Best Buy 2013 Annual Report Download - page 78

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78
One Month Ended
January 31, 2012 January 31, 2011
(unaudited) (unaudited)
Revenue $ 628 $ 732
Gross profit 133 166
Operating income (loss) (16) 20
Net earnings (loss) from continuing operations (19) 15
Loss from discontinued operations, net of tax (6)(43)
Net loss including noncontrolling interests (25)(28)
Net loss attributable to Best Buy Co., Inc. shareholders(1) (14)(33)
(1) The net loss attributable to Best Buy Co., Inc. shareholders for the one month ended January 31, 2012 represents the adjustment to Retained earnings
within the Consolidated Statements of Changes in Shareholders' Equity as a result of the exclusion of January results for entities reported on a lag.
In addition, the Consolidated Statements of Cash Flows includes a net reconciling adjustment for the cash flows as a result of
the exclusion of January 2012 in fiscal 2013 (11-month) described above. The total adjustment was $74 million, primarily due
to $50 million of cash used in financing activities and $18 million of cash used in investing activities. The total adjustment for
January 2011 in fiscal 2012 (11-month recast) results was $5 million. The adjustments for both periods included the effect of
exchange rate changes on our cash balances.
3. Profit Share Buy-Out
During fiscal 2008, we entered into a profit-sharing agreement with Carphone Warehouse Group plc ("Carphone Warehouse")
(the "profit share agreement"). Under the terms of this agreement, Carphone Warehouse provided expertise and certain other
resources to enhance our mobile telephone retail business ("Best Buy Mobile") in return for a share of incremental profits
generated in excess of defined thresholds.
During fiscal 2009, we acquired a 50% controlling interest in the retail business of Carphone Warehouse, subsequently renamed
Best Buy Europe Distributions Limited ("Best Buy Europe"), which included the profit share agreement with Best Buy Mobile.
Carphone Warehouse holds a 50% noncontrolling interest in Best Buy Europe.
In November 2011, we announced strategic changes in respect of Best Buy Europe, including an agreement to buy out
Carphone Warehouse's interest in the profit share agreement for $1.3 billion (the "Mobile buy-out"), subject to the approval of
Carphone Warehouse shareholders. The Mobile buy-out was completed during the fourth quarter of fiscal 2012.
Financial Reporting Impact of the Mobile Buy-out
We accounted for the Mobile buy-out transaction as a $1.3 billion payment to terminate the future payments due under the
profit share agreement with Best Buy Europe, thereby eliminating Carphone Warehouse's interest in the profits. This payment
was presented within Net earnings from continuing operations attributable to noncontrolling interests in our Consolidated
Statements of Earnings, consistent with the financial reporting of the previous recurring payments made pursuant to the profit
share agreement. In the Consolidated Statements of Cash Flows, the payment to Carphone Warehouse is included within
Payment to noncontrolling interest, as part of cash flows from Financing Activities.
Goodwill Impairment – Best Buy Europe
The Best Buy Europe reporting unit comprises our 50% controlling interest in Best Buy Europe, which included the profit
share agreement with Best Buy Mobile. Based upon the preliminary purchase price allocation for the Best Buy Europe
acquisition in the second quarter of fiscal 2009, we recorded $1.5 billion of goodwill.
At the time of the announcement of the Mobile buy-out in November 2011, we also announced the closure of our large-format
Best Buy branded stores in the U.K. As of the end of the third quarter of fiscal 2012 and in light of these strategic decisions, we
performed an interim evaluation of potential impairment of goodwill associated with the Best Buy Europe reporting unit.
Following the elimination of the profit share agreement from Best Buy Europe and the closure of large-format Best Buy
branded stores in the U.K., the remaining fair value of the Best Buy Europe reporting unit is entirely attributable to its small-
format store retail operations. As a result of these events, we performed a goodwill impairment analysis and determined that the
goodwill attributable to the Best Buy Europe reporting unit, representing $1.2 billion as of January 24, 2012, had been fully
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