NOTE 7, INCOME TAXES:

Income tax expense (benefit) consists of the following:

(In thousands)	2013			2012			2011
Current
Federal	$	18,253		$	9,375		$	(3,136	)
State		2,621			1,439			223
		20,874			10,814			(2,913	)

Deferred
Federal		(706	)		(2,235	)		(7,002	)
State		54			26			(945	)
		(652	)		(2,209	)		(7,947	)
	$	20,222		$	8,605		$	(10,860	)

The differences between income tax expense in the accompanying Consolidated Financial Statements and the amount computed by applying the statutory Federal income tax rate are as follows:

(In thousands)	2013			2012			2011
Statutory rates applied to income before income taxes	$	18,370		$	8,231		$	1,565
State income taxes, net of Federal tax benefit		1,610			769			143
Net permanent differences		316			8			33
Change in deferred tax asset valuation allowance		(1,363	)		(1,207	)		(14,121	)
Change in state credits		1,466			1,129			717
Change for net operating loss carrybacks, amended returns and related receivables		(204	)		342			422
Change in deferred tax rate		—			(125	)		274
Change in reserve for uncertain tax positions		—			(674	)		42
Other		27			132			65
	$	20,222		$	8,605		$	(10,860	)

Our 2011 benefit includes a $717,000 impact of the change in treatment of ports credits by the state of Georgia. These credits were almost completely reserved in our valuation allowance as are the remaining revised credits. Our expense in 2013 and 2012 includes the impact of state credits which expired. The change in state credits in 2013 and 2012 is the unused amounts which expired as of each of the end of the tax years.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The amounts in the following table are grouped based on broad categories of items that generate the deferred tax assets and liabilities.

(In thousands)	2013		2012
Deferred tax assets:
Accounts receivable related	$	610	$	578
Net property and equipment		11,977		10,313
Leases		5,007		5,608
Accrued liabilities		776		655
State tax credits		110		1,576
Pension		4,633		9,515
Other		28		37
Total deferred tax assets		23,141		28,282
Deferred tax liabilities:
Inventory related		8,951		8,446
Other		643		702
Total deferred tax liabilities		9,594		9,148
Valuation allowance		—		(1,363	)
Net deferred tax assets	$	13,547	$	17,771

Deferred tax assets and deferred tax liabilities which are current are netted against each other as are non-current deferred tax assets and non-current deferred tax liabilities as they relate to each tax-paying component for presentation in the consolidated balance sheets. These groupings are detailed in the following table:

(In thousands)	2013			2012
Current assets (liabilities):
Current deferred assets	$	11,048		$	5,060
Current deferred liabilities		(10,754	)		(10,292	)
Valuation allowance		—			(1,363	)
		294			(6,595	)
Non-current assets (liabilities):
Non-current deferred assets		39,974			46,997
Non-current deferred liabilities		(26,721	)		(22,631	)
		13,253			24,366
Net deferred tax assets	$	13,547		$	17,771

We review our deferred tax assets to determine the need for a valuation allowance based on evidence to conclude that it is more-likely-than-not they will be realized.

Our profitability in the fourth quarter of 2011 was sufficient such that we were no longer in a cumulative loss position. The sustained improvements in our results since mid-2009 and a review of other positive and negative evidence led us to conclude that a valuation allowance for most of our net deferred tax assets was no longer required. Accordingly, during the fourth quarter of 2011 we released $14.1 million of our valuation allowance. As of December 31, 2012 and 2011 our valuation allowance on deferred tax assets was $1.4 million and $2.6 million, respectively, and was related to state income tax credits.

We file income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. With respect to U.S. federal, state and local jurisdictions, with limited exceptions, we are no longer subject to income tax audits for years before 2009.

Uncertain Tax Positions: A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(In thousands)	2013		2012			2011
Balance at January 1	$	—	$	783		$	785
Gross increases – tax positions in prior period		—		—			38
Gross decreases – tax positions in prior period		—		—			(40	)
Reductions related to settlements with taxing authorities and the lapse of the statute of limitations				(783	)		—
Balance at December 31	$	—	$	—		$	783

During 2012 we settled federal and state audits and the statute of limitations lapsed eliminating our unrecognized tax positions and reducing our effective tax rate by approximately $674,000. Interest and penalties are recognized as components of income tax expense. We had approximately $285,000 of accrued interest and penalties at December 31, 2011.