NOTE E — INCOME TAXES

The Company’s statutory federal tax rate is 35%. State tax rates vary among states and average approximately 6.0% to 6.5%, although some state rates are higher and a small number of states do not impose an income tax. Due primarily to the alternative fuel tax credit, the effective tax benefit rate for the three months ended March 31, 2013 was 42.5%. The effective tax benefit rate for the three months ended March 31, 2012 was 19.4%, reflecting a valuation allowance for deferred tax assets of $4.7 million based on management’s conclusion during first quarter 2012 that a part of federal deferred tax assets was not more likely than not to be realized.

A reconciliation of the 2013 and 2012 rates to the statutory federal rates is shown in the table within this Note. Due to the retroactive reinstatement in January 2013 of the alternative fuel tax credit that had previously expired on December 31, 2011, the $0.9 million benefit of the 2012 credit and the $0.3 million benefit of the first quarter 2013 credit were recognized in the first quarter of 2013. In addition to the effect of the alternative fuel tax credit on the effective tax benefit rate in 2013, for both 2013 and 2012, the difference between the Company’s effective tax rate and the federal statutory rate primarily results from state income taxes, nondeductible expenses, changes in the cash surrender value of life insurance and policy proceeds, and changes in valuation allowances for deferred tax assets.

As of March 31, 2013, the Company’s deferred tax assets exceeded the deferred tax liabilities which will reverse in future years. The Company evaluated the total deferred tax assets at March 31, 2013 and concluded that, other than for certain deferred tax assets related to foreign tax credits or certain state tax benefits, the assets did not exceed the amount for which realization is more likely than not. In making this determination, the Company considered the future reversal of existing taxable temporary differences, taxable income in carryback years, future taxable income, and tax planning strategies. For example, certain expense components that generate deferred tax assets are eligible for a significantly longer carryback period if the Company so elects. Because there is sufficient taxable income in the longer carryback period, the assets related to these expense items are expected to be fully realized. Also, taking into account the changes in capitalization as a result of its June 2012 acquisition (see Note C), Panther would have had substantial taxable income that would have exceeded the Company’s taxable loss in recent years.

During the three months ended March 31, 2013, the Company received no refunds of federal or state income taxes, and the Company paid state and foreign income taxes of $0.5 million.

Reconciliation between the effective income tax rate, as computed on loss before income taxes, and the statutory federal income tax rate for the three months ended March 31, 2013 and 2012 is presented in the following table:

	Three Months Ended
	March 31
	2013					2012
	(in thousands)

Income tax benefit at the statutory federal rate	$	(8,156	)	(35.0	)%	$	(7,888	)	(35.0	)%
Federal income tax effects of:
Increase in valuation allowances	312			1.3		4,660			20.7
Alternative fuel tax credit	(1,180		)	(5.0	)	—			—
Effect of permanent differences and other	18			0.1		(235		)	(1.0	)
State income taxes	(902		)	(3.9	)	(911		)	(4.1	)
Total income tax benefit	$	(9,908	)	(42.5	)%	$	(4,374	)	(19.4	)%