4. Income Taxes

The income tax provision as shown in the statements of operations includes the following:

(amounts in thousands)	Year Ended February 2, 2013			Year Ended January 28, 2012			Year Ended January 29, 2011

Current:
Federal	$	2,807		$	2,857		$	4,354
State		397			(1,956	)		1,091
Foreign		974			770			970

		4,178			1,671			6,415

Deferred:
Federal	$	(140	)	$	1,128		$	(1,059	)
State		1			122			(156	)

		(139	)		1,250			(1,215	)

	$	4,039		$	2,921		$	5,200

A reconciliation of the actual income tax rates to the federal statutory rate follows:



Tax expense at U.S. statutory rate	34.0	%	34.0	%	34.2	%
State income taxes, net of federal income tax benefit	2.4		1.7		4.7
State income tax refund, net of federal income tax	—		(9.4	)	—
Nondeductible expenses	0.4		0.7		1.0
Other	0.3		1.0		0.3

Tax provision	37.1	%	28.0	%	40.2	%

A summary of deferred income tax assets is as follows:

	February 2, 2013						January 28, 2012

(amounts in thousands)	Current			Non-Current			Current			Non-Current
Deferred tax assets:
Amortization	$	—		$	237		$	—		$	272
Deferred revenue		—			54			—			154
Other		15			12			20			—
State income taxes		71			431			81			370
Compensation		—			1,277			—			1,024

Total deferred tax assets		86			2,011			101			1,820

Deferred tax liabilities:
Depreciation		—			(318	)		—			(220	)
Deferred revenue		(38	)		—			(38	)		—

Total deferred tax liabilities		(38	)		(318	)		(38	)		(220	)

Net deferred tax assets	$	48		$	1,693		$	63		$	1,600

Foreign taxes include withholding required on royalty payments from foreign jurisdictions. Deferred tax assets primarily relate to amortization of intangible assets, state tax benefits and stock-based compensation. The Company believes that it is more likely than not that the deferred tax assets will be realized based upon expected future income.

The difference in the effective tax rate for Fiscal 2013 in comparison to Fiscal 2012 was primarily the result of settling income tax examinations with the California Franchise Tax Board in regards to the apportionment of net income. The settlement resulted in a tax provision decrease of approximately $1.0 million in Fiscal 2012.

The amount of unrecognized tax benefits was approximately $1.0 million and $0.9 million, respectively, at February 2, 2013 and January 28, 2012. At February 2, 2013, approximately $0.7 million of unrecognized tax benefits would, if recognized, affect the effective tax rate. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(amounts in thousands)	Year Ended February 2, 2013			Year Ended January 28, 2012			Year Ended January 29, 2011

Gross unrecognized tax benefits at beginning of year	$	900		$	1,100		$	800
Additions:
Tax positions taken in prior years		273			250			400
Tax positions taken in the current year		24			—			—
Reductions:
Tax positions taken in prior years		(170	)		—			—
Tax positions taken in the current year		—			—			—
Settlement with taxing authorities		—			(450	)		(100	)
Lapse in statute of limitations		—			—			—

Gross unrecognized tax benefits at year end	$	1,027		$	900		$	1,100

In accordance with authoritative guidance, interest and penalties related to unrecognized tax benefits are included within the provision for taxes on the consolidated statements of income. The total amount of interest and penalties recognized in the consolidated statements of income for Fiscal 2013, Fiscal 2012 and Fiscal 2011, respectively, was $0.1 million, $0.04 million and $0.04 million. As of February 2, 2013 and January 28, 2012, respectively, the total amount of accrued interest and penalties included in the liability for unrecognized tax benefits was $0.3 million and $0.2 million.

Due to inherent uncertainties in estimating accruals for uncertain tax positions, amounts asserted by tax authorities could be greater or less than the amounts accrued by the Company. Accordingly, the Company's provision on federal and state matters to be recorded in the future may change as revised estimates are made or the underlying matters are settled or otherwise resolved. As of February 2, 2013, the Company does not believe that its estimates, as otherwise provided for, on such tax positions will significantly increase or decrease within the next twelve months.

The Company files income tax returns in the U.S. federal and California and certain other state jurisdictions. For federal income tax purposes, the fiscal 2010 and later tax years remain open for examination by the tax authorities under the normal three year statute of limitations. For state tax purposes, the fiscal 2009 and later tax years remain open for examination by the tax authorities under a four year statute of limitations.