GameStop 2011 Annual Report Download - page 101

GAMESTOP CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
As of January 28, 2012, the gross amount of unrecognized tax benefits was approximately $25.4 million. If
the Company were to prevail on all uncertain tax positions, the net effect would be a benefit to the Company’s
effective tax rate of approximately $16.4 million, exclusive of any benefits related to interest and penalties.
A reconciliation of the changes in the gross balances of unrecognized tax benefits follows (in millions):
January 28,
2012
January 29,
2011
January 30,
2010
Beginning balance of unrecognized tax benefits ........... $24.9 $35.2 $32.2
Increases related to current period tax positions ......... — — 5.0
Increases related to prior period tax positions ........... 9.9 2.1 8.1
Reductions as a result of a lapse of the applicable statute of
limitations ..................................... (2.0) (6.4) (1.5)
Reductions as a result of settlements with taxing
authorities ..................................... (7.4) (6.0) (8.6)
Ending balance of unrecognized tax benefits .............. $25.4 $24.9 $35.2
The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax
expense. As of January 28, 2012, January 29, 2011 and January 30, 2010, the Company had approximately
$3.2 million, $6.2 million and $6.9 million, respectively, in interest and penalties related to unrecognized tax
benefits accrued, of which approximately $2.7 million of benefit and $1.4 million of expense were recognized
through income tax expense in the fiscal years ended January 28, 2012 and January 30, 2010, respectively, with
an immaterial amount recognized in income tax expense in the fiscal year ended January 29, 2011. If the
Company were to prevail on all uncertain tax positions, the reversal of this accrual would also be a benefit to the
Company’s effective tax rate.
It is reasonably possible that the amount of the unrecognized benefit with respect to certain of the
Company’s unrecognized tax positions could significantly increase or decrease within the next 12 months as a
result of settling ongoing audits. At this time, an estimate of the range of the reasonably possible outcomes
cannot be made.
14. Stock Incentive Plan
Effective June 2011, the Company’s stockholders voted to adopt the 2011 Incentive Plan (the “2011
Incentive Plan”) to provide for issuance under the 2011 Incentive Plan of the Company’s Class A common stock.
The 2011 Incentive Plan provides a maximum aggregate amount of 9.25 million shares of Class A common stock
with respect to which options may be granted and provides for the granting of incentive stock options,
non-qualified stock options, stock appreciation rights, performance awards, restricted stock and other share-based
awards, which may include, without limitation, restrictions on the right to vote such shares and restrictions on the
right to receive dividends on such shares. The options to purchase Class A common shares are issued at fair
market value of the underlying shares on the date of grant. In general, the options vest and become exercisable in
equal annual installments over a three-year period, commencing one year after the grant date, and expire ten
years from issuance. Shares issued upon exercise of options are newly issued shares. Options and restricted
shares granted after June 21, 2011 are issued under the 2011 Incentive Plan.
Effective June 2009, the Company’s stockholders voted to amend the Third Amended and Restated 2001
Incentive Plan (the “2001 Incentive Plan”) to provide for issuance under the 2001 Incentive Plan of the
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