Best Buy 2006 Annual Report Download - page 40

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26
$ in millions, except per share amounts
(footnotes continued)
expense related to the fair value of our stock-based compensation awards. We electedthe modifiedprospective
transition method as permittedby SFAS No. 123(R) and, accordingly, financial results for fiscal years prior to 2006
have not been restated. Stock-based compensation expense for fiscal 2006 was $132 ($87 net of tax). Stock-based
compensation expense recognized in our financial results for years prior to fiscal 2006 was not significant.
(2)During the fourth quarter of fiscal 2005, following a review of our lease accounting practices, we recorded a
cumulative charge of $36pre-tax ($23 net of tax) to correct our accounting for certain operating lease matters.
Additionally, during the same quarter, weestablished a sales return liability which reduced gross profit by $15 pre-tax
($10 net of tax).
(3)During the third quarter of fiscal 2002, we acquired Future Shop Ltd. Duringthe fourth quarterof fiscal 2001, we
acquiredMusicland Stores Corporation and Magnolia Hi-Fi, Inc., which began doing business as Magnolia Audio
Video during fiscal 2004. The results of operations of these businesses are included fromtheir respective dates of
acquisition.
(4)Effective on March 3, 2002, we adopted SFAS No. 142, Goodwill and Other Intangible Assets. During fiscal2003, we
completed the required goodwill impairment testing and recognized an after-tax, noncash impairment charge of $40
that is reflected in our fiscal 2003 financial results as a cumulative effect of a change in accounting principle. Also
effective on March 3, 2002, we changed our method of accounting forvendor allowances in accordance with
Emerging Issues Task Force (EITF) Issue No. 02-16,Accounting by a Reseller for Cash Consideration Received froma
Vendor. The change resulted in an after-tax, noncash charge of $42 that also is reflected in our fiscal 2003 financial
results as a cumulative effect of a change in accounting principle. Fiscal 2002 has not been restated to reflect the pro
forma effects of these changes.
(5)Earnings per share is presented on a dilutedbasis and reflects three-for-two stock splits effected in August 2005 and
May 2002.
(6)Comprised of revenue at stores and Web sites operatingfor at least 14 full months, as well as remodeled and
expanded locations. Relocated stores are excludedfromthe comparable store sales calculation until atleast 14 full
months after reopening. The calculation of the comparable store sales percentage gain excludes the effect of
fluctuations in foreign currency exchange rates.
During fiscal 2004, we refined our methodology for calculating our comparable store sales percentage gain toreflect
the impact of non-point-of-sale (non-POS) revenue transactions. We refined our comparable store sales calculation in
light of changesin our business. Previously, ourcomparable store sales calculationwas based on store POS revenue.
The comparable store sales percentage gains for fiscal 2006, fiscal 2005 and fiscal 2004 have been computed using
the refined methodology. The comparable store sales percentage gains for prior fiscal years have not been computed
using the refined methodology. Refining the methodology for calculating our comparable store sales percentage gain
didnot impact previously reported revenue, net earnings or cash flows.
(7)Includes both continuing and discontinued operations. The current ratio is calculated by dividing total current assets by
total current liabilities.
(8)Excludes GeekSquad stand-alone stores.