GameStop 2006 Annual Report Download - page 93

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was heard in November 2005 and was denied. The Defendants appealed the denial of the motion to dismiss and on
March 24, 2006, the Alabama Supreme Court denied the Defendants’ application. Discovery is proceeding.
Mr. Moore was found guilty of capital murder in a criminal trial in Alabama and was sentenced to death in August
2005. We do not believe there is sufficient information to estimate the amount of the possible loss, if any, resulting
from the lawsuit.
On April 18, 2006, former and current store managers Charles Kohler, James O. Little, III, Jason Clayton, Nick
Quintois, Kirk Overby and Amy Johnson (collectively the “plaintiffs”) filed a complaint against the Company in the
U.S. District Court for the Eastern District of Louisiana, alleging that GameStop’s salaried retail managers were
misclassified as exempt in violation of the FLSA and should have been paid overtime. The plaintiffs sought to
represent all current and former salaried retail managers who were employed by GameStop (as well as a subsidiary
of EB) for the three years before April 18, 2006. The Company filed a motion to dismiss, transfer or stay the case
based on the pendency of a prior action. After the parties fully briefed the motion but were still awaiting the court’s
decision, they negotiated a settlement of the plaintiffs’ individual claims. In November 2006, the court approved the
settlement and the case has been dismissed. The settlement did not have a material impact on the Company’s
financial position or results of operations.
In the ordinary course of our business, the Company is, from time to time, subject to various other legal
proceedings. Management does not believe that any such other legal proceedings, individually or in the aggregate,
will have a material adverse effect on the Company’s operations or financial condition.
12. Income Taxes
The provision for income tax consisted of the following:
53 Weeks
Ended
February 3,
2007
52 Weeks
Ended
January 28,
2006
52 Weeks
Ended
January 29,
2005
(In thousands)
Current tax expense (benefit):
Federal ....................................... $32,127 $40,251 $23,780
State......................................... 2,370 2,300 4,355
Foreign....................................... 18,894 7,954 (634)
53,391 50,505 27,501
Deferred tax expense (benefit):
Federal ....................................... 571 (3,093) 5,228
State......................................... (2,149) (894) 6
Foreign....................................... (1,502) 312 168
(3,080) (3,675) 5,402
Charge in lieu of income taxes, relating to the tax effect of
stock option tax deduction......................... 45,735 12,308 5,082
Total income tax expense ........................... $96,046 $59,138 $37,985
F-25
GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)