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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2020

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:


	2020		2019		2018⁽¹⁾

	(in thousands)
Current provision:
Federal	$	10,001	$	2,202	$	9,750
State		3,267		1,813		3,264
Foreign		413		2,060		2,238
		13,681		6,075		15,252

Deferred provision (benefit):
Federal		5,948		4,196		1,157
State		1,789		1,221		737
Foreign		(22)		(6)		(22)
		7,715		5,411		1,872
Total provision for income taxes	$	21,396	$	11,486	$	17,124

(1)	For 2018, the income tax provision reflects the impact of the Tax Reform Act, as previously disclosed in this Note.

Schedule of components of the deferred tax provision or benefit


	2020⁽¹⁾		2019⁽¹⁾		2018⁽¹⁾⁽²⁾

	(in thousands)
Amortization, depreciation, and basis differences for property, plant and equipment and other long-lived assets	$	4,975	$	16,255	$	23,153
Amortization of intangibles and impairment		183		(6,933)		(763)
Changes in reserves for workers’ compensation, third-party casualty, and cargo claims		(182)		(1,880)		469
Revenue recognition		(1,481)		(1,437)		(2,524)
Allowance for doubtful accounts		(652)		541		(115)
Nonunion pension and other retirement plans		957		564		(2,810)
Multiemployer pension fund withdrawal⁽³⁾		157		150		(5,818)
Federal and state net operating loss carryforwards utilized (generated)		(259)		59		746
State depreciation adjustments		343		(1,302)		(1,761)
Share-based compensation		(195)		(709)		(529)
Valuation allowance increase (decrease)		617		383		(744)
Other accrued expenses		1,663		(699)		(4,881)
Impact of the Tax Reform Act⁽²⁾		—		—		(3,772)
Prepaid expenses		1,207		1,782		1,313
Operating lease right-of-use assets/liabilities – net⁽⁴⁾		(13)		(1,049)		—
Other		395		(314)		(92)
Deferred tax provision	$	7,715	$	5,411	$	1,872

(1)	The components of the deferred tax provision reflect the statutory U.S. income tax rate in effect for the applicable year, which is a blended rate for 2018 (as previously discussed within this Note), and 21% for 2019 and 2020.

(2)	For 2018, 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 Pension Fund (see Note I).

(4)	Net change in operating lease right-of-use deferred tax assets and liabilities recorded due to the adoption of ASC Topic 842 in 2019.

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:


	2020		2019

	(in thousands)
Deferred tax assets:
Accrued expenses	$	40,502	$	41,757
Operating lease liabilities⁽¹⁾		33,933		19,726
Supplemental pension liabilities		103		1,091
Multiemployer pension fund withdrawal⁽²⁾		5,409		5,546
Postretirement liabilities other than pensions		4,871		5,359
Share-based compensation		5,827		5,605
Federal and state net operating loss carryovers		1,353		1,093
Revenue recognition		1,426		—
Other		1,297		1,538
Total deferred tax assets		94,721		81,715
Valuation allowance		(1,284)		(668)
Total deferred tax assets, net of valuation allowance		93,437		81,047

Deferred tax liabilities:
Amortization, depreciation, and basis differences for property, plant and equipment, and other long-lived assets		113,092		107,835
Operating lease right-of-use assets⁽¹⁾		32,923		18,703
Intangibles		7,520		7,373
Revenue recognition		—		669
Prepaid expenses		6,151		4,952
Total deferred tax liabilities		159,686		139,532
Net deferred tax liabilities	$	(66,249)	$	(58,485)

(1)	Operating lease right-of-use assets and liabilities were recorded in 2019 due to the adoption of ASC Topic 842.

(2)	ABF Freight recorded a multiemployer pension fund withdrawal liability in 2018 resulting from the transition agreement it entered into with the New England 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:


	2020⁽¹⁾			2019⁽¹⁾			2018⁽¹⁾

	(in thousands, except percentages)
Income tax provision at the statutory federal rate	$	19,424		$	10,809		$	17,721
Federal income tax effects of:
State income taxes		(1,062)			(637)			(840)
Nondeductible expenses		1,395			1,344			1,682
Life insurance proceeds and changes in cash surrender value		(488)			(775)			7
Alternative fuel credit		(1,261)			(2,340)			(1,203)
Net increase (decrease) in valuation allowances		617			382			(891)
Net increase (decrease) in uncertain tax positions		(933)			(20)			933
Settlement of share-based compensation		420			388			(649)
Impact of the Tax Reform Act on current tax⁽¹⁾		—			—			(52)
Impact of the Tax Reform Act on deferred tax⁽¹⁾		—			—			(3,772)
Nonunion pension termination expense		—			1,040			—
Foreign tax credits generated		(391)			(2,054)			(2,216)
Federal research and development tax credits		(2,078)			(1,354)			—
Other		306			(385)			187
Federal income tax provision		15,949			6,398			10,907
State income tax provision		5,056			3,034			4,001
Foreign income tax provision		391			2,054			2,216
Total provision for income taxes	$	21,396		$	11,486		$	17,124
Effective tax rate		23.1	%		22.3	%		20.3	%

(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.