Income Taxes

Our income tax provision consists of the following (in millions):



	Year Ended December 31,
	2012			2011			2010
Current:
Federal	$	16.2		$	13.7		$	3.8
State	2.5			3.6			0.5
Foreign	—			—			—
Total current tax provision	$	18.7		$	17.3		$	4.3

Deferred:
Federal	$	2.5		$	0.3		$	5.1
State	0.5			(0.5		)	0.9
Foreign	(0.2		)	(0.1		)	(0.8		)
Total deferred tax (benefit) provision	$	2.8		$	(0.3	)	$	5.2

Total income tax provision	$	21.5		$	17.0		$	9.5

A reconciliation of the statutory federal income tax rate to our effective income tax rate and income tax provision is as follows (in millions):



	Year Ended December 31,
	2012					2011					2010
Federal income tax provision at the statutory rate	$	19.4		35.0	%	$	15.1		35.0	%	$	9.5		35.0	%
Increase (decrease) resulting from:
State income taxes, net of federal benefit	2.3			4.2		2.1			4.9		1.2			4.4
Decrease in unrecognized tax benefits (inclusive of
related interest and penalty)	(0.2		)	(0.4	)	(0.3		)	(0.7	)	(0.5		)	(1.8	)
Effect of foreign operations	(0.2		)	(0.4	)	(0.1		)	(0.2	)	(0.8		)	(2.9	)
Non-deductible acquisition costs	0.2			0.4		0.3			0.7		—			—
Tax credits and other, net	—			—		(0.1		)	(0.3	)	0.1			0.2
Income tax provision	$	21.5		38.8	%	$	17.0		39.4	%	$	9.5		34.9	%

Our effective tax rate was 38.8% for 2012 compared to 39.4% for 2011. The decrease in our effective tax rate for 2012 was due primarily to a higher proportion of earnings from states with lower tax rates and the impact of non-deductible acquisition related costs recognized in each period.

In 2012 and 2011, the provision for income taxes included a net benefit of $0.5 million related primarily to the expiration of the statute of limitations for uncertain tax positions and adjustments of prior year's estimates. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The tax effects of significant temporary differences which comprise deferred tax assets and liabilities are as follows (in millions):



	December 31, 2012			December 31, 2011
Deferred tax assets:
Employee benefits, including post-retirement benefits	$	15.3		$	15.6
Trade and other receivables	4.3			3.9
Goodwill and intangibles	2.7			2.6
Self-insurance reserves	0.9			0.6
Other	3.4			3.3
Subtotal	26.6			26.0
Less: valuation allowance	(0.1		)	(0.1		)
Net deferred tax assets	$	26.5		$	25.9
Deferred tax liabilities:
Inventories	$	4.0		$	2.8
Property and equipment	19.5			17.8
Prepaid and deposits	0.5			0.5
Deferred income	0.2			0.2
Goodwill and intangibles	7.9			7.2
Other	1.3			1.3
Total deferred tax liabilities	$	33.4		$	29.8

Total net deferred tax liabilities	$	(6.9	)	$	(3.9	)
Net current deferred tax assets	4.8			5.9
Net non-current deferred tax liabilities	$	(11.7	)	$	(9.8	)

At each balance sheet date, a valuation allowance was established against the deferred tax assets based on management's assessment of whether it is more likely than not that these deferred tax assets would not be realized. We had a valuation allowance of $0.1 million at December 31, 2012 and 2011 related to foreign tax credits, which will expire at various times between 2014 and 2016.

The total gross amount of unrecognized tax benefits related to federal, state and foreign taxes, was approximately $1.6 million and $1.8 million at December 31, 2012 and 2011, respectively, all of which would impact our effective tax rate, if recognized. The expiration of the statute of limitations for certain tax positions in future years and expected settlement of certain tax audit issues could impact the total gross amount of unrecognized tax benefits by $1.1 million through the year ending December 31, 2013. A reconciliation of the beginning and ending amounts of unrecognized tax benefits for 2012, 2011 and 2010 is as follows (in millions):



	2012			2011			2010
Balance at beginning of year	$	1.8		$	1.2		$	1.5
Increase in unrecognized tax benefits on acquisition	—			0.9			—
Lapse of statute of limitations	(0.2		)	(0.2		)	(0.4		)
Other	—			(0.1		)	0.1
Balance at end of year	$	1.6		$	1.8		$	1.2

We file U.S. federal, state and foreign income tax returns in jurisdictions with varying statutes of limitations. The 2009 to 2012 tax years remain subject to examination by federal and state tax authorities. The 2008 tax year is still open for certain state tax authorities. The 2005 to 2012 tax years remain subject to examination by the tax authorities in certain foreign jurisdictions.

We recognize interest and penalties on income taxes in income tax expense. For the years ended December 31, 2012, 2011 and 2010 we recognized a net benefit in our provision for income taxes of $0.1 million related primarily to the recovery of interest associated with the expiration of the statute of limitations for certain unrecognized tax position. As of December 31, 2012 and 2011, we had a liability of $0.7 million for estimated interest and penalties related to unrecognized tax benefits, consisting of $0.4 million for interest and $0.3 million for penalties.