Note 7, Income Taxes:

Income tax expense (benefit) consists of the following:

(In thousands)	2015			2014		2013
Current
Federal	$	17,598		$	10,257	$	18,253
State		2,907			1,611		2,621
		20,505			11,868		20,874

Deferred
Federal		(2,476	)		4,323		(706	)
State		(543	)		477		54
		(3,019	)		4,800		(652	)
	$	17,486		$	16,668	$	20,222

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)	2015			2014		2013
Statutory rates applied to income before income taxes	$	15,846		$	8,840	$	18,370
State income taxes, net of Federal tax benefit		1,487			788		1,610
Net permanent differences		(11	)		42		316
Release of debit balance in accumulated other comprehensive income related to settled pension obligations		—			6,866		—
Change in deferred tax asset valuation allowance		—			—		(1,363	)
Change in state credits		—			110		1,466
Other		164			22		(177	)
	$	17,486		$	16,668	$	20,222

The change in state credits in 2014 and 2013 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)	2015		2014
Deferred tax assets:
Accounts receivable	$	772	$	743
Property and equipment		9,250		5,787
Leases		5,880		5,055
Accrued liabilities		10,916		9,523
Retirement benefits		579		720
Other		31		31
Total deferred tax assets		27,428		21,859

Deferred tax liabilities:
Inventory		9,285		9,198
Other		898		740
Total deferred tax liabilities		10,183		9,938
Net deferred tax assets	$	17,245	$	11,921

As discussed in Note 1, we adopted ASU 2015-17 as of December 31, 2015, and we applied the new guidance prospectively and the 2014 balance sheet was not adjusted. For 2015, deferred tax assets and liabilities are classified as noncurrent. For 2014, 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)	2015			2014
Current assets (liabilities):
Current deferred assets	$	—		$	5,801
Current deferred liabilities		—			(11,490	)
		—			(5,689	)
Non-current assets (liabilities):
Non-current deferred assets		27,428			38,978
Non-current deferred liabilities		(10,183	)		(21,368	)
		17,245			17,610
Net deferred tax assets	$	17,245		$	11,921

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 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 2010.

Uncertain Tax Positions

No uncertain tax positions were identified for the years currently open under statute of limitations, including 2013, 2014 and 2015. Interest and penalties associated with uncertain tax positions, if any, are recognized as components of income tax expense.