2K Sports 2008 Annual Report Download - page 91

11. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities as of October 31, 2008 and 2007 consisted of:
October 31, October 31,
2008 2007
Compensation and benefits $ 40,293 $ 30,968
Software development costs 39,803 41,500
Licenses 13,594 14,614
Income tax payable 13,263 22,937
Professional fees 7,618 7,281
Marketing and promotions 7,430 4,035
Rent and deferred rent obligations 6,732 9,889
Deferred Consideration for Acquisitions (Firaxis) 921 1,000
Deferred tax liability —5,841
Other 23,435 8,770
Total $153,089 $146,835
12. LEGAL AND OTHER PROCEEDINGS
Various lawsuits, claims, proceedings and investigations are pending involving us and certain of our
subsidiaries as described below in this section. Depending on the amount and the timing, an unfavorable
resolution of some or all of these matters could materially affect our business, financial condition, results
of operations or cash flows. In addition to the matters described herein, we are, or may become, involved
in routine litigation in the ordinary course of business which we do not believe to be material to our
business, financial condition, results of operations or cash flows.
Consumer Class Action—Grand Theft Auto: San Andreas. In July 2005, we received four complaints for
purported class actions, which were consolidated in the U.S. District Court for the Southern District of
New York. The plaintiffs, alleged purchasers of our Grand Theft Auto: San Andreas game, assert that we
engaged in consumer deception and false advertising, breached an implied warranty of merchantability and
were unjustly enriched as a result of our alleged failure to disclose that Grand Theft Auto: San Andreas
contained ‘‘hidden’’ content. The complaints seek unspecified damages, declarations of various violations
of law and litigation costs. Although the Court previously granted preliminary approval of a settlement of
the foregoing consumer class action lawsuits, in July 2008 the Court refused to certify the proposed
settlement class on the basis that, under controlling case law issued after the parties negotiated the
settlement, the plaintiffs could no longer meet their burden of showing that the case could proceed on the
proposed class basis, regardless of whether the purpose of certification was for litigation or settlement. The
plaintiffs have applied for permission to appeal. We express no opinion as to the likelihood of permission
to appeal being granted or the outcome of any such appeal, and will continue to defend this case
vigorously.
City of Los Angeles Consumer Litigation. In January 2006, the City of Los Angeles filed a complaint
against us in the Superior Court of the State of California alleging violations of California law on
substantially the same basis as the consumer class action regarding Grand Theft Auto: San Andreas. The
complaint seeks injunctive and other relief. The case was removed and transferred to the U.S. District
Court for the Southern District of New York. We have engaged in settlement discussions with the City of
Los Angeles and expect that they will lead to a resolution of this matter after the resolution of such
consumer class action.
Securities Class Action—Grand Theft Auto: San Andreas and Option Backdating. In February and March
2006, four purported class action complaints were filed against us and certain of our former officers and
directors in the U.S. District Court for the Southern District of New York. The actions were consolidated,
and in April 2007 the lead plaintiff filed a consolidated second amended complaint which contained
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