Restaurant operating expenses consist of the following:  • Occupancy costs of Company-operated restaurants.  • Utility costs of Company-operated restaurants.  • Repair and maintenance expenses of the Company-operated restaurant facilities.  • Marketing and advertising expenses done locally and contribu- tions to advertising funds for Company-operated restaurants. • Insurance costs directly related to Company-operated  restaurants.  24. Income Taxes 25. Reclassifications 26. Recently Issued Accounting Standards Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those tem- porary differences are expected to be recovered or settled. A valua- tion allowance has been established to reduce deferred tax assets attributable to net operating losses and credits of Miami Subs. Certain prior year balances have been reclassified to conform with current year presentation. In June 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 143, “Accounting for Asset Retirement Obligations” (“SFAS No. 143”). SFAS No. 143 addresses financial and reporting obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. It applies to legal obligations associated with the retirement of long-lived assets that result from acquisition, construction, development and/or the normal operation of a long-lived asset, except for certain obligations of lessees. The Company has evaluated the effect of the adoption of SFAS No. 143 on its financial position and results of operations, and it has not had a material impact on the financial position and results of operations of the Company. In April 2002, the FASB issued Statement of Financial Account- ing Standards No. 145 (“SFAS No. 145”), “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement  No. 13, and Technical Corrections.” SFAS No. 145 eliminates the current requirement that gains and losses on debt extinguishment must be classified as extraordinary items in the income statement. Instead, such gains and losses will be classified as extraordinary items only if they are deemed to be unusual and infrequent, in accordance  In December 2003, the FASB issued a revision to FASB Interpre- tation No. 46, “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51” (“FIN No. 46(R)” or the “Inter- pretation”). FIN No. 46(R) clarifies the application of ARB No. 51, “Consolidated Financial Statements,” to certain entities in which equity investors do not have the characteristics of a controlling finan- cial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial sup- port. FIN No. 46(R) requires the consolidation of these entities, known as variable interest entities, by the primary beneficiary of the entity. The primary beneficiary is the entity, if any, that will absorb a majority of the entity’s expected losses, receive a majority of the entity’s expected residual returns, or both.  In May 2003, the FASB issued Statement of Financial Account- ing Standards No. 150 (“SFAS No. 150”), “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This statement establishes standards for how an issuer classi- fies and measures in its statement of financial position certain financial instruments with characteristics of both liabilities and equity. In accordance with the standard, financial instruments that embody obligations for the issuer are required to be classified as liabilities. The adoption of SFAS No. 150 has not had a material impact on the Company’s financial position and results of operations. In April 2003, the FASB issued Statement of Financial Account- ing Standards No. 149 (“SFAS No. 149”), “Amendment of State- ment No. 133 on Derivative Instruments and Hedging Activities,” which amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133. The adoption of SFAS No. 149 has not had a material impact on the Company’s financial position and results of operations. with the current criteria for extraordinary classification. Additionally, any gain or loss on extinguishment of debt that was classified as an extraordinary item in prior periods presented that does not meet the  criteria in APB Opinion No. 30 for classification as an extraordinary item shall be reclassified. In addition, SFAS No. 145 eliminates an  inconsistency in lease accounting by requiring that modifications of capital leases that result in reclassification as operating leases be accounted for consistent with sale-leaseback accounting rules. SFAS No. 145 also contains other nonsubstantive corrections to authorita- tive accounting literature. SFAS No. 145 has not had a material impact on the financial position and results of operations of the Company.  2004 Annual Report  Nathan’s Famous, Inc. & Subsidiaries page twenty-three