Barnes and Noble 2010 Annual Report Download - page 53

The tax effects of temporary differences that give rise to
significant components of the Company’s deferred tax
assets and liabilities as of May 1, 2010, May 2, 2009 and
January 31, 2009 are as follows:
May 1, 2010 May 2, 2009
January 31,
2009
Deferred tax liabilities:
Investment in
Barnes & Noble.com $ (95,051) (94,843) (94,843)
Depreciation (75,385) (63,224) (63,224)
Goodwill and intangible asset
amortization (239,434) (29,252) (29,703)
Prepaid expenses (6,944) (5,927) (5,927)
Other (7,201) (1,499) (1,499)
Total deferred tax liabilities (424,015) (194,745) (195,196)
Deferred tax assets:
Loss carryover 41,348 42,907 42,907
Lease transactions 40,353 41,285 41,285
Estimated accruals 81,898 39,792 41,098
Stock-based compensation 11,482 13,724 14,375
Insurance liability 10,896 9,697 9,697
Pension 10,998 9,400 9,400
Inventory 22,642 7,584 7,584
Investments in equity
securities 1,282 2,132 2,132
Total deferred tax assets $ 220,899 166,521 168,478
Net deferred tax liabilities $ (203,116) (28,224) (26,718)
Balance Sheet caption
reported in:
Prepaid expenses and other
current assets $ 108,491 51,145 52,452
Deferred tax liabilities (311,607) (79,369) (79,170)
Net deferred tax liabilities $ (203,116) (28,224) (26,718)
At May 1, 2010, the Company had federal and state net
operating loss carryforwards (NOLs) of approximately
$86,000 that expire beginning in 2018 through 2022, the
utilization of which is limited to approximately $6,700 on
an annual basis. These NOLs account for $34,594 of the
$41,348 of loss carryover deferred tax assets at May 1, 2010,
with the remainder relating primarily to other state NOLs.
As of May 1, 2010, the Company had $15,268 of unrecog-
nized tax benefits, all of which, if recognized, would affect
the Company’s effective tax rate. A reconciliation of the
beginning and ending amount of unrecognized tax benefits
for fiscal 2010, the transition period and fiscal 2008 is as
follows:
Balance at February 2, 2008 $ 18,946
Additions for tax positions of the current period 455
Additions for tax positions of prior periods 5,000
Expiration of statute of limitations (329)
Reductions due to settlement payments (55)
Other reductions for tax positions of prior periods (184)
Balance at January 31, 2009 $ 23,833
Additions for tax positions of the current period 339
Additions for tax positions of prior periods 369
Balance at May 2, 2009 $ 24,541
Additions for tax positions of the current period 2,457
Additions for tax positions of prior periods 2,563
Other reductions for tax positions of prior periods (14,293)
Balance at May 1, 2010 $ 15,268
The Company’s continuing practice is to recognize interest
and penalties related to income tax matters in income tax
expense. As of May 2, 2009 and May 1, 2010, the Company
had accrued $5,356 and $3,119, respectively, for net interest
and penalties, which is included in the $24,541 and $15,268
of unrecognized tax benefits noted above. The change in
the amount accrued for net interest and penalties includes
$2,005 in additions for net interest and penalties recog-
nized in income tax expense in the Company’s fiscal 2010
statement of operations and $4,242 in other reductions.
The Company is subject to U.S. federal income tax as well as
income tax in jurisdictions of each state having an income
tax. The tax years that remain subject to examination are
primarily from fiscal 2006 and forward. Some earlier years
remain open for a small minority of states.
2010 Annual Report 51