SEGMENTS

We generate sales, operating earnings and cash flows by retailing numerous product offerings worldwide. We operate all of the “R” Us branded retail stores in the United States, Puerto Rico and Guam and 77% of the 942 “R” Us branded retail stores internationally (excluding temporary Express store locations). The balance of the “R” Us branded retail stores internationally are operated by licensees. Licensing fees did not have a material impact on our Net sales and accounted for $17 million, $16 million and $16 million for fiscals 2014, 2013 and 2012, respectively. We also own and operate websites including Toysrus.com, Babiesrus.com, eToys.com, FAO.com and toys.com, as well as other Internet sites we operate in our international markets.

Our business has two reportable segments: Toys “R” Us – Domestic (“Domestic”) and Toys “R” Us – International (“International”). The following is a brief description of our segments:

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Domestic — Our Domestic segment sells a variety of products in the baby, core toy, entertainment, learning and seasonal categories through 872 stores that operate in 49 states in the United States, Puerto Rico and Guam and through the Internet. Domestic Net sales in fiscal 2014 were derived from traditional toy stores (including Babies “R” Us Express (“BRU Express”) and Juvenile Expansion formats), baby stores, side-by-side (“SBS”) stores, permanent Express stores (with cumulative lease terms of at least two years) and our flagship stores in New York City. Additionally, we generated Net sales through our temporary Express store locations.

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International — Our International segment sells a variety of products in the baby, core toy, entertainment, learning and seasonal categories through 730 operated and 212 licensed stores in 36 countries and jurisdictions and through the Internet. In addition to fees received from licensed stores, International Net sales in fiscal 2014 were derived from traditional toy stores (including BRU Express formats), SBS stores, baby stores and permanent Express stores (with cumulative lease terms of at least two years). Additionally, we generated Net sales through our temporary Express store locations. Our operated stores are located in Australia, Austria, Brunei, Canada, China, France, Germany, Hong Kong, Japan, Malaysia, Poland, Portugal, Singapore, Spain, Switzerland, Taiwan, Thailand and the United Kingdom.

The Chief Operating Decision Maker evaluates segment performance primarily based on Net sales and segment Operating earnings (loss). Segment Operating earnings (loss) excludes corporate related charges and income. All intercompany transactions between the segments have been eliminated. Income tax information by segment has not been included as taxes are calculated at a company-wide level and are not allocated to each segment. Revenues from external customers are derived primarily from merchandise sales and we do not generate material sales from any single customer.

The following tables show our percentage of Net sales by product category:



	Fiscal Years Ended
Domestic:	January 31, 2015		February 1, 2014		February 2, 2013
Baby	38.0	%	37.7	%	37.9	%
Core Toy	17.4	%	16.2	%	16.0	%
Entertainment	10.2	%	11.3	%	11.7	%
Learning	22.7	%	22.8	%	22.4	%
Seasonal	11.2	%	11.3	%	11.3	%
Other (1)	0.5	%	0.7	%	0.7	%
Total	100	%	100	%	100	%


(1)	Consists primarily of non-product related revenues.



	Fiscal Years Ended
International:	January 31, 2015		February 1, 2014		February 2, 2013
Baby	20.2	%	20.4	%	21.6	%
Core Toy	23.5	%	22.7	%	21.9	%
Entertainment	8.5	%	10.0	%	11.4	%
Learning	31.1	%	30.8	%	29.2	%
Seasonal	15.9	%	15.3	%	15.2	%
Other (1)	0.8	%	0.8	%	0.7	%
Total	100	%	100	%	100	%


(1)	Consists primarily of non-product related revenues, including licensing fees from unaffiliated third parties.

From time to time, we may make revisions to our prior period Net sales by product category to conform to the current period allocation. These revisions did not have a significant impact to our prior year disclosure.

A summary of financial results by reportable segment is as follows:



	Fiscal Years Ended
(In millions)	January 31, 2015			February 1, 2014			February 2, 2013
Net sales
Domestic	$	7,524		$	7,638		$	8,149
International	4,837			4,905			5,394
Total Net sales	$	12,361		$	12,543		$	13,543
Operating earnings (loss)
Domestic (1) (2)	$	332		$	(197	)	$	571
International (1)	229			203			309
Corporate and other	(370		)	(356		)	(324		)
Operating earnings (loss)	191			(350		)	556
Interest expense	(451		)	(524		)	(480		)
Interest income	4			7			16
(Loss) earnings before income taxes	$	(256	)	$	(867	)	$	92


(1)	Fiscal 2013 includes full impairments of the Toys-Domestic and Toys-Japan reporting unit’s goodwill balances of $361 million and $17 million, respectively. Refer to Note 1 entitled “SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES” for further details.


(2)	Includes incremental expense related to the write-down of excess and obsolete inventory of $51 million for fiscal 2013.

Certain corporate and other items are reported separately in our disclosure of segment Operating earnings (loss). In addition to the income items described above, charges include corporate office expenses and shared service center expenses, as well as certain other centrally managed expenses, which are not fully allocated to our reportable segments. The significant categories of expenses include salaries, benefits and related expenses, professional fees, corporate facility depreciation and amortization and insurance. Salaries, benefits and related expenses include salaries, bonus, payroll taxes and health insurance expenses for corporate office employees. Professional fees include costs related to internal control compliance, financial statement audits, legal, information technology and other consulting fees, which are engaged and managed through the corporate office. Depreciation and amortization includes depreciation of leasehold improvements for properties occupied by corporate office employees. Corporate insurance expense includes the cost of fire, liability and automobile premiums.



	Fiscal Years Ended
(In millions)	January 31, 2015		February 1, 2014		February 2, 2013
Depreciation and amortization
Domestic	$	210	$	216	$	225
International	116		123		136
Corporate	51		49		46
Total Depreciation and amortization	$	377	$	388	$	407
Capital expenditures
Domestic	$	67	$	113	$	148
International	83		86		95
Corporate	57		39		43
Total Capital expenditures	$	207	$	238	$	286



(In millions)	January 31, 2015		February 1, 2014
Merchandise inventories
Domestic	$	1,353	$	1,375
International	711		796
Total Merchandise inventories	$	2,064	$	2,171
Total Assets
Domestic	$	3,633	$	3,812
International	2,122		2,442
Corporate and other (1)	1,360		1,295
Total Assets	$	7,115	$	7,549


(1)	Includes cash and cash equivalents, deferred tax assets and other corporate assets.

Our Net sales, inclusive of each country’s respective Internet operations, and long-lived assets by country or region are as follows:



	Fiscal Years Ended
(In millions)	January 31, 2015		February 1, 2014		February 2, 2013
Net sales
United States (1)	$	7,524	$	7,638	$	8,149
Europe (2)	1,405		1,447		1,439
Japan	1,308		1,374		1,795
Canada	834		883		928
UK	710		680		735
China and Southeast Asia	333		277		233
Australia	230		228		248
Other (3)	17		16		16
Total Net sales	$	12,361	$	12,543	$	13,543


(1)	Includes our wholly-owned operations in Puerto Rico and Guam.


(2)	Includes our wholly-owned operations in Germany, Austria, Switzerland, France, Spain, Portugal and Poland.


(3)	Represents licensing fees from unaffiliated third parties.



(In millions)	January 31, 2015		February 1, 2014
Long-lived assets
United States (1)	$	2,372	$	2,521
Europe (2)	352		417
Japan	306		383
UK	281		312
Canada	180		212
China and Southeast Asia	41		32
Australia	14		16
Total Long-lived assets	$	3,546	$	3,893


(1)	Includes our wholly-owned operations in Puerto Rico and Guam.


(2)	Includes our wholly-owned operations in Germany, Austria, Switzerland, France, Spain, Portugal and Poland.