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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. Deferred tax assets and liabilities are classified on the accompanying consolidated balance sheets based on the classification of the underlying asset or liability. Significant components of the Company’s net deferred tax assets (liabilities) follows: 

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In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred taxes will not be realized. Based upon the availability of carrybacks of future deductible amounts to the past two years’ taxable income and management’s projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not the existing deductible temporary differences will reverse during periods in which carrybacks are available or in which the Company generates net taxable income. However, there can be no assurance that the Company will generate any income or any specific level of continuing income in future years. 

## NOTE 4 – COMMITMENTS AND CONTINGENCIES Operating Lease Commitments 

Future minimum lease payments under noncancelable store, distribution center and former corporate head- quarters operating leases (including leases with related parties) are as follows: 

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The above future minimum lease payments include amounts for leases that were signed prior to January 29, 2005 for stores that were not open as of January 29, 2005. 

Minimum rental payments for operating leases do not include contingent rentals that may be paid under certain store leases based on a percentage of sales in excess of stipulated amounts. Future minimum lease payments have not been reduced by expected future minimum sublease rentals of $1,239 under operating leases. 

