Best Buy 2013 Annual Report Download - page 102

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Deferred tax assets and liabilities included in our Consolidated Balance Sheets were as follows ($ in millions):
February 2, 2013 March 3, 2012
Other current assets $ 228 $ 226
Other assets 66 53
Other current liabilities (5) —
Other long-term liabilities (10)(16)
Net deferred tax assets $ 279 $ 263
At February 2, 2013, we had total net operating loss carryforwards from international operations of $160 million, of which
$117 million will expire in various years through 2028 and the remaining amounts have no expiration. Additionally, we had
acquired U.S. federal net operating loss carryforwards of $25 million which expire between 2023 and 2030, and U.S. federal
foreign tax credits of $81 million which expire between 2015 and 2023.
At February 2, 2013, a valuation allowance of $228 million had been established, of which $75 million is against U.S. federal
foreign tax credit carryforwards, $4 million is against capital loss carryforwards, and $149 million is against certain
international net operating loss carryforwards and other international deferred tax assets. The $24 million increase from
March 3, 2012, is primarily due to a valuation allowance on the U.S. federal foreign tax credit carryforward, partially offset by
the decrease in valuation allowances against international net operating loss carryforwards.
We have not provided deferred taxes on unremitted earnings attributable to foreign operations that have been considered to be
reinvested indefinitely. These earnings relate to ongoing operations and were $2.5 billion at February 2, 2013. It is not
practicable to determine the income tax liability that would be payable if such earnings were not indefinitely reinvested.
The following table provides a reconciliation of changes in unrecognized tax benefits for fiscal 2013 (11-month), 2012 and
2011 ($ in millions):
11-Month 12-Month
2013 2012 2011
Balance at beginning of period $ 387 $ 359 $ 393
Gross increases related to prior period tax positions 10 69 36
Gross decreases related to prior period tax positions (22)(35)(90)
Gross increases related to current period tax positions 37 43 40
Settlements with taxing authorities (10)(20) —
Lapse of statute of limitations (19)(29)(20)
Balance at end of period $ 383 $ 387 $ 359
Unrecognized tax benefits of $231 million and $239 million at February 2, 2013, and March 3, 2012, respectively, would
favorably impact our effective income tax rate if recognized.
We recognize interest and penalties (not included in the "unrecognized tax benefits" above), as well as interest received from
favorable tax settlements, as components of income tax expense. Interest expense of $8 million was recognized in fiscal 2013
(11-month). At February 2, 2013, and March 3, 2012, we had accrued interest of $85 million and $79 million, respectively. No
penalties were recognized in fiscal 2013 (11-month) or accrued for at February 2, 2013, and March 3, 2012, respectively.
We file a consolidated U.S. federal income tax return, as well as income tax returns in various states and foreign jurisdictions.
With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax
authorities for years before fiscal 2004.
Because existing tax positions will continue to generate increased liabilities for us for unrecognized tax benefits over the next
12 months, and since we are routinely under audit by various taxing authorities, it is reasonably possible that the amount of
unrecognized tax benefits will change during the next 12 months. An estimate of the amount or range of such change cannot be
made at this time. However, we do not expect the change, if any, to have a material effect on our consolidated financial
condition, results of operations or cash flows within the next 12 months.
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