GameStop 2008 Annual Report Download - page 94

allowances on foreign net operating losses and the recognition of foreign tax credits not previously benefited.
Valuation allowances were recorded in earlier years against foreign net operating losses generated in subsidiaries
for which profitability could not be reasonably foreseen. The valuation allowances on foreign net operating losses
were released during fiscal 2007 upon such subsidiaries attaining profitability.
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:
January 31,
2009
February 2,
2008
(In thousands)
Deferred tax asset:
Fixed assets ............................................. $ 32,460 $ 21,395
Inventory obsolescence reserve . .............................. 16,580 16,823
Deferred rents ............................................ 13,001 11,585
Stock-based compensation ................................... 27,081 16,347
Net operating losses ....................................... 15,283 17,801
Other .................................................. 13,565 12,455
Total deferred tax assets .................................. 117,970 96,406
Deferred tax liabilities:
Goodwill ............................................... (34,033) (30,280)
Prepaid expenses .......................................... (4,392) (4,110)
Acquired intangible assets ................................... (60,576) —
Other .................................................. (2,877) (8,203)
Total deferred tax (liabilities) assets .......................... (101,878) (42,593)
Net.................................................. $ 16,092 $ 53,813
Financial statements:
Current deferred tax assets .................................... $ 23,615 $ 27,481
Deferred tax (liabilities) assets . . . .............................. $ (7,523) $ 26,332
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and
foreign jurisdictions. The Internal Revenue Service (“IRS”) completed examination of the Company’s U.S. income
tax returns for the fiscal years ended on January 29, 2005 and January 28, 2006 during fiscal 2008. The Company
did not record any material adjustments to its consolidated financial statements as a result of these audits. The
Company is no longer subject to U.S. federal income tax examination by tax authorities for years before and
including the fiscal year ended January 28, 2006. The IRS has commenced an examination of EB’s U.S. income tax
return for the short year ended October 8, 2005. EB is no longer subject to U.S. federal income tax examination by
tax authorities for years prior to and including the fiscal year ended February 1, 2003.
With respect to state and local jurisdictions and countries outside of the United States, the Company and its
subsidiaries are typically subject to examination for three to six years after the income tax returns have been filed.
Although the outcome of tax audits is always uncertain, the Company believes that adequate amounts of tax, interest
and penalties have been provided for in the accompanying financial statements for any adjustments that might be
incurred due to state, local or foreign audits.
F-27
GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)