5. Income Taxes

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Income Taxes

The items comprising income tax expense are as follows (in thousands):

	Year ended December 31,
	2015			2014			2013
Current  —  Federal	$	11,848		$	12,626		$	12,541
—  State		1,528			1,585			1,065
		13,376			14,211			13,606
Deferred  —  Federal		(1,364	)		31			(1,063	)
— State		(67	)		(29	)		140
		(1,431	)		2			(923	)
Total income tax expense	$	11,945		$	14,213		$	12,683

Temporary differences and carryforwards which have given rise to deferred income tax assets and liabilities as of December 31, 2015 and 2014 are as follows (in thousands):

	2015		2014
Deferred tax assets:
Benefit plans	$	1,958	$	1,535
Inventories		473		483
Other		733		158
Total deferred tax assets	$	3,164	$	2,176
Deferred tax liabilities:
Property, plant and equipment	$	9,585	$	9,648
Patents and goodwill		2,897		2,926
Other		91		158
Total deferred tax liabilities	$	12,573	$	12,732
Net deferred tax liability	$	9,409	$	10,556
Balance Sheet classification:
Non-current deferred income tax liability	$	9,989	$	11,129
Current deferred income tax asset		580		573
Net deferred tax liability	$	9,409	$	10,556

Total income tax expense differs from the amount that would be provided by applying the statutory federal income tax rate to pretax earnings as illustrated below (in thousands):

	Year ended December 31,
	2015			2014			2013
Income tax expense at the statutory federal income tax rate	$	14,304		$	14,707		$	13,743
Increase (decrease) resulting from:
State income taxes		882			934			770
Section 199 manufacturing deduction		(1,383	)		(1,290	)		(1,307	)
R&D tax credits		(2,254	)		(393	)		(626	)
Other, net		396			255			103
Total income tax expense	$	11,945		$	14,213		$	12,683

A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits as required by ASC 740 is as follows (in thousands):

Gross unrecognized tax benefits at January 1, 2013	$	541
Increase in tax positions for prior years		11
Increase in tax positions for current year		0
Lapse in statutes of limitation		(206	)
Gross unrecognized tax benefits at December 31, 2013	$	346
Increase in tax positions for prior years		6
Increase in tax positions for current year		0
Lapse in statutes of limitation		(223	)
Gross unrecognized tax benefits at December 31, 2014	$	129
Increase in tax positions for prior years		122
Increase in tax positions for current year		0
Lapse in statutes of limitation		(131	)
Gross unrecognized tax benefits at December 31, 2015	$	120

As of December 31, 2015 all of the unrecognized tax benefits, which were comprised of uncertain tax positions, would impact the effective tax rate if recognized. Unrecognized tax benefits that are affected by statutes of limitation that expire within the next 12 months are immaterial.

We are subject to United States federal income tax as well as to income tax of multiple state jurisdictions.  We have concluded all United States federal income tax matters for years through 2010.  In 2015, the Internal Revenue Service, or IRS, began examining certain of our United States federal income tax returns for 2011, 2012 and 2013. All material state and local income tax matters have been concluded for years through 2011. 

We recognize interest and penalties, if any, related to unrecognized tax benefits in income tax expense. The liability for unrecognized tax benefits included accrued interest of $9,000 and $21,000 at December 31, 2014 and 2013, respectively. Tax expense for the year ended December 31, 2015, 2014 and 2013 included a net interest benefit of $9,000, $12,000 and $5,400, respectively.

In the fourth quarter of 2015, we recorded tax credits for our R&D expenditures totaling $2.3 million.  These credits reflected amounts for the full year 2015 following the extension of the R&D tax credit laws in December. This amount also included an adjustment for recalculation of these tax credits from prior years resulting from a new regulation issued by the Treasury Department which favorably impacted the benefits provided to the Company under these rules.