Best Buy 2006 Annual Report Download - page 73

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Notes to ConsolidatedFinancial Statements
$ in millions, except per share amounts
59
PART II
1. Summary of Significant Accounting Policies
Description of Business
Best Buy Co., Inc. is aspecialty retailer of consumer
electronics, home-office products, entertainment software,
appliances and related services, with fiscal 2006 revenue
from continuing operations of $30.8 billion.
We operate two reportable segments: Domestic and
International. The Domestic segment is comprisedof the
operations of U.S. Best Buy, Magnolia Audio Video and
U.S. Geek Squad. U.S. Best Buy stores offer a wide variety
of consumer electronics, home-office equipment,
entertainment software, appliances and related services
through 742 stores in 49 states and the District of
Columbia at the end of fiscal 2006. Magnolia Audio Video
stores offer high-end audio and video products and related
services through 20 stores in California,Washington and
Oregon at the end of fiscal2006. U.S. GeekSquad offers
computer repair, support andinstallation services in all U.S.
Best Buy stores and at 12 stand-alone stores at the end of
fiscal 2006.
The International segment was established in connection
with our acquisition of Future Shop in fiscal 2002. At the
end of fiscal 2006, the International segment operated 118
Future Shop stores throughout all Canadian provinces and
44 Canadian Best Buy stores in Ontario, Quebec, Alberta,
British Columbia, Manitoba and Saskatchewan. The
International segment offers products and services similar to
those offered by the Domestic segment, although Canadian
Best Buy stores do not sell appliances. Canadian Geek
Squad offers computer repair, support and installation
services in all Canadian Best Buy stores and five stand-
alone stores at the end of fiscal 2006.
Effective March 7, 2006, we acquired all of the common
stock of Pacific Sales Kitchen and Bath Centers, Inc. See
Note 13, Subsequent Event, for further details.
In support of our retail store operations, we also maintain
Web sites for each of ourbrands (BestBuy.com,
BestBuyCanada.ca, FutureShop.ca, MagnoliaAV.com,
GeekSquad.com, GeekSquad.ca and PacificSales.com).
In fiscal 2004, we sold ourinterest in Musicland Stores
Corporation. As described in Note 2, Discontinued
Operations, we have classifiedMusicland’s financial results
as discontinued operations for all periods presented. These
Notes to Consolidated Financial Statements, except where
otherwise indicated, relate to continuing operations only.
Basis of Presentation
The consolidated financial statements include the accounts
of Best Buy Co., Inc. and its subsidiaries.
We have eliminated all intercompany accounts and
transactions. Allsubsidiaries are wholly owned.
On June 23, 2005, our Board of Directors (Board)
approved a three-for-two stock split. Shareholders of record
as of July 13, 2005, receivedone additional share forevery
two shares owned, with fractional shares beingredeemed
forcash. The additional shares were distributed on
August 3, 2005. All share and per share information herein
reflect this stock split.
Reclassifications
To maintain consistency and comparability, certainamounts
from previously reported consolidated financial statements
have been reclassified to conform to the current-year
presentation. These reclassifications have no effect on
previously reported operating income or net earnings. See
Note 1, Summary of Significant Accounting Policies — Cash
and Cash Equivalents and Investments, and Note 2,
Discontinued Operations, for further details of the
reclassifications.
Use of Estimates in the Preparation of Financial
Statements
The preparation of financial statements in conformity with
accountingprinciples generally accepted in the United
States (GAAP) requires us to make estimates and
assumptions. These estimates and assumptions affect the
reported amounts in the consolidated balance sheets and
statements of earnings, as well as the disclosure of
contingent liabilities. Future results could be materially
affected if actual results differ from these estimates and
assumptions.