Note 4 — Income Taxes

The Company’s income tax expense is computed based on the federal statutory rates and the state statutory rates, net of related federal benefit. Income tax expense consists of the following (in thousands):


	52 Weeks Ended February 1, 2014			53 Weeks Ended February 2, 2013			52 Weeks Ended January 28, 2012
Current
Federal	$	9,270		$	3,753		$	7,249
State		1,125			(346	)		2,003
Deferred
Federal		(1,091	)		3,278			2,772
State		125			1,014			(569	)

	$	9,429		$	7,699		$	11,455

Income tax expense differs from the amount computed by applying the statutory federal income tax rate to pre-tax income. A reconciliation of income tax expense at the statutory federal income tax rate to the amount provided is as follows (in thousands):


	52 Weeks Ended February 1, 2014			53 Weeks Ended February 2, 2013			52 Weeks Ended January 28, 2012
Tax at federal statutory rate	$	8,385		$	7,550		$	10,699
State income taxes (net of federal benefit)		920			402			773
Tax credits		(192	)		(563	)		—
Other		316			310			(17	)

Income tax expense	$	9,429		$	7,699		$	11,455

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. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):


	February 1, 2014			February 2, 2013
Deferred tax assets:
Accruals	$	2,998		$	1,909
Inventory valuation		301			186
Deferred rent and other		8,228			7,971

Total deferred tax assets		11,527			10,066
Deferred tax liabilities:
Depreciation		(11,597	)		(11,060	)
Prepaid assets		(491	)		(532	)

Total deferred tax liabilities		(12,088	)		(11,592	)

Net deferred tax liabilities	$	(561	)	$	(1,526	)

Future utilization of the deferred tax assets is evaluated by the Company and any valuation allowance is adjusted accordingly. At February 1, 2014 and February 2, 2013, there was no valuation allowance against the Company’s deferred tax assets.

The Company and one or more of its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. The Company is no longer subject to U.S. federal income tax examinations by authorities for years prior to 2009. With few exceptions, the Company is no longer subject to state and local income tax examinations for years prior to 2007. The Company has no ongoing U.S. federal, state or local income tax examinations.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


	52 Weeks Ended February 1, 2014		53 Weeks Ended February 2, 2013
	(In thousands)
Balance at the beginning of the year	$	307	$	712
Additions based on tax positions related to the current year		—		—
Additions for tax positions of prior years		—		—
Reductions for tax positions of prior years		—		—
Reductions due to settlements		—		—
Reductions due to lapse of the statute of limitations		—		(405	)

Balance at the end of the year	$	307	$	307

Included in the February 1, 2014 balance and February 2, 2013 balance is $307,000 of unrecognized tax benefits that, if recognized, would decrease the Company’s effective tax rate.

The Company accrues interest on unrecognized tax benefits as a component of income tax expense. Penalties, if incurred, would be recognized as a component of income tax expense. The Company had $186,000 and $155,000 accrued for the payment of interest and penalties associated with unrecognized tax benefits at February 1, 2014 and February 2, 2013, respectively.