The tax effects of temporary differences that give rise to deferred tax assets and liabilities are as follows ($ thousands):

2007

2006

Deferred tax assets:

Accrued expense

$8,613

$7,927

Tax credit and net operating loss carry forwards

2,288

2,554

LIFO and inventory reserves

5,286

4,327

Other

2,664

2,109

Deferred tax assets:

18,851

16,917

Valuation allowance

(1,245)

(1,360)

Net deferred tax assets

$17,606

$15.557

Deferred tax liabilities:

Depreciation Ana Amortization

(27,338)

(29,313)

Compensation and retirement plans

(3,831)

(8,963)

Other

(1,470)

(764)

Deferred tax liabilities

(32,639)

(39,040)

Net Deferred tax liability

($15,033)

($23,483)

If the valuation allowance had been the same in 2007 as it was in 2006, the company would have reported $115 higher

a. net income.

b. deferred tax asset.

c. income tax expense.