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Table of Contents
39
• Entertainment: The 9.3% comparable sales decline, principally in Canada, reflected a decrease in sales of movies
due to a lack of new releases and weak gaming sales in the first three quarters, as consumers awaited the launch of
new platforms in the fourth quarter of fiscal 2014 (12-month).
• Appliances: The 1.5% comparable sales decline was primarily due to a decline in sales of kitchen and laundry
appliances in Canada.
• Services: The 6.3% comparable sales decline was primarily due to a decrease in sales of extended warranties in
Canada driven by the overall comparable store sales decline and a change in product mix, particularly in televisions.
Our International segment experienced a gross profit decline of $109 million, or 8.8%, in fiscal 2014 (12-month), driven
primarily by a revenue decline in Canada and a decrease in the gross profit rate, which were partially offset by an extra month
of activity. The 1.0% of revenue decrease in the gross profit rate was driven by increased promotional activity and an increased
mix of lower-margin products, primarily in Canada.
Our International segment's SG&A decreased $77 million, or 6.5%, in fiscal 2014 (12-month) due to savings from previous
store closures in Canada and China and Renew Blue cost reduction initiatives, partially offset by an extra month of activity. The
SG&A rate also decreased by 0.4% of revenue as a result of the aforementioned factors.
Our International segment recorded $26 million and $87 million of restructuring charges in fiscal 2014 (12-month) and 2013
(11-month), respectively. The fiscal 2014 (12-month) restructuring charges primarily related to employee termination benefits
as a result of Renew Blue cost reduction initiatives. The restructuring charges in fiscal 2013 (11-month) also related to our
Renew Blue initiatives and consisted of facility closure costs, property and equipment impairments and employee termination
benefits. These restructuring charges resulted in a decrease in our operating income in fiscal 2014 (12-month) and fiscal 2013
(11-month) of 0.5% of revenue and 1.7% of revenue, respectively. Refer to Note 4, Restructuring Charges, of the Notes to
Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report
on Form 10-K for further information about our restructuring activities.
During fiscal 2014 (12-month), we recorded no goodwill impairment charges compared to $611 million in fiscal 2013 (11-
month). Refer to Note 1, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements,
included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for further information
about the fiscal 2013 (11-month) goodwill impairment.
The decrease in the International segment's operating loss in fiscal 2014 (12-month) was primarily due to the decreased
goodwill impairment and restructuring charges, partially offset by a decrease in gross profit.
Additional Consolidated Results
Other Income (Expense)
In fiscal 2015, we recognized a gain of $13 million due to the sale of available-for-sale and cost-based investments. In fiscal
2014, we recognized a gain of $20 million in connection with the sale of cost-based investments.
In fiscal 2015, our investment income and other was $14 million, compared to $19 million in the prior year. The decrease in
fiscal 2015 was due to lower returns on our deferred compensation assets, partially offset by an increase in interest income
driven by higher average cash and cash equivalents and short-term investment balances. In fiscal 2014 (12-month), our
investment income and other was $19 million, compared to $13 million in fiscal 2013 (11-month). The increase in fiscal 2014
(12-month) was primarily due to higher average cash and cash equivalents and short-term investments balances.
Interest expense was $90 million in fiscal 2015, compared to $100 million in fiscal 2014. The decrease in interest expense was
primarily due to replacing our previous 2013 Notes that bore interest at 6.75% with 2018 Notes that bear interest at 5.00% in
the middle of fiscal 2014. Interest expense was $100 million in fiscal 2014 (12-month), compared to $99 million in fiscal 2013
(11-month). The relatively flat interest expense was the result of an extra month of expense in fiscal 2014 (12-month), offset by
a decrease in interest expense as a result of replacing our previous 2013 Notes with 2018 Notes.
Income Tax Expense
Income tax expense decreased to $141 million in fiscal 2015, compared to a tax expense of $388 million in the prior year,
primarily due to a $353 million discrete benefit related to reorganizing certain European legal entities, partially offset by an
increase in pre-tax earnings in the current-year period. Our effective income tax rate ("ETR") for fiscal 2015 was 10.1%,
compared to a rate of 35.8% in fiscal 2014. Excluding the impact of reorganizing certain European legal entities, the ETR