GameStop 2009 Annual Report Download - page 94

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The difference in income tax provided and the amounts determined by applying the statutory rate to income
before income taxes resulted from the following:
52 Weeks
Ended
January 30,
2010
52 Weeks
Ended
January 31,
2009
52 Weeks
Ended
February 2,
2008
Federal statutory tax rate ........................... 35.0% 35.0% 35.0%
State income taxes, net of federal effect ................ 1.5 1.1 0.5
Foreign income taxes .............................. 1.5 0.5 (0.8)
Other (including permanent differences) ................ (1.8) 0.6 (0.1)
36.2% 37.2% 34.6%
The Company’s effective tax rate decreased from 37.2% in the 52 weeks ended January 31, 2009 to 36.2% in
the 52 weeks ended January 30, 2010, primarily due to audit settlements and statute expirations. The Company’s
effective tax rate increased from 34.6% in the 52 weeks ended February 2, 2008 to 37.2% in the 52 weeks ended
January 31, 2009, primarily due to expenses related to the mergers and acquisitions and associated corporate
structuring. 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 and consisted of the following
components:
January 30,
2010
January 31,
2009
(In thousands)
Deferred tax asset:
Fixed assets ............................................. $ 29,785 $ 32,460
Inventory obsolescence reserve . .............................. 17,371 16,580
Deferred rents ............................................ 14,738 13,001
Stock-based compensation ................................... 22,652 27,081
Net operating losses ....................................... 12,250 15,283
Other .................................................. 9,979 13,565
Total deferred tax assets .................................. 106,775 117,970
Deferred tax liabilities:
Goodwill ............................................... (37,897) (34,033)
Prepaid expenses .......................................... (3,956) (4,392)
Acquired intangible assets ................................... (63,466) (60,576)
Valuation allowance ....................................... (2,037) —
Other .................................................. (3,656) (2,877)
Total deferred tax liabilities . . .............................. (111,012) (101,878)
Net.................................................. $ (4,237) $ 16,092
Financial statements:
Current deferred tax assets .................................... $ 21,229 $ 23,615
Deferred tax liabilities ....................................... $ (25,466) $ (7,523)
F-26
GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)