GameStop 2006 Annual Report Download - page 95
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Differences between financial accounting principles and tax laws cause differences between the bases of
certain assets and liabilities for financial reporting purposes and tax purposes. The tax effects of these differences, to
the extent they are temporary, are recorded as deferred tax assets and liabilities under SFAS 109 and consisted of the
following components:
February 3,
2007
January 28,
2006
(In thousands)
Deferred tax asset:
Allowance for doubtful accounts .............................. $ 669 $ 816
Inventory capitalization costs . . . .............................. 2,504 2,743
Inventory obsolescence reserve . .............................. 14,573 16,603
Organization costs......................................... 104 160
Accrued liabilities ......................................... 1,236 8,688
Gift certificate liability ..................................... 6,951 5,155
Deferred rents ............................................ 8,131 9,682
Deferred compensation ..................................... 499 (5)
Stock-based compensation ................................... 7,842 —
Merger-related liabilities .................................... 1,237 9,702
Foreign net operating losses . . . .............................. 12,243 3,360
Translation adjustment...................................... 181 634
Accrued state taxes ........................................ (230) 194
Total deferred tax assets .................................. 55,940 57,732
Deferred tax liabilities:
Goodwill ............................................... (23,504) (24,459)
Prepaid expenses .......................................... (2,664) (3,062)
Valuation allowance ....................................... (1,585) —
Restructuring accruals ...................................... (522) —
Fixed assets ............................................. 12,202 (2,136)
Foreign dividend .......................................... (1,400) (286)
Accrued state taxes ........................................ 2,195 (378)
Total deferred tax liabilities . . .............................. (15,278) (30,321)
Net.................................................. $40,662 $ 27,411
Financial statements:
Current deferred tax assets .................................. $34,858 $ 41,051
Non-current deferred tax assets (liabilities)....................... $ 5,804 $(13,640)
The valuation allowance primarily represents the tax benefits of certain foreign net operating loss carryfor-
wards and other deferred tax assets which may expire without being utilized.
13. Stock Incentive Plan
Effective October 2005, the Company’s stockholders voted to amend the Amended and Restated 2001
Incentive Plan of Historical GameStop (the “Option Plan”) to provide for issuance under the Option Plan of the
Company’s Class A common stock. The Option Plan provides a maximum aggregate amount of 40,000 shares of
F-27
GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)