Note 7, Income Taxes:

Income tax expense (benefit) consists of the following:

(In thousands)	2014		2013			2012
Current
Federal	$	10,257	$	18,253		$	9,375
State		1,611		2,621			1,439
		11,868		20,874			10,814

Deferred
Federal		4,323		(706	)		(2,235	)
State		477		54			26
		4,800		(652	)		(2,209	)
	$	16,668	$	20,222		$	8,605

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)	2014		2013			2012
Statutory rates applied to income before income taxes	$	8,840	$	18,370		$	8,231
State income taxes, net of Federal tax benefit		788		1,610			769
Net permanent differences		42		316			8
Release of valuation allowance in accumulated other comprehensive income related to settled pension obligations		6,866		—			—
Change in deferred tax asset valuation allowance		—		(1,363	)		(1,207	)
Change in state credits		110		1,466			1,129
Change for net operating loss carrybacks, amended returns and related receivables		—		(204	)		342
Change in deferred tax rate		—		—			(125	)
Change in reserve for uncertain tax positions		—		—			(674	)
Other		22		27			132
	$	16,668	$	20,222		$	8,605

The change in state credits in 2014, 2013 and 2012 is the unused amounts which expired as of the end of each 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)	2014		2013
Deferred tax assets:
Accounts receivable related	$	743	$	610
Net property and equipment		5,787		11,977
Leases		5,055		5,007
Accrued liabilities		9,523		776
State tax credits		—		110
Retirement benefits		720		4,633
Other		31		28
Total deferred tax assets		21,859		23,141
Deferred tax liabilities:
Inventory related		9,198		8,951
Other		740		643
Total deferred tax liabilities		9,938		9,594
Net deferred tax assets	$	11,921	$	13,547

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)	2014			2013
Current assets (liabilities):
Current deferred assets	$	5,801		$	11,048
Current deferred liabilities		(11,490	)		(10,754	)
		(5,689	)		294
Non-current assets (liabilities):
Non-current deferred assets		38,978			39,974
Non-current deferred liabilities		(21,368	)		(26,721	)
		17,610			13,253
Net deferred tax assets	$	11,921		$	13,547

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

We established a valuation allowance in 2008 against virtually all of our deferred tax assets due to our operating loss in that year and projected loss in 2009. A portion of the allowance was charged to AOCI and was increased in 2009. Our profitability in 2011 was sufficient for us to release the valuation allowance. The "backward-tracing" prohibition in ASC 740, Income Taxes required us to record the total amount of the release as a tax benefit in net income including the portion originally charged to AOCI. This resulted in a debit valuation allowance of $6,866,000 remaining in AOCI until the settlement of the Plan's pension obligations in 2014 when this amount was reversed and included in total tax expense.

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

During 2012 we settled federal and state audits and the statute of limitations lapsed eliminating our remaining $674,000 unrecognized tax positions and reducing our effective tax rate in that year. No new uncertain tax positions were identified in 2013 or 2014. Interest and penalties associated with uncertain tax positions, if any, are recognized as components of income tax expense.