Income Taxes

Comprehensive tax legislation enacted through the Tax Act on December 22, 2017, significantly modified U.S. corporate income tax law. In addition to the law's corporate income tax rate reduction, several other provisions are pertinent to the Company's financial statements and related disclosures for the year ended April 30, 2019 and future years.

The Company recognized the income tax effects of the 2017 Tax Act in accordance with Staff Accounting Bulletin No. 118 (“SAB 118”) which provides SEC guidance on the application of ASC 740, Income Taxes, in the reporting period in which the 2017 Tax Act was signed into law. Our analysis of the Tax Act and associated regulations was completed as of January 31, 2019.

Income tax expense was comprised of the following:



	FISCAL YEARS ENDED APRIL 30
(in thousands)	2019			2018			2017

CURRENT EXPENSE
Federal	$	25,649		$	8,668		$	23,638
State	8,231			1,290			4,189
Foreign	1,125			257			—
Total current expense	35,005			10,215			27,827

DEFERRED EXPENSE
Federal	(4,498		)	17,833			8,607
State	(3,266		)	3,642			1,292
Foreign	(41		)	(71		)	—
Total deferred expense	(7,805		)	21,404			9,899
Total expense	27,200			31,619			37,726
Other comprehensive income (loss)	190			50			4,391
Total comprehensive income tax expense	$	27,390		$	31,669		$	42,117

The Company's effective income tax rate varied from the federal statutory rate as follows:



	FISCAL YEARS ENDED APRIL 30
	2019		2018		2017
Federal statutory rate	21.0	%	30.4	%	35.0	%
Effect of:
Federal income tax credits	(1.4	)%	(0.5	)%	(0.2	)%
Acquisition and integration costs	—		1.2		—
Stock compensation	(0.5	)	(2.4	)	(1.3	)
Meals and entertainment	0.3		0.3		0.3
Effect of Tax Act	(1.1	)	1.2		—
Domestic production deduction	—		(0.8	)	(2.2	)
Valuation allowance for deferred taxes	0.6		—		—
Foreign	0.8		—		—
Other	1.2		0.4		(0.3	)
Total	(0.1	)%	(0.6	)%	(3.7	)%

Effective federal income tax rate	20.9	%	29.8	%	31.3	%
State income taxes, net of federal tax effect	3.6		3.6		3.3
Effective income tax rate	24.5	%	33.4	%	34.6	%

The significant components of deferred tax assets and liabilities were as follows:



	APRIL 30
(in thousands)	2019			2018
Deferred tax assets:
Accounts receivable	$	1,852		$	4,772
Product liability	2,133			2,180
Employee benefits	6,192			6,513
Tax credit carryforwards	4,439			3,937
Other	3,272			2,865
Gross deferred tax assets, before valuation allowance	17,888			20,267
Valuation allowance	(3,630		)	(2,467		)
Gross deferred tax assets, after valuation allowance	14,258			17,800

Deferred tax liabilities:
Pension benefits	119			1,035
Inventory	76			240
Depreciation	23,721			21,076
Intangibles	53,259			65,294
Other	1,059			986
Gross deferred tax liabilities	78,234			88,631

Net deferred tax liability	$	63,976		$	70,831

We have not recorded deferred income taxes applicable to undistributed earnings of foreign subsidiaries that are indefinitely reinvested in foreign operations. Undistributed earnings that are indefinitely reinvested in foreign operations are not significant as of April 30, 2019.

The Company recorded a valuation allowance related to deferred tax assets for certain state investment tax credit ("ITC") carryforwards and foreign tax credit ("FTC") carryforwards. Deferred tax assets are reduced by a valuation allowance when, after considering all positive and negative evidence, it is determined that it is more likely than not that some portion, or all, of the deferred tax asset will not be realized. In fiscal 2019, the Company determined that there will not be sufficient income in states for which an ITC deferred tax asset exists and that there will not be sufficient foreign source income to utilize the FTCs. Therefore, the Company has reassessed the valuation allowance and recorded an additional valuation allowance in the amount of $0.5 million and $0.7 million related to ITCs and FTCs, respectively.

The gross amount of state tax credit carryforwards related to state ITCs as of April 30, 2019 and 2018 was $4.6 million and $5.2 million. These credits expire in various years beginning in fiscal 2020. Net of the federal impact and related valuation allowance, the Company recorded $0.8 million and $1.5 million of deferred tax assets related to these credits, as of April 30, 2019 and 2018. The Company accounts for ITCs under the deferral method, under which the tax benefit from the ITC is deferred and amortized into income tax expense over the book life of the related property. As of April 30, 2019 and 2018, a deferred credit balance of $1.0 million and $1.3 million, respectively, is included in other liabilities on the balance sheet.

The gross amount of foreign tax credit carryforwards as of April 30, 2019 is $0.7 million, which expires in fiscal 2029.