Income Taxes

Income tax expense consisted of the following:



	Years Ended October 31,
	2017			2016			2015
	(In thousands)
Current expense:
Federal	$	117,611		$	67,880		$	101,605
State	11,024			7,613			11,704
	128,635			75,493			113,309
Deferred expense (benefit):
Federal	15,452			27,983			4,169
State	1,804			1,194			1,043
Change in valuation allowance	(1,106		)	(954		)	(431		)
	16,150			28,223			4,781
	$	144,785		$	103,716		$	118,090

Significant components of the Company’s deferred tax assets and liabilities are outlined below.



	October 31,
	2017			2016
	(In thousands)
Deferred tax liabilities:
Property, plant and equipment	$	116,431		$	96,027
Prepaid and other assets	2,154			2,243
Total deferred tax liabilities	118,585			98,270
Deferred tax assets:
Accrued expenses and accounts receivable	11,941			10,572
Inventory	348			493
Compensation on restricted stock	13,606			10,591
State income tax credits	14,050			15,229
Other	165			166
Valuation allowance	(13,423		)	(14,529		)
Total deferred tax assets	26,687			22,522
Net deferred tax liabilities	$	91,898		$	75,748

The increase in the Company's deferred tax liability is primarily attributable to the Company's decision to take bonus depreciation on qualifying assets placed in service during fiscal 2017. The value of assets placed in service during fiscal 2017 is significant due to the start-up of the Company's new St. Pauls, North Carolina facilities.

Included in the deferred tax assets at October 31, 2017, are North Carolina Investing in Business Property Credit and North Carolina Jobs Credits totaling $11.7 million, as well as Georgia Job Tax Credits totaling $2.3 million. The North Carolina Investing in Business Property Credit provides a 7% investment tax credit for property located in a North Carolina development area, the North Carolina Creating Jobs Credit provides a tax credit for increased employment in North Carolina, and the Georgia Job Tax Credit provides a tax credit for creation and retention of qualifying jobs in Georgia. It is management’s opinion that the majority of the North Carolina and Georgia income tax credits will not be utilized before they expire, and a $13.4 million valuation allowance has been recorded as of October 31, 2017. These credits expire between fiscal years 2017 and 2023.

At the end of each reporting period, the Company evaluates all available information at that time to determine if it is more likely than not that some or all of these credits will be utilized. As of October 31, 2017, 2016, and 2015, the Company determined that a total of $627,000, $700,000, and $350,000, respectively, would be recovered. Accordingly, those amounts were released from the valuation allowance and benefited deferred tax expense in the respective periods.

The differences between the consolidated effective income tax rate and the federal statutory rate of 35.0% are as follows:



	Years Ended October 31,
	2017			2016			2015
	(In thousands)
Income taxes at statutory rate	$	148,585		$	102,437		$	116,932
State income taxes	9,038			7,007			8,757
State income tax credits	(606		)	(948		)	(342		)
Federal income tax credits	(390		)	(390		)	(90		)
Federal manufacturers deduction	(11,527		)	(8,425		)	(10,714		)
Excess tax benefits	(3,345		)	—			—
Nondeductible expenses	3,506			2,482			3,234
Other, net	630			2,507			744
Change in valuation allowance	(1,106		)	(954		)	(431		)
Income tax expense	$	144,785		$	103,716		$	118,090