Assets and Liabilities Held for Sale and Discontinued Operations

3 Months Ended

May 04, 2013

Income Statement, Balance Shet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

Assets and Liabilities Held for Sale and Discontinued Operations

Assets and Liabilities Held for Sale

On April 29, 2013, we entered into a definitive agreement with CPW to sell our 50% ownership interest in Best Buy Europe to CPW in return for net proceeds of £471 million ($733 million based on the exchange rates in effect at May 4, 2013). Net proceeds represent a sale price of £500 million less £29 million of costs we have agreed to pay CPW in satisfaction of obligations under existing agreements, and will be in the form of cash, deferred cash and CPW ordinary shares. The transaction is subject to approval of CPW shareholders and certain European regulators. We expect the transaction to be completed in the second quarter of fiscal 2014. In connection with this transaction, we entered into a deal-contingent forward foreign currency contract to hedge the minimum value of the proceeds we will receive. Refer to Note 8, Derivative Instruments, for additional information regarding the deal-contingent forward contract. As a result of our commitment to sell Best Buy Europe, we also recognized a $175 million impairment (which is not tax deductible) to write down the book value of our investment in Best Buy Europe to fair value based on expected net proceeds. Proceeds from the sale of our interest in Best Buy Europe, denominated in British Pound Sterlings ("GBP"), are expected to exceed our GBP book value of Best Buy Europe. However, devaluation of GBP against the U.S. Dollar since the time of our original acquisition has led to significant accumulated foreign currency losses, which will be recognized on disposal of Best Buy Europe, and the aforementioned impairment reflects the impact of these foreign currency losses.

The assets and liabilities of Best Buy Europe as of May 4, 2013 are classified as held for sale in the Condensed Consolidated Balance Sheets and the results of Best Buy Europe are presented as discontinued operations in the Consolidated Statements of Earnings. The composition of assets and liabilities held for sale as of May 4, 2013 was as follows ($ in millions):

	May 4, 2013
Cash and cash equivalents	$	163
Receivables	1,211
Merchandise inventories	385
Other current assets	120
Current assets held for sale	1,879
Net property and equipment	147
Other assets	324
Long-term assets held for sale	471
Accounts payable	965
Other current liabilities	420
Current liabilities held for sale	1,385
Long-term liabilities held for sale	79

Discontinued Operations

During the first quarter of fiscal 2014, and prior to the aforementioned sale agreement, Best Buy Europe sold its fixed-line business in Switzerland, which resulted in a gain of $28 million (with no tax impact).

Discontinued operations comprise: (i) Napster operations within our Domestic segment; (ii) large-format Best Buy branded store operations in China within our International segment; and (iii) Best Buy Europe operations (including the fixed-line business in Switzerland) within our International segment. The presentation of discontinued operations has been retrospectively applied to all prior periods presented.

The financial results of discontinued operations for the three months ended May 4, 2013 and May 5, 2012 were as follows ($ in millions):

	Three Months Ended
	May 4, 2013			May 5, 2012
Revenue	$	1,430		$	1,244
Restructuring charges(1)	53			6
Loss from discontinued operations before income tax benefit (expense)	(185		)	(19		)
Income tax benefit (expense)(2)	(13		)	4
Gain on sale of discontinued operations	28			—
Equity in loss of affiliates	—			(2		)
Net loss from discontinued operations, including noncontrolling interests	(170		)	(17		)
Net (earnings) loss from discontinued operations attributable to noncontrolling interests	(8		)	6
Net loss from discontinued operations attributable to Best Buy Co., Inc. shareholders	$	(178	)	$	(11	)

⁽¹⁾ See Note 6, Restructuring Charges, for further discussion of the restructuring charges associated with discontinued operations.

⁽²⁾ The fiscal 2014 effective tax rate for discontinued operations differs from the statutory tax rate primarily due to the $53 million of restructuring charges and $175 million impairment of our investment in Best Buy Europe, which generally included no related tax benefit. The deferred tax assets related to the restructuring charges generally resulted in an increase in the valuation allowance in an equal amount, while the investment impairment is not tax deductible.