NOTE 4 - INCOME TAXES

The composition of the Company’s deferred tax assets and liabilities is as follows:

	Fiscal Year Ended
	March 1, 2014		March 2, 2013
	(in thousands)

Deferred tax assets:
Pension costs	$	2,759	$	4,004
Reserves not currently deductible for tax purposes		66		69
Net operating loss carry forwards		79,145		70,746
Depreciation		3,490		13,124
AMT credit		3,182		3,182
Accrued expenses		110		4,086
Other		82		81
Wind-down expenses		3,954		8,752
Air right		3,703		3,641
Lease claim		13,934		14,439
Store closing cost		-		2,650
Total deferred tax assets	$	110,425	$	124,774
Valuation Allowance		(59,868)		(83,676)
Deferred tax asset after valuation allowance	$	50,557	$	41,098

Deferred tax liabilities:
Intangibles	$	(156)	$	(356)
Write up of owned real estate		(50,401)		(40,742)
Total deferred tax liabilities	$	(50,557)	$	(41,098)
Net deferred tax assets	$	-	$	-

At March 1, 2014, the Company had state net operating loss carry forwards of approximately $216.2 million. These net operating losses expire in years through fiscal 2033. The Company also had Federal net operating loss carry forwards of approximately $193.7 million. These net operating losses will expire in years through fiscal 2033.

Since under liquidation basis accounting all future estimated taxes are accrued as of the reporting date net of the benefit expected to be derived from available NOLs, it is not appropriate to record a separate deferred tax asset on the same NOLs. Accordingly, a valuation allowance of approximately $83.7 million was recorded through March 2, 2013. The valuation allowance was reduced by approximately $23.8 million during the fiscal year ended March 1, 2014 to $59.9 million primarily due to the increase in the estimated net realizable values of various Company properties during the fiscal year ended March 1, 2014.