Best Buy 2003 Annual Report Download - page 162

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Adjusted basic earnings per share from continuing operations 1.93 1.81 1.29
Reported basic loss per share from discontinued operations (1.37) — (0.02)
Add back goodwill amortization — 0.05 0.01
Adjusted basic (loss) earnings per share from discontinued
operations (1.37) 0.05 (0.01)
Cumulative effect of change in accounting principles (0.25) — —
Adjusted basic earnings per share $ 0.31 $ 1.86 $ 1.28
48
$ in millions, except per share amounts
2003 2002 2001
Reported diluted earnings per share from continuing operations $ 1.91 $ 1.77 $ 1.26
Add back goodwill amortization — 0.01 —
Adjusted diluted earnings per share from continuing operations 1.91 1.78 1.26
Reported diluted loss per share from discontinued operations (1.36) — (0.02)
Add back goodwill amortization — 0.05 0.01
Adjusted diluted (loss) earnings per share from discontinued
operations (1.36) 0.05 (0.01)
Cumulative effect of change in accounting principles (0.25) — —
Adjusted diluted earnings per share $ 0.30 $ 1.83 $ 1.25
During the second quarter of fiscal 2003, we completed the transitional requirements for goodwill impairment testing. As a result of
the transitional goodwill impairment testing, we determined that the book value of the assets of our Musicland and Magnolia Hi−Fi
businesses, which were acquired in the fourth quarter of fiscal 2001, exceeded their current fair values. We determine fair values
utilizing widely accepted valuation techniques, including discounted cash flow and market multiple analyses. We based Musicland’s
fair value on the then−current expectations for the business in light of the existing retail environment and the uncertainty associated
with future trends in prerecorded music products. We based Magnolia Hi−Fi’s fair value on the then−current expectations for the
business in light of recent sales trends and the then−existing business environment, including an economic slowdown in the Pacific
Northwest. The resulting after−tax, non−cash impairment charge was $348, of which $308 was associated with Musicland and $40
was associated with Magnolia Hi−Fi. The charge represented a complete write−off of the goodwill associated with these businesses.
As described in note 2, we have classified the results of operations of our Musicland subsidiary as discontinued operations, including
the related goodwill impairment charge.
In the fourth quarter of fiscal 2003, we completed our annual impairment testing of goodwill related to our acquisition of Future Shop
using the same techniques as described above, and determined there was no impairment.
The only significant identifiable intangible asset included in our balance sheet is an indefinite−lived intangible trade name related to
Future Shop.
The changes in the carrying amount of goodwill by segment for continuing operations were as follows:
Domestic International Total
Balances at Feb. 26, 2000 $ — $ — $ —
Goodwill resulting from acquisitions 68 — 68
Systematic amortization of goodwill (1) — (1)
Balances at March 3, 2001 67 — 67