Best Buy 2001 Annual Report Download - page 43

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44
$ in thousands, except per share amounts
2. Acquisitions
Effective December 15, 2 000, the Company acquired the common stock of M agnolia Hi-Fi for $8 8,000 in cash, including
transaction costs. Effective January 31, 2001, the Company acquired the common stock of M usicland for $4 25,100, including
transaction costs, plus the assumption of long-term debt valued at $271,200. Both acquisitions were accounted for using the
purchase method. Accordingly, the net assets were recorded at their estimated fair values and operating results were included in
the Company’s financial statements from the dates of acquisition.
The purchase prices for Magnolia Hi-Fi and Musicland have been allocated on a preliminary basis using information currently available.
The allocation of the purchase price to the assets and liabilities acquired is expected to be finalized by the end of fiscal 2002.
Adjustments to the allocation of purchase price may occur as a result of obtaining more information regarding asset valuations,
liabilities assumed and revisions of preliminary estimates of fair values made at the date of purchase. The Company is continuing
to evaluate how the acquired operations will be integrated into the Company’s overall business strategy. These preliminary allocations
resulted in acquired goodwill of $387,400, which is being amortized on a straight-line basis over 20 years. Amortization of goodwill
was $2,000 for fiscal 2001 and is included in selling, general and administrative expenses.
The pro forma unaudited consolidated results of operations as though Musicland had been acquired as of the beginning of fiscal 2001
and 2000 are as follows:
2001 2000
Revenues $17,0 78,464 $14,39 3,960
N et earnings 417,229 371,724
Basic earnings per share 2.02 1.82
Diluted earnings per share 1.9 6 1.75
The pro forma results include goodwill amortization of $15,900 and other adjustments, principally the loss of interest income on
cash used to finance the acquisition. The pro forma results exclude costs expected to be incurred in the integration and
transformation of M usicland’s business. The pro forma results are not necessarily indicative of what actually would have occurred
had the acquisition been completed as of the beginning of each of the fiscal years presented, nor are they necessarily indicative
of future consolidated results. Pro forma information related to the acquisition of Magnolia Hi-Fi is not presented, as the operating
results of M agnolia Hi-Fi would not have had a significant impact on the Company’s results of operations.
Best Buy Co., Inc.N otes