

⁽²⁾ For 2018 and 2017, the effect of the change in the U.S. corporate tax rate from 35% to 21% in accordance with the Tax Reform Act is reflected as a separate component of the deferred tax provision.

⁽³⁾ ABF Freight recorded a multiemployer pension fund withdrawal liability in 2018 resulting from the transition agreement it entered into with the New England Teamsters and Trucking Industry Pension Fund (see Note I).

Schedule of significant components of deferred tax assets and liabilities

Significant components of the deferred tax assets and liabilities at December 31 were as follows:

		2018			2017(1)
		(in thousands)
Deferred tax assets:
Accrued expenses		$	39,885		$	36,843
Pension liabilities			2,754			4,413
Multiemployer pension fund withdrawal(2)			5,710			—
Postretirement liabilities other than pensions			7,660			6,236
Share-based compensation			4,893			4,466
Federal and state net operating loss carryovers			1,152			1,781
Other			1,355			1,508
Total deferred tax assets			63,409			55,247
Valuation allowance			(53)			(844)
Total deferred tax assets, net of valuation allowance			63,356			54,403
Deferred tax liabilities:
Amortization, depreciation, and basis differences for property, plant and equipment, and other long-lived assets			93,525			73,725
Intangibles			14,066			14,573
Revenue recognition			1,513			6,172
Prepaid expenses			3,225			3,125
Total deferred tax liabilities			112,329			97,595
Net deferred tax liabilities		$	(48,973)		$	(43,192)

⁽¹⁾ The amounts for deferred tax assets and liabilities reflect the applicable tax rates for each category, with the U.S. federal rate at 21% for a substantial portion of 2017 temporary differences in accordance with the Tax Reform Act. The amounts also include deferred taxes for states and foreign jurisdictions.

⁽²⁾ ABF Freight recorded a multiemployer pension fund withdrawal liability in 2018 resulting from the transition agreement it entered into with the New England Teamsters and Trucking Industry Pension Fund (see Note I).

Reconciliation between the effective income tax rate, as computed on income or loss before income taxes, and the statutory federal income tax rate

Reconciliation between the effective income tax rate, as computed on income before income taxes, and the statutory federal income tax rate for the years ended December 31 is presented in the following table:

		2018(1)			2017(2)			2016(2)
		(in thousands, except percentages)
Income tax provision at the statutory federal rate		$	17,721		$	18,052		$	9,901
Federal income tax effects of:
State income taxes			(840)			(992)			(357)
Nondeductible expenses			946			1,551			1,653
Life insurance proceeds and changes in cash surrender value			7			(927)			(1,001)
Alternative fuel credit			(1,203)			—			(1,180)
Increase (decrease) in valuation allowances			(891)			401			(61)
Increase (decrease) in uncertain tax positions			933			(720)			—
Settlement of share-based compensation			(649)			(1,129)			—
Impact of the Tax Reform Act on current tax(2)			(52)			(1,288)			—
Impact of the Tax Reform Act on deferred tax(2)			(3,772)			(24,542)			—
Other(3)			(1,293)			(1,687)			(1,398)
Federal income tax provision (benefit)			10,907			(11,281)			7,557
State income tax provision			4,001			2,834			1,019
Foreign income tax provision			2,216			297			1,059
Total provision (benefit) for income taxes		$	17,124		$	(8,150)		$	9,635
Effective tax (benefit) rate			20.3	%		(15.8)	%		34.1	%

⁽¹⁾ Amounts in this reconciliation reflect the statutory U.S. income tax rate in effect for the applicable year after the enactment of the Tax Reform Act, which is 21%. The effect of applying a blended rate of 32.74% for the two months ended February 28, 2018, in accordance with the Tax Reform Act, is reflected in separate components of the reconciliation.

⁽²⁾ Amounts in this reconciliation reflect the statutory U.S. income tax rate in effect for the applicable year prior to the enactment of the Tax Reform Act, which is 35%. For 2017, the effect of the change in the U.S. corporate tax rate to 21% in accordance with the Tax Reform Act is reflected in separate components of the reconciliation.

⁽³⁾ Includes foreign income tax provision, as presented in this table.

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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