Best Buy 2014 Annual Report Download - page 76

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71
One Month Ended
January 31, 2012 January 31, 2011
(unaudited) (unaudited)
Revenue $ 189 $ 249
Gross profit 16 24
Operating loss (14)(1)
Net earnings (loss) from continuing operations (13) —
Loss from discontinued operations, net of tax (12)(28)
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) 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 ("CPW") (the "profit share
agreement"). Under the terms of this agreement, CPW 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 CPW, subsequently referred to as Best Buy
Europe, which included the profit share agreement with Best Buy Mobile. CPW held a 50% noncontrolling interest in Best Buy
Europe until the sale of our 50% interest in Best Buy Europe to CPW in the second quarter of fiscal 2014. Refer to Note 4,
Discontinued Operations.
In November 2011, we announced strategic changes in respect of Best Buy Europe, including an agreement to buy out CPW's
interest in the profit share agreement for $1.3 billion (the "Mobile buy-out"), subject to the approval of CPW 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 CPW's interest in the profits. This payment is presented
within net earnings (loss) from discontinued 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 CPW is included within payment to noncontrolling
interest, as part of cash flows from financing activities.
Goodwill Impairment - Best Buy Europe
We recorded $1.5 billion of goodwill as a result of our acquisition of Best Buy Europe in fiscal 2009. This goodwill was part of
our Best Buy Europe reporting unit, which comprised our 50% controlling interest in Best Buy Europe and the profit share
agreement with Best Buy Mobile.
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 was 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