Best Buy 2015 Annual Report Download - page 47

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Table of Contents
40
would have been 35.6% in fiscal 2015. Refer to Note 10, Income Taxes, 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 additional
information.
Income tax expense increased to $388 million in fiscal 2014 (12-month), compared to a tax expense of $263 million in the
prior-year period. Our ETR was 35.8% in fiscal 2014 (12-month), compared to 7,152.3% in fiscal 2013 (11-month). Excluding
the impact of the goodwill impairments (which are not tax deductible), the ETR would have been 42.6% in fiscal 2013 (11-
month). The ETR in fiscal 2014 (12-month) was lower than in fiscal 2013 (11-month), excluding the goodwill impairments, as
fiscal 2013 (11-month) was higher than normal as a result of decreased tax benefits from foreign operations, which were due
primarily to a decrease in foreign earnings and a valuation allowance on U.S. federal foreign tax credits.
Our consolidated effective tax rate is impacted by the statutory income tax rates applicable to each of the jurisdictions in which
we operate. As our foreign earnings are generally taxed at lower statutory rates than the 35% U.S. federal statutory rate,
changes in the proportion of our consolidated taxable earnings originating in foreign jurisdictions impact our consolidated
effective rate. Our foreign earnings have been indefinitely reinvested outside the U.S. and are not subject to current U.S.
income tax.
Discontinued Operations
Discontinued operations consists primarily of Best Buy Europe and Five Star in our International segment, as well as
mindSHIFT in our Domestic segment.
The loss from discontinued operations was $11 million in fiscal 2015 compared to a loss of $172 million in fiscal 2014. The
decrease in the loss year-over-year was primarily due to the impairment of our investment in Best Buy Europe, as well as the
loss on the sale of mindSHIFT in fiscal 2014. The loss from discontinued operations of $172 million in fiscal 2014 (12-month)
compared to a loss of $161 million in fiscal 2013 (11-month). The loss in fiscal 2013 (11-month) was primarily due to the
write-off of goodwill related to our Five Star reporting unit.
Impact of Inflation and Changing Prices
Highly competitive market conditions and the general economic environment minimized inflation's impact on the selling prices
of our products and services and on our expenses. In addition, price deflation and the continued commoditization of certain
technology products limited our ability to increase our gross profit rate.
Non-GAAP Financial Measures
The periods used for analysis of non-GAAP financial performance represent the periods that management used internally to
assess performance. As a result of the change in our fiscal year in fiscal 2013, some of the periods included in this section of
our MD&A differ from the audited periods included in our Consolidated Statements of Earnings, and as such, these periods are
also different than those analyzed within the Results of Operations section of the MD&A.