INCOME TAXES

The provision for income taxes consisted of the following:



	Fiscal Year
	2011		2012		2013
	(In thousands)
Federal:
Current	$	42,161	$	42,532	$	40,982
Deferred	10,463		652		(6,944		)
State:
Current	8,761		5,348		6,809
Deferred	566		615		(1,798		)
Provision for income taxes	$	61,951	$	49,147	$	39,049

Provision for income tax is reconciled to the amount computed by applying the statutory Federal income tax rate of 35% for fiscal years 2011, 2012 and 2013 to income before provision for income taxes as follows:



	Fiscal Year
	2011		2012		2013
	(In thousands)
Computed federal tax provision at statutory rates	$	55,805	$	45,095	$	35,831
State income taxes, net of federal income tax effect	6,063		3,876		3,257
Increase (decrease) in tax reserves	74		119		(243		)
Other, net	9		57		204
Provision for income taxes	$	61,951	$	49,147	$	39,049

The tax effects of temporary differences that give rise to significant positions of deferred tax assets and deferred tax liabilities as of February 2, 2013 and February 1, 2014 are as follows:



	February 2, 2013			February 1, 2014
	(In thousands)
Deferred tax assets:
Current accrued liabilities and other	$	10,117		$	16,511
Noncurrent lease obligations	9,685			6,154
Noncurrent accrued liabilities and other	352			345
	20,154			23,010
Deferred tax liabilities:
Current inventories	(20,278		)	(16,616		)
Current prepaid expenses and other current assets	(1,767		)	(1,714		)
Noncurrent property, plant and equipment	(19,828		)	(17,657		)
	(41,873		)	(35,987		)
Net deferred tax liability	$	(21,719	)	$	(12,977	)

The following table summarizes the activity related to our unrecognized tax benefits and related accrued interest and penalties for fiscal years 2012 and 2013:



	Fiscal Year
	2012			2013
	(In thousands)
Unrecognized tax benefit, beginning of year	$	626		$	613
Increases related to current year tax positions	293			65
Settlement of tax positions	(132		)	—
Expiration of the statue of limitations for the assessment of taxes	(174		)	(308		)
Unrecognized tax benefit, end of year	$	613		$	370

In assessing the realizability of deferred tax assets, management considered whether it was more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of the deferred tax assets is dependent upon existence of taxable income in carryback periods and the generation of future taxable income during periods in which temporary differences become deductible. Management considered income taxes paid during the previous two years and projected future taxable income in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the temporary differences are deductible, management has determined that no valuation allowance was required at February 2, 2013 and February 1, 2014.

The Company has recognized a tax benefit for costs associated with acquisition-related activities in fiscal year 2013. Certain of these costs may be capitalized for tax purposes if an acquisition is completed, resulting in a reversal of tax benefits previously recognized.

The effective tax rate for both fiscal years 2012 and 2013 was 38.1%. While state income tax rates were higher in fiscal year 2013, changes in unrecognized tax benefits offset the increases and resulted in an unchanged effective income tax rate as compared to fiscal year 2012.

Significant changes to U.S. federal or state income tax rules could occur as part of future legislation. Such changes could influence our future income tax expense and/or the timing of income tax deductions. The impact of such changes on our business operations and financial statements remains uncertain. However, as the possibility of any enactment progresses, we will continue to monitor current developments and assess the potential implications of these tax law changes on our business and consolidated financial statements.

We file a federal income tax return along with state and local income tax returns in various jurisdictions. The Internal Revenue Service (“IRS”) has audited tax returns through fiscal year 2008, including its examination of the tax returns for fiscal years 2007 and 2008 which was finalized in October 2010. No material adjustments were required to these tax returns as a result of the examination by the IRS. For the years before fiscal year 2010, the majority of our state and local income tax returns are no longer subject to examinations by taxing authorities.