Best Buy 2012 Annual Report Download - page 87

$ in millions, except per share amounts or as otherwise noted
87
U.S. Treasury Bills. Our U.S. Treasury notes were classified as Level 1 as they trade with sufficient frequency and volume
to enable us to obtain pricing information on an ongoing basis.
Foreign Currency Derivative Instruments. Comprised primarily of foreign currency forward contracts and foreign
currency swap contracts, our foreign currency derivative instruments were measured at fair value using readily observable
market inputs, such as quotations on forward foreign exchange points and foreign interest rates. Our foreign currency
derivative instruments were classified as Level 2 as these instruments are custom, over-the-counter contracts with various
bank counterparties that are not traded in an active market.
Auction Rate Securities. Our investments in ARS were classified as Level 3 as quoted prices were unavailable due to
events described in Note 5, Investments. Due to limited market information, we utilized a DCF model to derive an estimate
of fair value. The assumptions we used in preparing the DCF model included estimates with respect to the amount and
timing of future interest and principal payments, forward projections of the interest rate benchmarks, the probability of full
repayment of the principal considering the credit quality and guarantees in place, and the rate of return required by
investors to own such securities given the current liquidity risk associated with ARS.
Marketable Equity Securities. Our marketable equity securities were measured at fair value using quoted market prices.
They were classified as Level 1 as they trade in an active market for which closing stock prices are readily available.
Deferred Compensation. Our deferred compensation liabilities and the assets that fund our deferred compensation consist
of investments in mutual funds. These investments were classified as Level 1 as the shares of these mutual funds trade with
sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis.
Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis
Assets and liabilities that are measured at fair value on a nonrecurring basis relate primarily to our tangible fixed assets,
goodwill and other intangible assets, which are remeasured when the derived fair value is below carrying value on our
Consolidated Balance Sheets. For these assets, we do not periodically adjust carrying value to fair value except in the event of
impairment. When we determine that impairment has occurred, the carrying value of the asset is reduced to fair value and the
difference is recorded within Operating income in our Consolidated Statements of Earnings.
With the exception of the goodwill impairment associated with our Best Buy Europe reporting unit described in Note 2, Profit
Share Buy-Out, as well as the fixed asset and tradename impairments associated with our fiscal 2012 and fiscal 2011
restructuring activities described in Note 7, Restructuring Charges, we had no significant remeasurements of such assets or
liabilities to fair value during fiscal 2012, 2011 and 2010. The following table summarizes the fair value remeasurments
recorded for fiscal 2012 and 2011:
Fiscal 2012 Fiscal 2011
Impairments Remaining Net Carrying Value Impairments Remaining Net Carrying Value
Continuing operations
Goodwill of Best Buy Europe reporting unit $ 1,207 $ — $ — $ —
Property and equipment 32 — 122 49
Total $ 1,239 $ — $ 122 $ 49
Discontinued operations(1)
Property and equipment $ 111 $ — $ 25 $ 2
Tradename 3 — 10 3
Total $ 114 $ — $ 35 $ 5
(1) Fixed asset and tradename impairments associated with discontinued operations are recorded within Loss from discontinued operations in our
Consolidated Statements of Earnings.
All of the fair value remeasurments included in the table above were based on significant unobservable inputs (Level 3). Refer
to Note 1, Summary of Significant Accounting Policies, as well as Note 2, Profit Share Buy-Out, for further information
associated with the goodwill impairment. Fixed asset fair values were derived using a DCF model to estimate the present value
of net cash flows that the asset or asset group was expected to generate. The key inputs to the DCF model generally included
our forecasts of net cash generated from revenue, expenses and other significant cash outflows, such as capital expenditures, as