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Profit Share Buy-Out
12 Months Ended
Feb. 01, 2014
Profit Share Buy-Out Disclosure [Abstract]  
Profit Share Buy-Out
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 goodwill attributable to the Best Buy Europe reporting unit, representing $1.2 billion as of January 24, 2012, had been fully impaired. The impairment loss is recorded in gain (loss) from discontinued operations within our Consolidated Statements of Earnings in fiscal 2012.

Acceleration of Intervening Event

The results of Best Buy Europe were recorded on a two-month lag in fiscal 2012. However, as described in Note 1, Summary of Significant Accounting Policies, the Mobile buy-out in January 2012 constituted a significant intervening event. Consequently, the recording of all accounting impacts arising from the Mobile buy-out, including the goodwill impairment, were accelerated and recorded in the fourth quarter of fiscal 2012 due to their significance to our consolidated financial statements.