Best Buy 2012 Annual Report Download - page 84

$ in millions, except per share amounts or as otherwise noted
84
Our investments in marketable equity securities were as follows:
March 3,
2012 February 26, 2011
Common stock of TalkTalk Telecom Group PLC $ — $ 62
Common stock of Carphone Warehouse Group plc — 84
Other 3 —
Total $ 3 $ 146
We purchased shares of The Carphone Warehouse Group PLC (“CPW”) common stock in fiscal 2008, representing nearly 3%
of CPW’s then outstanding shares. In March 2010, CPW demerged into two new holding companies: TalkTalk Telecom Group
PLC (“TalkTalk”), which is the holding company for the fixed line voice and broadband telecommunications business of the
former CPW, and Carphone Warehouse Group plc, which includes the former CPW’s 50% ownership interest in Best Buy
Europe. Accordingly, our investment in CPW was exchanged for equivalent levels of investment in TalkTalk and Carphone
Warehouse. In the third quarter of fiscal 2012, we sold our shares of TalkTalk and Carphone Warehouse for $112 ($51 for
TalkTalk and $61 for Carphone Warehouse) and recognized a $55 pre-tax gain on the sale.
We review all investments for other-than-temporary impairment at least quarterly or as indicators of impairment exist.
Indicators of impairment include the duration and severity of the decline in fair value as well as the intent and ability to hold
the investment to allow for a recovery in the market value of the investment. In addition, we consider qualitative factors that
include, but are not limited to: (i) the financial condition and business plans of the investee including its future earnings
potential, (ii) the investee’s credit rating, and (iii) the current and expected market and industry conditions in which the investee
operates. If a decline in the fair value of an investment is deemed by management to be other-than-temporary, the cost basis of
the investment is written down to fair value, and the amount of the write-down is included in net earnings.
All unrealized holding gains or losses related to our investments in marketable equity securities are reflected net of tax in
accumulated other comprehensive income in shareholders' equity. Net unrealized gain, net of tax, included in accumulated
other comprehensive income was $0 and $75 at March 3, 2012, and February 26, 2011, respectively.
Other Investments
The aggregate carrying values of investments accounted for using either the cost method or the equity method at March 3,
2012, and February 26, 2011, were $55 and $72, respectively.
6. Fair Value Measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
To measure fair value, we use a three-tier valuation hierarchy based upon observable and non-observable inputs:
Level 1 — Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement
date.
Level 2 — Significant other observable inputs available at the measurement date, other than quoted prices included in Level 1,
either directly or indirectly, including:
• Quoted prices for similar assets or liabilities in active markets;
• Quoted prices for identical or similar assets in non-active markets;
• Inputs other than quoted prices that are observable for the asset or liability; and
• Inputs that are derived principally from or corroborated by other observable market data.
Level 3 — Significant unobservable inputs that cannot be corroborated by observable market data and reflect the use of
significant management judgment. These values are generally determined using pricing models for which the assumptions
utilize management's estimates of market participant assumptions.