Best Buy 2007 Annual Report Download - page 88

Download and view the complete annual report

Please find page 88 of the 2007 Best Buy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 119

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119

$ in millions, except per share amounts
73
PART II
The final purchase price allocation, net of cash acquired,
was as follows:
Merchandise inventories $ 45
Property and equipment 2
Other assets(1) 19
Tradename 17
Goodwill 369
Current liabilities (44)
Total $408
(1) Includes $7 related to the acquired customer sales backlog.
Jiangsu Five Star Appliance Co., Ltd.
On June 8, 2006, we acquired a 75% interest in Five Star for
$184, including a working capital injection of $122 and
transaction costs. Five Star is an appliance and consumer
electronics retailer with 135 stores located in seven of
China’s 34 provinces. We made the investment in Five Star to
further our international growth plans, to increase our
knowledge of Chinese customers and to obtain an immediate
retail presence in China. The acquisition was accounted for
using the purchase method in accordance with SFAS
No. 141, Business Combinations. Accordingly, we recorded
the net assets at their estimated fair values, and included
operating results in our International segment from the date
of acquisition. We allocated the purchase price on a
preliminary basis using information currently available. The
allocation of the purchase price to the assets and liabilities
acquired will be finalized no later than the second quarter of
fiscal 2008, as we obtain more information regarding asset
valuations, liabilities assumed and revisions of preliminary
estimates of fair values made at the date of purchase. None
of the goodwill is deductible for tax purposes.
The preliminary purchase price allocation, net of cash
acquired, was as follows:
Restricted cash $ 204
Merchandise inventories 109
Property and equipment 78
Other assets 78
Tradename 21
Goodwill 27
Accounts payable (368)
Other current liabilities (39)
Debt (64)
Long-term liabilities (1)
Minority interests(1) (32)
Total $ 13
(1) The minority owners’ proportionate share of assets and
liabilities were recorded at historical carrying values.
The minority owners’ proportionate share of net earnings
was $1 in fiscal 2007.
Five Star owns a 40% interest in, and purchases appliances
from, Jiangsu Heng Xin Ge Li Air Conditioner Sales Co.,
Ltd. Purchases from this affiliate were $43 in fiscal 2007. At
March 3, 2007, less than $1 was due to this affiliate for the
purchase of appliances.
4. Investments
Short-Term and Long-Term Investments
The following table presents the amortized principal amounts, related weighted-average interest rates, maturities and major
security types for our investments:
March 3, 2007 Feb.25, 2006
Amortized
Principal
Amount
Weighted-
Average
Interest Rate
Amortized
Principal
Amount
Weighted-
Average
Interest Rate
Short-term investments (less than one year) $2,588 5.68% $3,041 4.76%
Long-term investments (one to three years) 318 5.68% 218 4.95%
Total $2,906 $3,259
Municipal debt securities $2,840 $3,155
Auction-rate and asset-backed securities 66 97
Debt securities issued by U.S. Treasury and other
U.S. government entities — 7
Total $2,906 $3,259