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$ in millions, except per share amounts
environment, including an economic slowdown in the During the fourth quarter of fiscal 2005, we completed
Pacific Northwest. The resulting after-tax, noncash our annual impairment testing of our goodwill and
impairment charge was $348, of which $308 was tradename, using the same valuation techniques as
associated with Musicland and $40 was associated with described above, and determined there was no
Magnolia Audio Video. The charge represented a impairment.
complete write-off of the goodwill associated with these
businesses. As described in Note 2, Discontinued
Operations, we have classified Musicland’s financial
results as discontinued operations, including the related
goodwill impairment charge.
The changes in the carrying amount of goodwill by segment for continuing operations were as follows:
Domestic International Total
Balances at March 2, 2002 $ 64 $401 $465
Goodwill resulting from acquisition 3 — 3
Final purchase price allocation adjustment — (5) (5)
Impairment charge (64) — (64)
Changes in foreign currency exchange rates — 30 30
Balances at March 1, 2003 3 426 429
Changes in foreign currency exchange rates — 48 48
Balances at February 28, 2004 3 474 477
Changes in foreign currency exchange rates — 36 36
Balance at February 26, 2005 $ 3 $510 $513
Tradename February 26, 2005, and February 28, 2004, respectively.
Lease rights amortization was $4, $4 and $2 for fiscal
We have an indefinite-lived intangible asset related to our 2005, 2004 and 2003, respectively. Current lease rights
Future Shop tradename that totaled $40 and $37 at amortization is expected to be approximately $3 for each
February 26, 2005, and February 28, 2004, respectively, of the next five fiscal years.
which is included in the International segment. The
change in the indefinite-lived intangible asset balance Insurance
from February 28, 2004, was the result of fluctuations in
We are self-insured for certain losses related to health,
foreign currency exchange rates.
workers’ compensation and general liability insurance,
Lease Rights although we obtain third-party insurance coverage to limit
Lease rights, representing costs incurred to acquire the our exposure to these claims. We estimate our self-insured
lease of a specific commercial property, are recorded at liabilities using historical experience and valuations
cost and are amortized to rent expense over the provided by independent third-party actuaries.
remaining lease term, which ranges up to 16 years,
beginning with the date we take possession of the Inventory Financing
property. We have inventory financing programs through which
The gross cost and accumulated amortization of lease certain suppliers receive payments from a designated
rights were $27 and $29; and $9 and $6, respectively, at
65