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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Minnesota
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41-0907483
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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7601 Penn Avenue South
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Richfield, Minnesota
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55423
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
x
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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ITEM 1.
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CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
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August 4, 2012
|
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March 3, 2012
|
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July 30, 2011
|
||||||
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|
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(recast)
|
||||||
CURRENT ASSETS
|
|
|
|
|
|
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|
||||
Cash and cash equivalents
|
$
|
680
|
|
|
$
|
1,199
|
|
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$
|
2,079
|
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Short-term investments
|
—
|
|
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—
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|
|
80
|
|
|||
Receivables
|
2,135
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|
2,288
|
|
|
1,868
|
|
|||
Merchandise inventories
|
6,299
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5,731
|
|
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6,784
|
|
|||
Other current assets
|
1,070
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|
1,079
|
|
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1,080
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|||
Total current assets
|
10,184
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|
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10,297
|
|
|
11,891
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|||
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|
||||||
PROPERTY AND EQUIPMENT, NET
|
3,407
|
|
|
3,471
|
|
|
3,781
|
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|||
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|
||||||
GOODWILL
|
1,342
|
|
|
1,335
|
|
|
2,507
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|||
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|
||||||
TRADENAMES, NET
|
130
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130
|
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|
136
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|||
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|
||||||
CUSTOMER RELATIONSHIPS, NET
|
221
|
|
|
229
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|
|
179
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|||
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|
||||||
EQUITY AND OTHER INVESTMENTS
|
91
|
|
|
140
|
|
|
316
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|
|||
|
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|
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||||||
OTHER ASSETS
|
474
|
|
|
403
|
|
|
486
|
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|||
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||||||
TOTAL ASSETS
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$
|
15,849
|
|
|
$
|
16,005
|
|
|
$
|
19,296
|
|
|
August 4, 2012
|
|
March 3, 2012
|
|
July 30, 2011
|
||||||
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(recast)
|
||||||
CURRENT LIABILITIES
|
|
|
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|
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|
|||
Accounts payable
|
$
|
6,055
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|
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$
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5,364
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|
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$
|
6,178
|
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Unredeemed gift card liabilities
|
385
|
|
|
456
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|
|
426
|
|
|||
Accrued compensation and related expenses
|
464
|
|
|
539
|
|
|
507
|
|
|||
Accrued liabilities
|
1,476
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|
1,685
|
|
|
1,556
|
|
|||
Accrued income taxes
|
7
|
|
|
288
|
|
|
37
|
|
|||
Short-term debt
|
519
|
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|
480
|
|
|
392
|
|
|||
Current portion of long-term debt
|
542
|
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|
43
|
|
|
444
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|
|||
Total current liabilities
|
9,448
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8,855
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9,540
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|||
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||||||
LONG-TERM LIABILITIES
|
1,125
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|
1,099
|
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1,168
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|||
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|
||||||
LONG-TERM DEBT
|
1,165
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1,685
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1,701
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|||
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||||||
EQUITY
|
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Best Buy Co., Inc. shareholders’ equity
|
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|||
Preferred stock, $1.00 par value: Authorized — 400,000 shares; Issued and outstanding — none
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—
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—
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—
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Common stock, $0.10 par value: Authorized — 1.0 billion shares; Issued and outstanding — 336,530,000, 341,400,000 and 370,102,000 shares, respectively
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34
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34
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37
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|
|||
Additional paid-in capital
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—
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—
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—
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|
|||
Retained earnings
|
3,395
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|
3,621
|
|
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5,846
|
|
|||
Accumulated other comprehensive income
|
86
|
|
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90
|
|
|
281
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|
|||
Total Best Buy Co., Inc. shareholders’ equity
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3,515
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3,745
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6,164
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|||
Noncontrolling interests
|
596
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621
|
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723
|
|
|||
Total equity
|
4,111
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4,366
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|
6,887
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|||
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||||||
TOTAL LIABILITIES AND EQUITY
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$
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15,849
|
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$
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16,005
|
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$
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19,296
|
|
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Three Months Ended
|
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Six Months Ended
|
||||||||||||
|
August 4, 2012
|
|
July 30, 2011
|
|
August 4, 2012
|
|
July 30, 2011
|
||||||||
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(recast)
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(recast)
|
||||||||
Revenue
|
$
|
10,547
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$
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10,856
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$
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22,157
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$
|
22,225
|
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Cost of goods sold
|
7,983
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8,094
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16,686
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16,542
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|
||||
Gross profit
|
2,564
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2,762
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5,471
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5,683
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|
||||
Selling, general and administrative expenses
|
2,440
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2,502
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4,958
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4,959
|
|
||||
Restructuring charges
|
91
|
|
|
—
|
|
|
218
|
|
|
4
|
|
||||
Operating income
|
33
|
|
|
260
|
|
|
295
|
|
|
720
|
|
||||
Other income (expense)
|
|
|
|
|
|
|
|
|
|
||||||
Investment income and other
|
6
|
|
|
8
|
|
|
12
|
|
|
25
|
|
||||
Interest expense
|
(30
|
)
|
|
(33
|
)
|
|
(63
|
)
|
|
(61
|
)
|
||||
Earnings from continuing operations before income tax expense and equity in loss of affiliates
|
9
|
|
|
235
|
|
|
244
|
|
|
684
|
|
||||
Income tax expense
|
14
|
|
|
87
|
|
|
86
|
|
|
242
|
|
||||
Equity in loss of affiliates
|
(2
|
)
|
|
—
|
|
|
(4
|
)
|
|
(1
|
)
|
||||
Net (loss) earnings from continuing operations
|
(7
|
)
|
|
148
|
|
|
154
|
|
|
441
|
|
||||
Loss from discontinued operations (Note 3), net of tax (expense) benefit of ($3), $12, $3 and $32
|
—
|
|
|
(37
|
)
|
|
(9
|
)
|
|
(91
|
)
|
||||
Net (loss) earnings including noncontrolling interests
|
(7
|
)
|
|
111
|
|
|
145
|
|
|
350
|
|
||||
Net loss (earnings) from continuing operations attributable to noncontrolling interests
|
19
|
|
|
2
|
|
|
19
|
|
|
(36
|
)
|
||||
Net loss from discontinued operations attributable to noncontrolling interests
|
—
|
|
|
15
|
|
|
6
|
|
|
26
|
|
||||
Net earnings attributable to Best Buy Co., Inc.
|
$
|
12
|
|
|
$
|
128
|
|
|
$
|
170
|
|
|
$
|
340
|
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per share attributable to Best Buy Co., Inc.
|
|
|
|
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
0.04
|
|
|
$
|
0.40
|
|
|
$
|
0.51
|
|
|
$
|
1.06
|
|
Discontinued operations
|
—
|
|
|
(0.06
|
)
|
|
(0.01
|
)
|
|
(0.17
|
)
|
||||
Basic earnings per share
|
$
|
0.04
|
|
|
$
|
0.34
|
|
|
$
|
0.50
|
|
|
$
|
0.89
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings (loss) per share attributable to Best Buy Co., Inc.
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.04
|
|
|
$
|
0.39
|
|
|
$
|
0.51
|
|
|
$
|
1.04
|
|
Discontinued operations
|
—
|
|
|
(0.05
|
)
|
|
(0.01
|
)
|
|
(0.17
|
)
|
||||
Diluted earnings per share
|
$
|
0.04
|
|
|
$
|
0.34
|
|
|
$
|
0.50
|
|
|
$
|
0.87
|
|
|
|
|
|
|
|
|
|
||||||||
Dividends declared per common share
|
$
|
0.16
|
|
|
$
|
0.15
|
|
|
$
|
0.32
|
|
|
$
|
0.30
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding (in millions)
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
338.2
|
|
|
376.0
|
|
|
340.3
|
|
|
383.6
|
|
||||
Diluted
|
338.6
|
|
|
385.6
|
|
|
341.0
|
|
|
393.3
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive (loss) income including noncontrolling interests
|
$
|
(39
|
)
|
|
$
|
123
|
|
|
$
|
157
|
|
|
$
|
505
|
|
Comprehensive loss (income) attributable to noncontrolling interests
|
39
|
|
|
12
|
|
|
25
|
|
|
(37
|
)
|
||||
Comprehensive income attributable to Best Buy Co., Inc.
|
$
|
—
|
|
|
$
|
135
|
|
|
$
|
182
|
|
|
$
|
468
|
|
|
Best Buy Co., Inc.
|
|
|
|
|
|||||||||||||||||||||||||
|
Common
Shares
|
|
Common
Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
Best Buy
Co., Inc.
|
|
Non-
controlling
Interests
|
|
Total
|
|||||||||||||||
Balances at March 3, 2012
|
341
|
|
|
$
|
34
|
|
|
$
|
—
|
|
|
$
|
3,621
|
|
|
$
|
90
|
|
|
$
|
3,745
|
|
|
$
|
621
|
|
|
$
|
4,366
|
|
Adjustment for fiscal year-end change (Note 2)
|
5
|
|
|
—
|
|
|
—
|
|
|
(108
|
)
|
|
(16
|
)
|
|
(124
|
)
|
|
—
|
|
|
(124
|
)
|
|||||||
Balances at January 28, 2012
|
346
|
|
|
34
|
|
|
—
|
|
|
3,513
|
|
|
74
|
|
|
3,621
|
|
|
621
|
|
|
4,242
|
|
|||||||
Net earnings, six months ended August 4, 2012
|
—
|
|
|
—
|
|
|
—
|
|
|
170
|
|
|
|
|
|
170
|
|
|
(25
|
)
|
|
145
|
|
|||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|||||||
Unrealized gains on available-for-sale investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
64
|
|
|
—
|
|
|
—
|
|
|
64
|
|
|
—
|
|
|
64
|
|
|||||||
Stock options exercised
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||||
Issuance of common stock under employee stock purchase plan
|
1
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
14
|
|
|||||||
Tax deficit from stock options exercised, restricted stock vesting and employee stock purchase plan
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
(8
|
)
|
|
—
|
|
|
(23
|
)
|
|
—
|
|
|
(23
|
)
|
|||||||
Common stock dividends, $0.32 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(107
|
)
|
|
—
|
|
|
(107
|
)
|
|
—
|
|
|
(107
|
)
|
|||||||
Repurchase and retirement of common stock
|
(11
|
)
|
|
—
|
|
|
(64
|
)
|
|
(173
|
)
|
|
—
|
|
|
(237
|
)
|
|
—
|
|
|
(237
|
)
|
|||||||
Balances at August 4, 2012
|
337
|
|
|
$
|
34
|
|
|
$
|
—
|
|
|
$
|
3,395
|
|
|
$
|
86
|
|
|
$
|
3,515
|
|
|
$
|
596
|
|
|
$
|
4,111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balances at February 26, 2011
|
393
|
|
|
$
|
39
|
|
|
$
|
18
|
|
|
$
|
6,372
|
|
|
$
|
173
|
|
|
$
|
6,602
|
|
|
$
|
690
|
|
|
$
|
7,292
|
|
Adjustment for fiscal year-end change (Note 2)
|
—
|
|
|
—
|
|
|
(18
|
)
|
|
(115
|
)
|
|
(20
|
)
|
|
(153
|
)
|
|
—
|
|
|
(153
|
)
|
|||||||
Balances at January 29, 2011
|
393
|
|
|
39
|
|
|
—
|
|
|
6,257
|
|
|
153
|
|
|
6,449
|
|
|
690
|
|
|
7,139
|
|
|||||||
Net earnings, six months ended July 30, 2011
|
—
|
|
|
—
|
|
|
—
|
|
|
340
|
|
|
—
|
|
|
340
|
|
|
10
|
|
|
350
|
|
|||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
127
|
|
|
127
|
|
|
25
|
|
|
152
|
|
|||||||
Unrealized gains on available-for-sale investments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||||
Cash flow hedging instruments – unrealized losses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
|||||||
Dividend distribution
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
67
|
|
|
—
|
|
|
—
|
|
|
67
|
|
|
—
|
|
|
67
|
|
|||||||
Stock options exercised
|
1
|
|
|
—
|
|
|
28
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|
—
|
|
|
28
|
|
|||||||
Issuance of common stock under employee stock purchase plan
|
1
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
23
|
|
|||||||
Tax benefit from stock options exercised, restricted stock vesting and employee stock purchase plan
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
|||||||
Common stock dividends, $0.30 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(113
|
)
|
|
—
|
|
|
(113
|
)
|
|
—
|
|
|
(113
|
)
|
|||||||
Repurchase and retirement of common stock
|
(25
|
)
|
|
(2
|
)
|
|
(110
|
)
|
|
(638
|
)
|
|
—
|
|
|
(750
|
)
|
|
—
|
|
|
(750
|
)
|
|||||||
Balances at July 30, 2011 (recast)
|
370
|
|
|
$
|
37
|
|
|
$
|
—
|
|
|
$
|
5,846
|
|
|
$
|
281
|
|
|
$
|
6,164
|
|
|
$
|
723
|
|
|
$
|
6,887
|
|
|
Six Months Ended
|
||||||
|
August 4, 2012
|
|
July 30, 2011
|
||||
|
|
|
(recast)
|
||||
OPERATING ACTIVITIES
|
|
|
|
||||
Net earnings including noncontrolling interests
|
$
|
145
|
|
|
$
|
350
|
|
Adjustments to reconcile net earnings including noncontrolling interests to total cash (used in) provided by operating activities
|
|
|
|
||||
Depreciation
|
445
|
|
|
448
|
|
||
Amortization of definite-lived intangible assets
|
20
|
|
|
30
|
|
||
Restructuring charges
|
223
|
|
|
33
|
|
||
Stock-based compensation
|
64
|
|
|
67
|
|
||
Deferred income taxes
|
(88
|
)
|
|
(54
|
)
|
||
Other, net
|
21
|
|
|
4
|
|
||
Changes in operating assets and liabilities
|
|
|
|
||||
Receivables
|
300
|
|
|
476
|
|
||
Merchandise inventories
|
512
|
|
|
659
|
|
||
Other assets
|
(139
|
)
|
|
(46
|
)
|
||
Accounts payable
|
(834
|
)
|
|
(501
|
)
|
||
Other liabilities
|
(575
|
)
|
|
(119
|
)
|
||
Income taxes
|
(316
|
)
|
|
(178
|
)
|
||
Total cash (used in) provided by operating activities
|
(222
|
)
|
|
1,169
|
|
||
|
|
|
|
||||
INVESTING ACTIVITIES
|
|
|
|
|
|
||
Additions to property and equipment
|
(316
|
)
|
|
(377
|
)
|
||
Purchases of investments
|
(11
|
)
|
|
(107
|
)
|
||
Sales of investments
|
64
|
|
|
73
|
|
||
Change in restricted assets
|
73
|
|
|
(31
|
)
|
||
Other, net
|
(5
|
)
|
|
—
|
|
||
Total cash used in investing activities
|
(195
|
)
|
|
(442
|
)
|
||
|
|
|
|
||||
FINANCING ACTIVITIES
|
|
|
|
|
|
||
Repurchase of common stock
|
(255
|
)
|
|
(737
|
)
|
||
Borrowings of debt
|
592
|
|
|
2,027
|
|
||
Repayments of debt
|
(569
|
)
|
|
(1,218
|
)
|
||
Dividends paid
|
(109
|
)
|
|
(115
|
)
|
||
Issuance of common stock under employee stock purchase plan and for the exercise of stock options
|
15
|
|
|
51
|
|
||
Other, net
|
(8
|
)
|
|
(12
|
)
|
||
Total cash used in financing activities
|
(334
|
)
|
|
(4
|
)
|
||
|
|
|
|
||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
30
|
|
|
18
|
|
||
|
|
|
|
||||
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS BEFORE ADJUSTMENT
|
(721
|
)
|
|
741
|
|
||
|
|
|
|
||||
ADJUSTMENT FOR FISCAL YEAR-END CHANGE (NOTE 2)
|
202
|
|
|
235
|
|
||
|
|
|
|
||||
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AFTER ADJUSTMENT
|
(519
|
)
|
|
976
|
|
||
|
|
|
|
||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
1,199
|
|
|
1,103
|
|
||
|
|
|
|
||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
680
|
|
|
$
|
2,079
|
|
1.
|
Basis of Presentation
|
2.
|
Fiscal Year-end Change
|
New Fiscal Calendar
(1)
|
|
Previous Fiscal Calendar
(1)
|
||
2013
|
|
2012
|
|
2012
|
May 2012 - July 2012
|
|
May 2011 - July 2011
|
|
June 2011 - August 2011
|
(1)
|
For entities reported on a lag, the fiscal months included in the second quarters of fiscal 2013 and 2012 were April through June under both the new and previous fiscal calendars.
|
|
February 2012
|
|
February 2011
|
||||
Net earnings
|
$
|
206
|
|
|
$
|
115
|
|
Impact of share repurchases
(1)
|
(98
|
)
|
|
—
|
|
||
Net reconciling item to Retained earnings
|
$
|
108
|
|
|
$
|
115
|
|
(1)
|
Share repurchases reduced Retained earnings after the Additional paid-in capital balance was reduced to zero during February 2012.
|
3.
|
Discontinued Operations
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
August 4, 2012
|
|
July 30, 2011
|
|
August 4, 2012
|
|
July 30, 2011
|
||||||||
|
|
|
(recast)
|
|
|
|
(recast)
|
||||||||
Revenue
|
$
|
—
|
|
|
$
|
89
|
|
|
$
|
8
|
|
|
$
|
217
|
|
|
|
|
|
|
|
|
|
||||||||
Restructuring charges
(1)
|
(1
|
)
|
|
1
|
|
|
5
|
|
|
29
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) from discontinued operations before income tax benefit
|
3
|
|
|
(53
|
)
|
|
(12
|
)
|
|
(127
|
)
|
||||
Income tax (expense) benefit
|
(3
|
)
|
|
12
|
|
|
3
|
|
|
32
|
|
||||
Gain on sale of discontinued operations
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||
Net loss from discontinued operations, including noncontrolling interests
|
—
|
|
|
(37
|
)
|
|
(9
|
)
|
|
(91
|
)
|
||||
Net loss from discontinued operations attributable to noncontrolling interests
|
—
|
|
|
15
|
|
|
6
|
|
|
26
|
|
||||
Net loss from discontinued operations attributable to Best Buy Co., Inc.
|
$
|
—
|
|
|
$
|
(22
|
)
|
|
$
|
(3
|
)
|
|
$
|
(65
|
)
|
(1)
|
See Note 7,
Restructuring Charges
, for further discussion of the restructuring charges associated with discontinued operations.
|
4.
|
Investments
|
|
August 4, 2012
|
|
March 3, 2012
|
|
July 30, 2011
|
||||||
|
|
|
|
|
(recast)
|
||||||
Short-term investments
|
|
|
|
|
|
|
|
|
|||
U.S. Treasury bills
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
80
|
|
|
|
|
|
|
|
||||||
Equity and other investments
|
|
|
|
|
|
|
|
|
|||
Debt securities (auction rate securities)
|
22
|
|
|
82
|
|
|
91
|
|
|||
Marketable equity securities
|
3
|
|
|
3
|
|
|
150
|
|
|||
Other investments
|
66
|
|
|
55
|
|
|
75
|
|
|||
Total equity and other investments
|
$
|
91
|
|
|
$
|
140
|
|
|
$
|
316
|
|
Description
|
|
Nature of collateral or guarantee
|
|
August 4, 2012
|
|
March 3, 2012
|
|
July 30, 2011
|
||||||
|
|
|
|
|
|
|
|
(recast)
|
||||||
Student loan bonds
|
|
Student loans guaranteed 95% to 100% by the U.S. government
|
|
$
|
20
|
|
|
$
|
80
|
|
|
$
|
89
|
|
Municipal revenue bonds
|
|
100% insured by AA/Aa-rated bond insurers at August 4, 2012
|
|
2
|
|
|
2
|
|
|
2
|
|
|||
Total fair value plus accrued interest
(1)
|
|
|
|
$
|
22
|
|
|
$
|
82
|
|
|
$
|
91
|
|
(1)
|
The par value and weighted-average interest rates (taxable equivalent) of our ARS were
$24
,
$88
and
$93
, and
0.69%
,
0.50%
and
0.32%
, respectively, at
August 4, 2012
,
March 3, 2012
and
July 30, 2011
, respectively.
|
|
August 4, 2012
|
|
March 3, 2012
|
|
July 30, 2011
|
||||||
|
|
|
|
|
(recast)
|
||||||
Common stock of TalkTalk Telecom Group PLC
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
88
|
|
Common stock of Carphone Warehouse Group plc
|
—
|
|
|
—
|
|
|
61
|
|
|||
Other
|
3
|
|
|
3
|
|
|
1
|
|
|||
Total
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
150
|
|
5.
|
Fair Value Measurements
|
•
|
Quoted prices for similar assets or liabilities in active markets;
|
•
|
Quoted prices for identical or similar assets in non-active markets;
|
•
|
Inputs other than quoted prices that are observable for the asset or liability; and
|
•
|
Inputs that are derived principally from or corroborated by other observable market data.
|
|
|
|
Fair Value Measurements
Using Inputs Considered as
|
||||||||||||
|
Fair Value at
August 4, 2012 |
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other current assets
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds (restricted cash)
|
$
|
62
|
|
|
$
|
62
|
|
|
$
|
—
|
|
|
$
|
—
|
|
U.S. Treasury bills (restricted cash)
|
30
|
|
|
30
|
|
|
—
|
|
|
—
|
|
||||
Equity and other investments
|
|
|
|
|
|
|
|
|
|
|
|
||||
Auction rate securities
|
22
|
|
|
—
|
|
|
—
|
|
|
22
|
|
||||
Marketable equity securities
|
3
|
|
|
3
|
|
|
—
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accrued liabilities
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivative instruments
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
|
|
Fair Value Measurements
Using Inputs Considered as
|
||||||||||||
|
Fair Value at
March 3, 2012 |
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds
|
$
|
272
|
|
|
$
|
272
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other current assets
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds (restricted cash)
|
119
|
|
|
119
|
|
|
—
|
|
|
—
|
|
||||
U.S. Treasury bills (restricted cash)
|
30
|
|
|
30
|
|
|
—
|
|
|
—
|
|
||||
Foreign currency derivative instruments
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Equity and other investments
|
|
|
|
|
|
|
|
|
|
|
|
||||
Auction rate securities
|
82
|
|
|
—
|
|
|
—
|
|
|
82
|
|
||||
Marketable equity securities
|
3
|
|
|
3
|
|
|
—
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accrued liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency derivative instruments
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
|
|
Fair Value Measurements
Using Inputs Considered as
|
||||||||||||
|
Fair Value at
July 30, 2011 |
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
|
(recast)
|
|
(recast)
|
|
(recast)
|
|
(recast)
|
||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
605
|
|
|
$
|
605
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commercial paper
|
165
|
|
|
—
|
|
|
165
|
|
|
—
|
|
||||
Short-term investments
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury bills
|
80
|
|
|
80
|
|
|
—
|
|
|
—
|
|
||||
Other current assets
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds (restricted assets)
|
133
|
|
|
133
|
|
|
—
|
|
|
—
|
|
||||
U.S. Treasury bills (restricted assets)
|
45
|
|
|
45
|
|
|
—
|
|
|
—
|
|
||||
Foreign currency derivative instruments
|
5
|
|
|
—
|
|
|
5
|
|
|
—
|
|
||||
Equity and other investments
|
|
|
|
|
|
|
|
|
|
|
|
||||
Auction rate securities
|
91
|
|
|
—
|
|
|
—
|
|
|
91
|
|
||||
Marketable equity securities
|
150
|
|
|
150
|
|
|
—
|
|
|
—
|
|
||||
Other assets
|
|
|
|
|
|
|
|
||||||||
Foreign currency derivative instruments
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
LIABILITIES
|
|
|
|
|
|
|
|
||||||||
Accrued liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency derivative instruments
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
Debt securities-
Auction rate securities only
|
||||||||||
|
Student loan
bonds
|
|
Municipal
revenue bonds
|
|
Total
|
||||||
Balances at May 5, 2012
|
$
|
64
|
|
|
$
|
2
|
|
|
$
|
66
|
|
Changes in unrealized losses included in other comprehensive income
|
3
|
|
|
—
|
|
|
3
|
|
|||
Sales
|
(47
|
)
|
|
—
|
|
|
(47
|
)
|
|||
Balances at August 4, 2012
|
$
|
20
|
|
|
$
|
2
|
|
|
$
|
22
|
|
|
Debt securities-
Auction rate securities only
|
||||||||||
|
Student loan
bonds
|
|
Municipal
revenue bonds
|
|
Total
|
||||||
Balances at March 3, 2012
|
$
|
80
|
|
|
$
|
2
|
|
|
$
|
82
|
|
Changes in unrealized losses included in other comprehensive income
|
4
|
|
|
—
|
|
|
4
|
|
|||
Sales
|
(64
|
)
|
|
—
|
|
|
(64
|
)
|
|||
Balances at August 4, 2012
|
$
|
20
|
|
|
$
|
2
|
|
|
$
|
22
|
|
|
Debt securities-
Auction rate securities only
|
||||||||||
|
Student loan
bonds
|
|
Municipal
revenue bonds
|
|
Total
|
||||||
Balances at April 30, 2011
|
$
|
95
|
|
|
$
|
2
|
|
|
$
|
97
|
|
Changes in unrealized losses included in other comprehensive income
|
2
|
|
|
—
|
|
|
2
|
|
|||
Sales
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
|||
Balances at July 30, 2011 (recast)
|
$
|
89
|
|
|
$
|
2
|
|
|
$
|
91
|
|
|
Debt securities-
Auction rate securities only
|
||||||||||
|
Student loan
bonds
|
|
Municipal
revenue bonds
|
|
Total
|
||||||
Balances at February 26, 2011
|
$
|
108
|
|
|
$
|
2
|
|
|
$
|
110
|
|
Changes in unrealized losses included in other comprehensive income
|
3
|
|
|
—
|
|
|
3
|
|
|||
Sales
|
(22
|
)
|
|
—
|
|
|
(22
|
)
|
|||
Balances at July 30, 2011 (recast)
|
$
|
89
|
|
|
$
|
2
|
|
|
$
|
91
|
|
|
Six Months Ended
|
|
Six Months Ended
|
||||||||||||
|
August 4, 2012
|
|
July 30, 2011
|
||||||||||||
|
Impairments
|
|
Remaining Net Carrying Value
|
|
Impairments
|
|
Remaining Net Carrying Value
|
||||||||
|
|
|
|
|
(recast)
|
|
(recast)
|
||||||||
Continuing operations
|
|
|
|
|
|
|
|
||||||||
Property and equipment
|
$
|
29
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
6.
|
Goodwill and Intangible Assets
|
|
Goodwill
|
|
Indefinite-lived Tradenames
|
||||||||||||||||||||
|
Domestic
|
|
International
|
|
Total
|
|
Domestic
|
|
International
|
|
Total
|
||||||||||||
Balances at March 3, 2012
|
$
|
516
|
|
|
$
|
819
|
|
|
$
|
1,335
|
|
|
$
|
19
|
|
|
$
|
111
|
|
|
$
|
130
|
|
Changes in foreign currency exchange rates
|
—
|
|
|
(7
|
)
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Acquisitions
|
14
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Balances at August 4, 2012
|
$
|
530
|
|
|
$
|
812
|
|
|
$
|
1,342
|
|
|
$
|
19
|
|
|
$
|
111
|
|
|
$
|
130
|
|
|
Goodwill
|
|
Indefinite-lived Tradenames
|
||||||||||||||||||||
|
Domestic
|
|
International
|
|
Total
|
|
Domestic
|
|
International
|
|
Total
|
||||||||||||
Balances at February 26, 2011
|
$
|
422
|
|
|
$
|
2,032
|
|
|
$
|
2,454
|
|
|
$
|
21
|
|
|
$
|
84
|
|
|
$
|
105
|
|
Changes in foreign currency exchange rates
|
—
|
|
|
53
|
|
|
53
|
|
|
—
|
|
|
3
|
|
|
3
|
|
||||||
Other
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|
28
|
|
||||||
Balances at July 30, 2011 (recast)
|
$
|
422
|
|
|
$
|
2,085
|
|
|
$
|
2,507
|
|
|
$
|
21
|
|
|
$
|
115
|
|
|
$
|
136
|
|
(1)
|
Represents the transfer of certain definite-lived tradenames (at their net book value) to indefinite-lived tradenames following our decision not to phase out certain tradenames. We believe these tradenames will continue to contribute to our future cash flows indefinitely.
|
|
August 4, 2012
|
|
March 3, 2012
|
|
July 30, 2011
|
||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Cumulative
Impairment
|
|
Gross
Carrying
Amount
|
|
Cumulative
Impairment
|
|
Gross
Carrying
Amount
|
|
Cumulative
Impairment
|
||||||||||||
|
|
|
|
|
|
|
|
|
(recast)
|
|
(recast)
|
||||||||||||
Goodwill
|
$
|
2,603
|
|
|
$
|
(1,261
|
)
|
|
$
|
2,596
|
|
|
$
|
(1,261
|
)
|
|
$
|
2,571
|
|
|
$
|
(64
|
)
|
|
August 4, 2012
|
|
March 3, 2012
|
|
July 30, 2011
|
||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||||||
|
|
|
|
|
|
|
|
|
(recast)
|
|
(recast)
|
||||||||||||
Customer relationships
|
$
|
465
|
|
|
$
|
(244
|
)
|
|
$
|
453
|
|
|
$
|
(224
|
)
|
|
$
|
393
|
|
|
$
|
(214
|
)
|
Fiscal Year
|
|
||
Remainder of fiscal 2013
|
$
|
21
|
|
2014
|
41
|
|
|
2015
|
41
|
|
|
2016
|
41
|
|
|
2017
|
24
|
|
|
Thereafter
|
53
|
|
7.
|
Restructuring Charges
|
|
Six Months Ended
|
||||||
|
August 4, 2012
|
|
July 30, 2011
|
||||
|
|
|
(recast)
|
||||
Continuing operations
|
|
|
|
||||
Fiscal 2013 restructuring
|
$
|
224
|
|
|
$
|
—
|
|
Fiscal 2012 restructuring
|
6
|
|
|
—
|
|
||
Fiscal 2011 restructuring
|
(12
|
)
|
|
4
|
|
||
Total
|
218
|
|
|
4
|
|
||
Discontinued operations
|
|
|
|
||||
Fiscal 2013 restructuring
|
—
|
|
|
—
|
|
||
Fiscal 2012 restructuring
|
3
|
|
|
—
|
|
||
Fiscal 2011 restructuring
|
2
|
|
|
29
|
|
||
Total (Note 3)
|
5
|
|
|
29
|
|
||
Total
|
$
|
223
|
|
|
$
|
33
|
|
|
Six Months Ended
August 4, 2012 |
||
Continuing operations
|
|
||
Property and equipment impairments
|
$
|
27
|
|
Termination benefits
|
81
|
|
|
Facility closure and other costs, net
|
116
|
|
|
Total
|
$
|
224
|
|
|
Termination
Benefits
|
|
Facility
Closure and
Other Costs
|
|
Total
|
||||||
Balance at March 3, 2012
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Charges
|
107
|
|
|
116
|
|
|
223
|
|
|||
Cash payments
|
(35
|
)
|
|
(2
|
)
|
|
(37
|
)
|
|||
Adjustments
|
(27
|
)
|
|
(6
|
)
|
|
(33
|
)
|
|||
Balance at August 4, 2012
|
$
|
45
|
|
|
$
|
108
|
|
|
$
|
153
|
|
|
Domestic
|
|
International
|
|
Total
|
||||||||||||||||||
|
Six Months
Ended August 4, 2012 |
|
Cumulative
Amount through August 4, 2012 |
|
Six Months
Ended August 4, 2012 |
|
Cumulative
Amount through August 4, 2012 |
|
Six Months
Ended August 4, 2012 |
|
Cumulative
Amount through August 4, 2012 |
||||||||||||
Continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Property and equipment impairments
|
$
|
1
|
|
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
15
|
|
|
$
|
1
|
|
|
$
|
32
|
|
Termination benefits
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Facility closure and other costs, net
|
5
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
||||||
Total
|
6
|
|
|
23
|
|
|
—
|
|
|
15
|
|
|
6
|
|
|
38
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Inventory write-downs
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
11
|
|
||||||
Property and equipment impairments
|
—
|
|
|
—
|
|
|
—
|
|
|
96
|
|
|
—
|
|
|
96
|
|
||||||
Termination benefits
|
—
|
|
|
—
|
|
|
1
|
|
|
17
|
|
|
1
|
|
|
17
|
|
||||||
Facility closure and other costs, net
|
—
|
|
|
—
|
|
|
2
|
|
|
84
|
|
|
2
|
|
|
84
|
|
||||||
Total
|
—
|
|
|
—
|
|
|
3
|
|
|
208
|
|
|
3
|
|
|
208
|
|
||||||
Total
|
$
|
6
|
|
|
$
|
23
|
|
|
$
|
3
|
|
|
$
|
223
|
|
|
$
|
9
|
|
|
$
|
246
|
|
|
Termination
Benefits
|
|
Facility
Closure and
Other Costs
(1)
|
|
Total
|
||||||
Balance at March 3, 2012
|
$
|
17
|
|
|
$
|
85
|
|
|
$
|
102
|
|
Charges
|
1
|
|
|
2
|
|
|
3
|
|
|||
Cash payments
|
(17
|
)
|
|
(77
|
)
|
|
(94
|
)
|
|||
Adjustments
|
—
|
|
|
34
|
|
|
34
|
|
|||
Changes in foreign currency exchange rates
|
—
|
|
|
2
|
|
|
2
|
|
|||
Balance at August 4, 2012
|
$
|
1
|
|
|
$
|
46
|
|
|
$
|
47
|
|
(1)
|
Included within the adjustments to facility closure and other costs is
$34
from the first quarter of fiscal 2013, representing an adjustment to exclude non-cash charges or benefits, which had no impact on our Condensed Consolidated Statements of Earnings and Comprehensive Income in the first quarter of fiscal 2013.
|
|
Domestic
|
|
International
|
|
Total
|
||||||||||||||||||||||||||||||
|
Six Months Ended
|
|
Cumulative
Amount through August 4, 2012 |
|
Six Months Ended
|
|
Cumulative
Amount through August 4, 2012 |
|
Six Months Ended
|
|
Cumulative
Amount through August 4, 2012 |
||||||||||||||||||||||||
|
August 4,
2012 |
|
July 30,
2011 |
|
|
August 4,
2012 |
|
July 30,
2011 |
|
|
August 4,
2012 |
|
July 30,
2011 |
|
|||||||||||||||||||||
|
|
|
(recast)
|
|
|
|
|
|
(recast)
|
|
|
|
|
|
(recast)
|
|
|
||||||||||||||||||
Continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Inventory write-downs
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
28
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
28
|
|
Property and equipment impairments
|
(12
|
)
|
|
—
|
|
|
3
|
|
|
—
|
|
|
(1
|
)
|
|
107
|
|
|
(12
|
)
|
|
(1
|
)
|
|
110
|
|
|||||||||
Termination benefits
|
—
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|||||||||
Facility closure and other costs, net
|
—
|
|
|
5
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
4
|
|
|||||||||
Total
|
(12
|
)
|
|
5
|
|
|
48
|
|
|
—
|
|
|
(1
|
)
|
|
107
|
|
|
(12
|
)
|
|
4
|
|
|
155
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Discontinued operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Inventory write-downs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|||||||||
Property and equipment impairments
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
—
|
|
|
—
|
|
|
40
|
|
|||||||||
Termination benefits
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
18
|
|
|
19
|
|
|
—
|
|
|
18
|
|
|
23
|
|
|||||||||
Intangible asset impairments
|
—
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|||||||||
Facility closure and other costs, net
|
3
|
|
|
—
|
|
|
3
|
|
|
(1
|
)
|
|
11
|
|
|
4
|
|
|
2
|
|
|
11
|
|
|
7
|
|
|||||||||
Total
|
3
|
|
|
—
|
|
|
35
|
|
|
(1
|
)
|
|
29
|
|
|
63
|
|
|
2
|
|
|
29
|
|
|
98
|
|
|||||||||
Total
|
$
|
(9
|
)
|
|
$
|
5
|
|
|
$
|
83
|
|
|
$
|
(1
|
)
|
|
$
|
28
|
|
|
$
|
170
|
|
|
$
|
(10
|
)
|
|
$
|
33
|
|
|
$
|
253
|
|
|
Termination
Benefits
|
|
Facility
Closure and
Other Costs
(1)
|
|
Total
|
||||||
Balance at February 26, 2011
|
$
|
28
|
|
|
$
|
13
|
|
|
$
|
41
|
|
Charges
|
6
|
|
|
—
|
|
|
6
|
|
|||
Cash payments
|
(24
|
)
|
|
(8
|
)
|
|
(32
|
)
|
|||
Adjustments
|
(3
|
)
|
|
8
|
|
|
5
|
|
|||
Changes in foreign currency exchange rates
|
—
|
|
|
1
|
|
|
1
|
|
|||
Balance at July 30, 2011 (recast)
|
$
|
7
|
|
|
$
|
14
|
|
|
$
|
21
|
|
(1)
|
Included within the adjustments to facility closure and other costs is
$10
from the first quarter of fiscal 2011, representing an adjustment to exclude non-cash charges or benefits, which had no impact on our Condensed Consolidated Statements of Earnings and Comprehensive Income in the first quarter of fiscal 2012.
|
|
Termination
Benefits
|
|
Facility
Closure and
Other Costs
|
|
Total
|
||||||
Balance at March 3, 2012
|
$
|
3
|
|
|
$
|
9
|
|
|
$
|
12
|
|
Charges
|
—
|
|
|
—
|
|
|
—
|
|
|||
Cash payments
|
(2
|
)
|
|
(3
|
)
|
|
(5
|
)
|
|||
Adjustments
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|||
Balance at August 4, 2012
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
5
|
|
8.
|
Debt
|
|
August 4, 2012
|
|
March 3, 2012
|
|
July 30, 2011
|
||||||
|
|
|
|
|
(recast)
|
||||||
U.S. revolving credit facility – 364-Day
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
U.S. revolving credit facility – Five-Year
|
—
|
|
|
—
|
|
|
—
|
|
|||
Europe revolving credit facility
|
519
|
|
|
480
|
|
|
—
|
|
|||
Europe receivables financing facility
|
—
|
|
|
—
|
|
|
386
|
|
|||
Old Europe revolving credit facility
|
—
|
|
|
—
|
|
|
—
|
|
|||
Canada revolving demand facility
|
—
|
|
|
—
|
|
|
—
|
|
|||
China revolving demand facilities
|
—
|
|
|
—
|
|
|
6
|
|
|||
Total short-term debt
|
$
|
519
|
|
|
$
|
480
|
|
|
$
|
392
|
|
|
August 4, 2012
|
|
March 3, 2012
|
|
July 30, 2011
|
||||||
|
|
|
|
|
(recast)
|
||||||
2013 Notes
|
$
|
500
|
|
|
$
|
500
|
|
|
$
|
500
|
|
2016 Notes
|
349
|
|
|
349
|
|
|
349
|
|
|||
2021 Notes
|
648
|
|
|
648
|
|
|
648
|
|
|||
Convertible debentures
|
—
|
|
|
—
|
|
|
402
|
|
|||
Financing lease obligations
|
136
|
|
|
149
|
|
|
162
|
|
|||
Capital lease obligations
|
73
|
|
|
81
|
|
|
82
|
|
|||
Other debt
|
1
|
|
|
1
|
|
|
2
|
|
|||
Total long-term debt
|
1,707
|
|
|
1,728
|
|
|
2,145
|
|
|||
Less: current portion
(1)
|
(542
|
)
|
|
(43
|
)
|
|
(444
|
)
|
|||
Total long-term debt, less current portion
|
$
|
1,165
|
|
|
$
|
1,685
|
|
|
$
|
1,701
|
|
(1)
|
Since holders of our convertible debentures could have required us to purchase all or a portion of the debentures on January 15, 2012, we classified the
$402
for such debentures in the current portion of long-term debt at
July 30, 2011
. Our 2013 Notes due July 15, 2013, are classified in the current portion of long-term debt as of
August 4, 2012
.
|
9.
|
Derivative Instruments
|
|
|
August 4, 2012
|
|
March 3, 2012
|
|
July 30, 2011
|
||||||||||||||||||
Contract Type
|
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
(recast)
|
|
(recast)
|
||||||||||||
Cash flow hedges (foreign exchange forward contracts)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
—
|
|
No hedge designation (foreign exchange forward contracts)
|
|
—
|
|
|
(2
|
)
|
|
1
|
|
|
(2
|
)
|
|
—
|
|
|
(1
|
)
|
||||||
Total
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
1
|
|
|
$
|
(2
|
)
|
|
$
|
6
|
|
|
$
|
(1
|
)
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
August 4, 2012
|
|
August 4, 2012
|
||||||||||||
Contract Type
|
|
Pre-tax Gain Recognized in
OCI
(1)
|
|
(Loss)
Reclassified from
Accumulated
OCI to Earnings
(Effective
Portion)
(2)
|
|
Pre-tax Gain
Recognized in
OCI
(1)
|
|
(Loss)
Reclassified from
Accumulated
OCI to Earnings
(Effective
Portion)
(2)
|
||||||||
Cash flow hedges (foreign exchange forward contracts)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
July 30, 2011
|
|
July 30, 2011
|
||||||||||||
Contract Type
|
|
Pre-tax Gain
Recognized in
OCI
(1)
|
|
Gain
Reclassified from
Accumulated
OCI to Earnings
(Effective
Portion)
(2)
|
|
Pre-tax Gain
Recognized in
OCI
(1)
|
|
Gain
Reclassified from
Accumulated
OCI to Earnings
(Effective
Portion)
(2)
|
||||||||
|
|
(recast)
|
|
(recast)
|
|
(recast)
|
|
(recast)
|
||||||||
Cash flow hedges (foreign exchange forward contracts)
|
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
13
|
|
|
$
|
7
|
|
(1)
|
Reflects the amount recognized in OCI prior to the reclassification of
50%
to noncontrolling interests for the cash flow and net investment hedges, respectively.
|
(2)
|
Gain reclassified from accumulated OCI is included within selling, general and administrative expenses (“SG&A”) in our Condensed Consolidated Statements of Earnings and Comprehensive Income.
|
|
|
Gain (Loss) Recognized within SG&A
|
||||||||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
Contract Type
|
|
August 4, 2012
|
|
August 4, 2012
|
|
July 30, 2011
|
|
July 30, 2011
|
||||||||
|
|
|
|
|
|
(recast)
|
|
(recast)
|
||||||||
No hedge designation (foreign exchange forward contracts)
|
|
$
|
6
|
|
|
$
|
3
|
|
|
$
|
(4
|
)
|
|
$
|
(12
|
)
|
|
|
Notional Amount
|
||||||||||
Contract Type
|
|
August 4, 2012
|
|
March 3, 2012
|
|
July 30, 2011
|
||||||
|
|
|
|
|
|
(recast)
|
||||||
Derivatives designated as cash flow hedging instruments
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
268
|
|
Derivatives not designated as hedging instruments
|
|
153
|
|
|
238
|
|
|
257
|
|
|||
Total
|
|
$
|
153
|
|
|
$
|
238
|
|
|
$
|
525
|
|
10.
|
Earnings per Share
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
August 4, 2012
|
|
July 30, 2011
|
|
August 4, 2012
|
|
July 30, 2011
|
||||||||
|
|
|
(recast)
|
|
|
|
(recast)
|
||||||||
Numerator
|
|
|
|
|
|
|
|
|
|
||||||
Net (loss) earnings from continuing operations
|
$
|
(7
|
)
|
|
$
|
148
|
|
|
$
|
154
|
|
|
$
|
441
|
|
Net loss (earnings) from continuing operations attributable to noncontrolling interests
|
19
|
|
|
2
|
|
|
19
|
|
|
(36
|
)
|
||||
Net earnings from continuing operations attributable to Best Buy Co., Inc., basic
|
12
|
|
|
150
|
|
|
173
|
|
|
405
|
|
||||
Adjustment for assumed dilution:
|
|
|
|
|
|
|
|
||||||||
Interest on convertible debentures, net of tax
|
—
|
|
|
2
|
|
|
—
|
|
|
3
|
|
||||
Net earnings from continuing operations attributable to Best Buy Co., Inc., diluted
|
$
|
12
|
|
|
$
|
152
|
|
|
$
|
173
|
|
|
$
|
408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Denominator
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding
|
338.2
|
|
|
376.0
|
|
|
340.3
|
|
|
383.6
|
|
||||
Effect of potentially dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Shares from assumed conversion of convertible debentures
|
—
|
|
|
8.8
|
|
|
—
|
|
|
8.8
|
|
||||
Stock options and other
|
0.4
|
|
|
0.8
|
|
|
0.7
|
|
|
0.9
|
|
||||
Weighted-average common shares outstanding, assuming dilution
|
338.6
|
|
|
385.6
|
|
|
341.0
|
|
|
393.3
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net earnings per share from continuing operations attributable to Best Buy Co., Inc.
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.04
|
|
|
$
|
0.40
|
|
|
$
|
0.51
|
|
|
$
|
1.06
|
|
Diluted
|
$
|
0.04
|
|
|
$
|
0.39
|
|
|
$
|
0.51
|
|
|
$
|
1.04
|
|
11.
|
Comprehensive Income
|
|
August 4, 2012
|
|
March 3, 2012
|
|
July 30, 2011
|
||||||
|
|
|
|
|
(recast)
|
||||||
Foreign currency translation
|
$
|
87
|
|
|
$
|
93
|
|
|
$
|
203
|
|
Unrealized (losses) gains on available-for-sale investments
|
(1
|
)
|
|
(3
|
)
|
|
76
|
|
|||
Unrealized gains on derivative instruments (cash flow hedges)
|
—
|
|
|
—
|
|
|
2
|
|
|||
Total
|
$
|
86
|
|
|
$
|
90
|
|
|
$
|
281
|
|
12.
|
Repurchase of Common Stock
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
August 4, 2012
|
|
July 30, 2011
|
|
August 4, 2012
|
|
July 30, 2011
|
||||||||
|
|
|
(recast)
|
|
|
|
(recast)
|
||||||||
June 2011 Program
|
|
|
|
|
|
|
|
||||||||
Number of shares repurchased
|
6.3
|
|
|
4.6
|
|
|
10.9
|
|
|
4.6
|
|
||||
Cost of shares repurchased
|
$
|
122
|
|
|
$
|
139
|
|
|
$
|
237
|
|
|
$
|
139
|
|
|
|
|
|
|
|
|
|
||||||||
June 2007 Program
|
|
|
|
|
|
|
|
||||||||
Number of shares repurchased
|
—
|
|
|
9.2
|
|
|
—
|
|
|
20.1
|
|
||||
Cost of shares repurchased
|
$
|
—
|
|
|
$
|
286
|
|
|
$
|
—
|
|
|
$
|
611
|
|
13.
|
Segments
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
August 4, 2012
|
|
July 30, 2011
|
|
August 4, 2012
|
|
July 30, 2011
|
||||||||
|
|
|
(recast)
|
|
|
|
(recast)
|
||||||||
Domestic
|
$
|
7,803
|
|
|
$
|
7,977
|
|
|
$
|
16,625
|
|
|
$
|
16,369
|
|
International
|
2,744
|
|
|
2,879
|
|
|
5,532
|
|
|
5,856
|
|
||||
Total
|
$
|
10,547
|
|
|
$
|
10,856
|
|
|
$
|
22,157
|
|
|
$
|
22,225
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
August 4, 2012
|
|
July 30, 2011
|
|
August 4, 2012
|
|
July 30, 2011
|
||||||||
|
|
|
(recast)
|
|
|
|
(recast)
|
||||||||
Domestic
|
$
|
83
|
|
|
$
|
239
|
|
|
$
|
378
|
|
|
$
|
605
|
|
International
|
(50
|
)
|
|
21
|
|
|
(83
|
)
|
|
115
|
|
||||
Total operating income
|
33
|
|
|
260
|
|
|
295
|
|
|
720
|
|
||||
Other income (expense)
|
|
|
|
|
|
|
|
||||||||
Investment income and other
|
6
|
|
|
8
|
|
|
12
|
|
|
25
|
|
||||
Interest expense
|
(30
|
)
|
|
(33
|
)
|
|
(63
|
)
|
|
(61
|
)
|
||||
Earnings from continuing operations before income tax expense and equity in loss of affiliates
|
$
|
9
|
|
|
$
|
235
|
|
|
$
|
244
|
|
|
$
|
684
|
|
|
August 4, 2012
|
|
March 3, 2012
|
|
July 30, 2011
|
||||||
|
|
|
|
|
(recast)
|
||||||
Domestic
|
$
|
9,884
|
|
|
$
|
9,592
|
|
|
$
|
10,887
|
|
International
|
5,965
|
|
|
6,413
|
|
|
8,409
|
|
|||
Total
|
$
|
15,849
|
|
|
$
|
16,005
|
|
|
$
|
19,296
|
|
14.
|
Contingencies
|
15.
|
Subsequent Event
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Overview
|
•
|
Results of Operations
|
•
|
Liquidity and Capital Resources
|
•
|
Off-Balance-Sheet Arrangements and Contractual Obligations
|
•
|
Significant Accounting Policies and Estimates
|
•
|
New Accounting Standards
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
August 4, 2012
|
|
July 30, 2011
|
|
August 4, 2012
|
|
July 30, 2011
|
||||||||
|
|
|
(recast)
|
|
|
|
(recast)
|
||||||||
Revenue
|
$
|
10,547
|
|
|
$
|
10,856
|
|
|
$
|
22,157
|
|
|
$
|
22,225
|
|
Revenue % decline
|
(2.8
|
)%
|
|
(0.4
|
)%
|
|
(0.3
|
)%
|
|
—
|
%
|
||||
Comparable store sales % decline
|
(3.2
|
)%
|
|
(3.8
|
)%
|
|
(4.3
|
)%
|
|
(3.4
|
)%
|
||||
Gross profit
|
$
|
2,564
|
|
|
$
|
2,762
|
|
|
$
|
5,471
|
|
|
$
|
5,683
|
|
Gross profit as a % of revenue
(1)
|
24.3
|
%
|
|
25.4
|
%
|
|
24.7
|
%
|
|
25.6
|
%
|
||||
SG&A
|
$
|
2,440
|
|
|
$
|
2,502
|
|
|
$
|
4,958
|
|
|
$
|
4,959
|
|
SG&A as a % of revenue
(1)
|
23.1
|
%
|
|
23.0
|
%
|
|
22.4
|
%
|
|
22.3
|
%
|
||||
Restructuring charges
|
$
|
91
|
|
|
$
|
—
|
|
|
$
|
218
|
|
|
$
|
4
|
|
Operating income
|
$
|
33
|
|
|
$
|
260
|
|
|
$
|
295
|
|
|
$
|
720
|
|
Operating income as % of revenue
|
0.3
|
%
|
|
2.4
|
%
|
|
1.3
|
%
|
|
3.2
|
%
|
||||
Net earnings from continuing operations
(2)
|
$
|
12
|
|
|
$
|
150
|
|
|
$
|
173
|
|
|
$
|
405
|
|
Loss from discontinued operations
(3)
|
$
|
—
|
|
|
$
|
(22
|
)
|
|
$
|
(3
|
)
|
|
$
|
(65
|
)
|
Net earnings attributable to Best Buy Co., Inc.
|
$
|
12
|
|
|
$
|
128
|
|
|
$
|
170
|
|
|
$
|
340
|
|
Diluted earnings per share from continuing operations
|
$
|
0.04
|
|
|
$
|
0.39
|
|
|
$
|
0.51
|
|
|
$
|
1.04
|
|
Diluted earnings per share
|
$
|
0.04
|
|
|
$
|
0.34
|
|
|
$
|
0.50
|
|
|
$
|
0.87
|
|
(1)
|
Because retailers vary in how they record certain costs between cost of goods sold and selling, general and administrative expenses ("SG&A"), our gross profit rate and SG&A rate may not be comparable to other retailers’ corresponding rates. For additional information regarding costs classified in cost of goods sold and SG&A, refer to Note 1,
Summary of Significant Accounting Policies
, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended March 3, 2012.
|
(2)
|
Includes both net (loss) earnings from continuing operations and net loss (earnings) from continuing operations attributable to noncontrolling interests.
|
(3)
|
Includes both net loss from discontinued operations and net loss from discontinued operations attributable to noncontrolling interests.
|
|
Three Months Ended
|
|
Six Months Ended
|
||
|
August 4, 2012
|
|
August 4, 2012
|
||
Comparable store sales impact
|
(3.0
|
)%
|
|
(4.0
|
)%
|
Impact of foreign currency exchange rate fluctuations
|
(0.4
|
)%
|
|
(0.3
|
)%
|
Net store changes
|
(0.2
|
)%
|
|
0.5
|
%
|
Non-comparable store sales channels
(1)
|
0.8
|
%
|
|
0.2
|
%
|
Extra week of revenue
(2)
|
—
|
%
|
|
3.3
|
%
|
Total revenue decrease
|
(2.8
|
)%
|
|
(0.3
|
)%
|
(1)
|
Non-comparable store sales channels primarily reflects the impact from revenue we earn from sales of merchandise to wholesalers and dealers, as well as other non-comparable sales channels not included within our comparable store sales calculation.
|
(2)
|
Represents the estimated incremental revenue associated with stores in our Domestic segment and Canada in fiscal 2013, which had 27 weeks of activity,
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
August 4, 2012
|
|
July 30, 2011
|
|
August 4, 2012
|
|
July 30, 2011
|
||||||||
|
|
|
(recast)
|
|
|
|
(recast)
|
||||||||
Operating income
|
$
|
33
|
|
|
$
|
260
|
|
|
$
|
295
|
|
|
$
|
720
|
|
Restructuring charges
|
91
|
|
|
—
|
|
|
218
|
|
|
4
|
|
||||
Adjusted operating income
|
$
|
124
|
|
|
$
|
260
|
|
|
513
|
|
|
$
|
724
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net earnings from continuing operations
|
$
|
12
|
|
|
$
|
150
|
|
|
$
|
173
|
|
|
$
|
405
|
|
After-tax impact of restructuring charges
|
56
|
|
|
—
|
|
|
141
|
|
|
3
|
|
||||
Adjusted net earnings from continuing operations
|
$
|
68
|
|
|
$
|
150
|
|
|
$
|
314
|
|
|
$
|
408
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted EPS from continuing operations
|
$
|
0.04
|
|
|
$
|
0.39
|
|
|
$
|
0.51
|
|
|
$
|
1.04
|
|
Per share impact of restructuring charges
|
0.16
|
|
|
—
|
|
|
0.41
|
|
|
—
|
|
||||
Adjusted diluted EPS from continuing operations
|
$
|
0.20
|
|
|
$
|
0.39
|
|
|
$
|
0.92
|
|
|
$
|
1.04
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
August 4, 2012
|
|
July 30, 2011
|
|
August 4, 2012
|
|
July 30, 2011
|
||||||||
|
|
|
(recast)
|
|
|
|
(recast)
|
||||||||
Revenue
|
$
|
7,803
|
|
|
$
|
7,977
|
|
|
$
|
16,625
|
|
|
$
|
16,369
|
|
Revenue % (decline) growth
|
(2.2
|
)%
|
|
(2.5
|
)%
|
|
1.6
|
%
|
|
(2.0
|
)%
|
||||
Comparable store sales % decline
|
(1.6
|
)%
|
|
(4.1
|
)%
|
|
(2.7
|
)%
|
|
(3.9
|
)%
|
||||
Gross profit
|
$
|
1,896
|
|
|
$
|
2,026
|
|
|
$
|
4,129
|
|
|
$
|
4,173
|
|
Gross profit as % of revenue
|
24.3
|
%
|
|
25.4
|
%
|
|
24.8
|
%
|
|
25.5
|
%
|
||||
SG&A
|
$
|
1,722
|
|
|
$
|
1,787
|
|
|
$
|
3,533
|
|
|
$
|
3,563
|
|
SG&A as % of revenue
|
22.1
|
%
|
|
22.4
|
%
|
|
21.3
|
%
|
|
21.8
|
%
|
||||
Restructuring charges
|
$
|
91
|
|
|
$
|
—
|
|
|
$
|
218
|
|
|
$
|
5
|
|
Operating income
|
$
|
83
|
|
|
$
|
239
|
|
|
$
|
378
|
|
|
$
|
605
|
|
Operating income as % of revenue
|
1.1
|
%
|
|
3.0
|
%
|
|
2.3
|
%
|
|
3.7
|
%
|
|
Three Months Ended
|
|
Six Months Ended
|
||
|
August 4, 2012
|
|
August 4, 2012
|
||
Comparable store sales impact
|
(1.6
|
)%
|
|
(2.6
|
)%
|
Net store changes
|
(1.0
|
)%
|
|
(0.2
|
)%
|
Non-comparable store sales channels
(1)
|
0.4
|
%
|
|
0.4
|
%
|
Extra week of revenue
(2)
|
—
|
%
|
|
4.0
|
%
|
Total revenue (decrease) increase
|
(2.2
|
)%
|
|
1.6
|
%
|
(1)
|
Non-comparable store sales channels reflects the impact from revenue we earn from sales channels not included within our comparable store sales calculation.
|
(2)
|
Represents the estimated incremental revenue associated with stores in our Domestic segment in fiscal 2013, which had 27 weeks of activity, compared to 26 weeks in the first six months of fiscal 2012.
|
|
Fiscal 2013
|
|
Fiscal 2012 (recast)
|
||||||||||||||||||||
|
Total Stores at Beginning of Second Quarter
|
|
Stores Opened
|
|
Stores Closed
|
|
Total Stores at End of Second Quarter
|
|
Total Stores at Beginning of Second Quarter
|
|
Stores Opened
|
|
Stores Closed
|
|
Total Stores at End of Second Quarter
|
||||||||
Best Buy
|
1,103
|
|
|
—
|
|
|
(41
|
)
|
|
1,062
|
|
|
1,101
|
|
|
4
|
|
|
—
|
|
|
1,105
|
|
Best Buy Mobile stand-alone
|
326
|
|
|
33
|
|
|
—
|
|
|
359
|
|
|
193
|
|
|
17
|
|
|
—
|
|
|
210
|
|
Pacific Sales
|
34
|
|
|
—
|
|
|
—
|
|
|
34
|
|
|
35
|
|
|
—
|
|
|
—
|
|
|
35
|
|
Magnolia Audio Video
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
6
|
|
|
—
|
|
|
(1
|
)
|
|
5
|
|
Total Domestic segment stores
|
1,468
|
|
|
33
|
|
|
(41
|
)
|
|
1,460
|
|
|
1,335
|
|
|
21
|
|
|
(1
|
)
|
|
1,355
|
|
|
Revenue Mix
|
|
Comparable Store Sales
|
||||||||
|
Three Months Ended
|
|
Three Months Ended
|
||||||||
|
August 4, 2012
|
|
July 30, 2011
|
|
August 4, 2012
|
|
July 30, 2011
|
||||
|
|
|
(recast)
|
|
|
|
(recast)
|
||||
Consumer Electronics
|
33
|
%
|
|
36
|
%
|
|
(9.6
|
)%
|
|
(8.6
|
)%
|
Computing and Mobile Phones
|
44
|
%
|
|
40
|
%
|
|
8.2
|
%
|
|
2.2
|
%
|
Entertainment
|
8
|
%
|
|
10
|
%
|
|
(22.1
|
)%
|
|
(18.2
|
)%
|
Appliances
|
7
|
%
|
|
6
|
%
|
|
9.0
|
%
|
|
5.4
|
%
|
Services
|
7
|
%
|
|
7
|
%
|
|
1.2
|
%
|
|
3.4
|
%
|
Other
|
1
|
%
|
|
1
|
%
|
|
n/a
|
|
|
n/a
|
|
Total
|
100
|
%
|
|
100
|
%
|
|
(1.6
|
)%
|
|
(4.1
|
)%
|
•
|
Consumer Electronics:
The
9.6%
comparable store sales decline was driven primarily by a decrease in the sales of digital imaging products, particularly compact cameras and camcorders, as a result of overall industry weakness due to convergence with smartphones. In addition, we experienced a decrease in television revenue due primarily to a decrease in average selling price from an increased sales mix of small and mid-sized televisions, as units sold increased. The declines were partially offset by the increased sales of e-Readers, which continued to experience gains, although at a lower rate than in prior quarters.
|
•
|
Computing and Mobile Phones:
The
8.2%
comparable store sales gain resulted primarily from increased sales of tablets due to new product launches and strong consumer demand, as well as mobile phones due to an increased mix of smartphones and new product launches. The growth in tablets and mobile phones was partially offset by a decline in sales of notebook computers, consistent with recent trends.
|
•
|
Entertainment:
The
22.1%
comparable store sales decline was mainly the result of a decline in gaming, as the industry weakness noted in past quarters continued into the second quarter of fiscal 2013. We believe the weakness in the gaming industry is due to fewer new software releases and the absence of new gaming platforms. We also continued to experience declines in the sales of movies and music.
|
•
|
Appliances:
The
9.0%
comparable store sales gain is consistent with the trends we have experienced over the last four fiscal quarters, as we have continued to improve our promotional effectiveness and implement operational improvements, including the addition of more Pacific Sales store-within-a-store concepts.
|
•
|
Services:
The
1.2%
comparable store sales gain was primarily due to increases in the sales of warranties, primarily related to mobile phones and tablets.
|
•
|
an increased mix of smartphones with higher average selling prices but a lower margin rate;
|
•
|
increased promotional activity in computing to stimulate demand and manage inventory levels ahead of anticipated product launches in the second half of the fiscal year; and
|
•
|
an increased mix of lower margin small and mid-sized televisions;
|
•
|
partially offset by an improvement in sales mix due to increased sales of mobile phones and decreased sales of notebooks and gaming products.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
August 4, 2012
|
|
July 30, 2011
|
|
August 4, 2012
|
|
July 30, 2011
|
||||||||
|
|
|
(recast)
|
|
|
|
(recast)
|
||||||||
Revenue
|
$
|
2,744
|
|
|
$
|
2,879
|
|
|
$
|
5,532
|
|
|
$
|
5,856
|
|
Revenue % (decline) growth
|
(4.7
|
)%
|
|
6.0
|
%
|
|
(5.5
|
)%
|
|
5.9
|
%
|
||||
Comparable store sales % decline
|
(8.2
|
)%
|
|
(2.8
|
)%
|
|
(9.4
|
)%
|
|
(1.5
|
)%
|
||||
Gross profit
|
$
|
668
|
|
|
$
|
736
|
|
|
$
|
1,342
|
|
|
$
|
1,510
|
|
Gross profit as % of revenue
|
24.3
|
%
|
|
25.6
|
%
|
|
24.3
|
%
|
|
25.8
|
%
|
||||
SG&A
|
$
|
718
|
|
|
$
|
715
|
|
|
$
|
1,425
|
|
|
$
|
1,396
|
|
SG&A as % of revenue
|
26.2
|
%
|
|
24.8
|
%
|
|
25.8
|
%
|
|
23.8
|
%
|
||||
Restructuring charges
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
Operating (loss) income
|
$
|
(50
|
)
|
|
$
|
21
|
|
|
$
|
(83
|
)
|
|
$
|
115
|
|
Operating (loss) income as % of revenue
|
(1.8
|
)%
|
|
0.7
|
%
|
|
(1.5
|
)%
|
|
2.0
|
%
|
|
Three Months Ended
|
|
Six Months Ended
|
||
|
August 4, 2012
|
|
August 4, 2012
|
||
Comparable store sales impact
|
(7.1
|
)%
|
|
(7.9
|
)%
|
Impact of foreign currency exchange rate fluctuations
|
(1.7
|
)%
|
|
(1.2
|
)%
|
Net store changes
|
2.4
|
%
|
|
2.5
|
%
|
Non-comparable sales channels
(1)
|
1.7
|
%
|
|
(0.2
|
)%
|
Extra week of revenue
(2)
|
—
|
%
|
|
1.3
|
%
|
Total revenue decrease
|
(4.7
|
)%
|
|
(5.5
|
)%
|
(1)
|
Non-comparable store sales channels primarily reflects the impact from revenue we earn from sales of merchandise to wholesalers and dealers as well as other non-comparable sales channels not included within our comparable store sales calculation.
|
(2)
|
Represents the estimated incremental revenue associated with stores in Canada in fiscal 2013, which had 27 weeks of activity, compared to 26 weeks in the first six months of fiscal 2012.
|
|
Fiscal 2013
|
|
Fiscal 2012 (recast)
|
||||||||||||||||||||
|
Total Stores at
Beginning of
Second Quarter
|
|
Stores
Opened
|
|
Stores
Closed
|
|
Total Stores
at End of
Second Quarter
|
|
Total Stores at
Beginning of
Second Quarter
|
|
Stores
Opened
|
|
Stores
Closed
|
|
Total Stores
at End of
Second Quarter
|
||||||||
Best Buy Europe
(1)
|
2,393
|
|
|
11
|
|
|
(32
|
)
|
|
2,372
|
|
|
2,346
|
|
|
38
|
|
|
(29
|
)
|
|
2,355
|
|
Canada
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Future Shop
|
149
|
|
|
—
|
|
|
—
|
|
|
149
|
|
|
146
|
|
|
—
|
|
|
—
|
|
|
146
|
|
Best Buy
|
77
|
|
|
—
|
|
|
—
|
|
|
77
|
|
|
71
|
|
|
3
|
|
|
—
|
|
|
74
|
|
Best Buy Mobile stand-alone
|
36
|
|
|
5
|
|
|
—
|
|
|
41
|
|
|
12
|
|
|
7
|
|
|
—
|
|
|
19
|
|
China
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Five Star
|
204
|
|
|
6
|
|
|
(1
|
)
|
|
209
|
|
|
171
|
|
|
7
|
|
|
—
|
|
|
178
|
|
Mexico
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Best Buy
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
Total International segment stores
|
2,867
|
|
|
22
|
|
|
(33
|
)
|
|
2,856
|
|
|
2,752
|
|
|
55
|
|
|
(29
|
)
|
|
2,778
|
|
(1)
|
Represents small-format The Carphone Warehouse and The Phone House stores.
|
|
Revenue Mix
|
|
Comparable Store Sales
|
||||||||
|
Three Months Ended
|
|
Three Months Ended
|
||||||||
|
August 4, 2012
|
|
July 30, 2011
|
|
August 4, 2012
|
|
July 30, 2011
|
||||
|
|
|
(recast)
|
|
|
|
(recast)
|
||||
Consumer Electronics
|
17
|
%
|
|
19
|
%
|
|
(14.3
|
)%
|
|
(11.3
|
)%
|
Computing and Mobile Phones
|
59
|
%
|
|
54
|
%
|
|
(0.8
|
)%
|
|
(0.2
|
)%
|
Entertainment
|
3
|
%
|
|
4
|
%
|
|
(13.3
|
)%
|
|
(18.5
|
)%
|
Appliances
|
13
|
%
|
|
14
|
%
|
|
(19.0
|
)%
|
|
7.7
|
%
|
Services
|
8
|
%
|
|
9
|
%
|
|
(14.4
|
)%
|
|
(3.7
|
)%
|
Other
|
< 1%
|
|
|
< 1%
|
|
|
n/a
|
|
|
n/a
|
|
Total
|
100
|
%
|
|
100
|
%
|
|
(8.2
|
)%
|
|
(2.8
|
)%
|
•
|
Consumer Electronics:
The
14.3%
comparable store sales decline was driven primarily by decreases in the sales of televisions and digital imaging products as a result of industry softness and device convergence similar to that experienced within our Domestic segment.
|
•
|
Computing and Mobile Phones
: The
0.8%
comparable store sales decline resulted primarily from a decrease in the sale of computers (both notebook and desktop) in Canada and China. Partially offsetting this decrease was an increase in tablet and mobile phone sales in Canada.
|
•
|
Entertainment:
The
13.3%
comparable store sales decline, principally in Canada, reflected decreases in the sales of gaming due to fewer new software releases and the absence of new gaming platforms, similar to trends seen in the Domestic segment.
|
•
|
Appliances:
The
19.0%
comparable store sales decline was primarily due to a decrease in the sales of appliances in our Five Star operations due to a slowdown in the housing market and the end of certain government stimulus programs in China in December 2011.
|
•
|
Services
: The
14.4%
comparable store sales decline was primarily due to the decrease in the sale of extended warranties.
|
|
August 4, 2012
|
|
March 3, 2012
|
|
July 30, 2011
|
||||||
|
|
|
|
|
(recast)
|
||||||
Cash and cash equivalents
|
$
|
680
|
|
|
$
|
1,199
|
|
|
$
|
2,079
|
|
Short-term investments
|
—
|
|
|
—
|
|
|
80
|
|
|||
Total cash and cash equivalents and short-term investments
|
$
|
680
|
|
|
$
|
1,199
|
|
|
$
|
2,159
|
|
Adjusted debt to EBITDAR =
|
Adjusted debt
|
|
EBITDAR
|
|
|
August 4, 2012
(1)
|
|
|
March 3, 2012
(1)
|
|
|
July 30, 2011
(1)
|
|
|||
|
|
|
|
|
(recast)
|
||||||
Debt (including current portion)
|
$
|
2,226
|
|
|
$
|
2,208
|
|
|
$
|
2,537
|
|
Capitalized operating lease obligations (8 times rental expense)
(2)
|
9,459
|
|
|
9,402
|
|
|
9,261
|
|
|||
Adjusted debt
|
$
|
11,685
|
|
|
$
|
11,610
|
|
|
$
|
11,798
|
|
|
|
|
|
|
|
||||||
Net (loss) earnings including noncontrolling interests
(3)
|
$
|
(31
|
)
|
|
$
|
330
|
|
|
$
|
1,495
|
|
Goodwill impairment
|
1,207
|
|
|
1,207
|
|
|
—
|
|
|||
Interest expense, net
|
98
|
|
|
97
|
|
|
56
|
|
|||
Income tax expense
|
536
|
|
|
709
|
|
|
724
|
|
|||
Depreciation and amortization expense
(4)
|
1,221
|
|
|
968
|
|
|
1,120
|
|
|||
Rental expense
|
1,182
|
|
|
1,175
|
|
|
1,158
|
|
|||
EBITDAR
|
$
|
4,213
|
|
|
$
|
4,486
|
|
|
$
|
4,553
|
|
|
|
|
|
|
|
||||||
Debt to net earnings ratio
|
(71.8
|
)
|
|
6.7
|
|
|
1.7
|
|
|||
Adjusted debt to EBITDAR ratio
|
2.8
|
|
|
2.6
|
|
|
2.6
|
|
(1)
|
Debt is reflected as of the respective balance sheet dates, while rental expense and the other components of EBITDAR represent activity for the 12 months ended as of each of the respective dates.
|
(2)
|
The multiple of eight times annual rental expense in the calculation of our capitalized operating lease obligations is the multiple used for the retail sector by one of the nationally recognized credit rating agencies that rate our creditworthiness, and we consider it to be an appropriate multiple for our lease portfolio.
|
(3)
|
We utilize net (loss) earnings including noncontrolling interests within our calculation as the earnings and related cash flows attributable to noncontrolling interests are available to service our debt and operating lease commitments.
|
(4)
|
Depreciation and amortization expense includes impairments of fixed assets, investments and intangible assets, as well as charges related to our restructuring activities.
|
|
Six Months Ended
|
||||||
|
August 4, 2012
|
|
July 30, 2011
|
||||
|
|
|
(recast)
|
||||
Total cash (used in) provided by:
|
|
|
|
|
|
||
Operating activities
|
$
|
(222
|
)
|
|
$
|
1,169
|
|
Investing activities
|
(195
|
)
|
|
(442
|
)
|
||
Financing activities
|
(334
|
)
|
|
(4
|
)
|
||
Effect of exchange rate changes on cash
|
30
|
|
|
18
|
|
||
Adjustment for fiscal year-end change
|
202
|
|
|
235
|
|
||
(Decrease) increase in cash and cash equivalents
|
$
|
(519
|
)
|
|
$
|
976
|
|
•
|
lower operating income levels in fiscal 2013;
|
•
|
higher cash outflows experienced in fiscal 2013 in relation to accounts payable, since the level of accounts payable at the end of recast fiscal 2011 was unusually low;
|
•
|
higher cash outflows in fiscal 2013 due to payments related to restructuring activities;
|
•
|
lower levels of transaction taxes payable in fiscal 2013; and
|
•
|
lower cash inflows from receivables due to timing of bank and credit card settlements
|
Rating Agency
|
|
Rating
|
|
Outlook
|
Moody’s
|
|
Baa2
|
|
Developing
|
Standard & Poor’s
|
|
BB+
|
|
CreditWatch Neg
|
Fitch
|
|
BB+
|
|
Rating Watch Neg
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
(c)
|
Stock Repurchases
|
Fiscal Period
|
|
Total Number
of Shares
Purchased
|
|
Average
Price Paid
per Share
|
|
Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs
|
|
Approximate Dollar
Value of Shares that
May Yet Be
Purchased Under the
Plans or Programs
(1)
|
||||||
May 6, 2012 through June 2, 2012
|
|
2,408,600
|
|
|
$
|
18.92
|
|
|
2,408,600
|
|
|
$
|
4,065,000,000
|
|
June 3, 2012 through July 7, 2012
|
|
3,932,998
|
|
|
19.50
|
|
|
3,932,998
|
|
|
3,989,000,000
|
|
||
July 8, 2012 through August 4, 2012
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,989,000,000
|
|
||
Total Fiscal 2013 Second Quarter
|
|
6,341,598
|
|
|
19.28
|
|
|
6,341,598
|
|
|
3,989,000,000
|
|
(1)
|
“Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs” reflects our $5.0 billion share repurchase program announced on June 21, 2011, less the $889 million we purchased in fiscal 2012 and the $122 million we purchased in the second quarter of fiscal 2013. The June 2011 program has no stated expiration date governing the period over which we can purchase shares. For additional information related to the June 2011 program, see Note 12,
Repurchase of Common Stock
, of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.
|
ITEM 6.
|
EXHIBITS
|
3.1
|
|
Amended and Restated By-Laws, dated June 20, 2012 (incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K filed by Best Buy Co., Inc. on June 21, 2012)
|
|
|
|
4.1
|
|
364-Day Credit Agreement dated as of August 31, 2012, among Best Buy Co., Inc., the Subsidiary Guarantors party thereto, the Lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent (incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K filed by Best Buy Co., Inc. on September 5, 2012)
|
|
|
|
10.1
|
|
Form of Best Buy Co., Inc. Continuity Award Agreement dated June 21, 2012
|
|
|
|
10.2
|
|
Employment Agreement, dated August 19, 2012, between Hubert Joly and Best Buy Co., Inc. (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Best Buy Co., Inc. on August 21, 2012)
|
|
|
|
10.3
|
|
Form of Long-Term Incentive Program Buy-Out Award Agreement dated September 4, 2012, between Hubert Joly and Best Buy Co., Inc.
|
|
|
|
10.4
|
|
Agreement and Release of Claims, dated May 12, 2012, by and between Brian J. Dunn and Best Buy Co., Inc. (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Best Buy Co., Inc. on May 14, 2012)
|
|
|
|
10.5
|
|
Confidentiality Agreement, dated August 26, 2012, between Richard Schulze and Best Buy Co., Inc. (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Best Buy Co., Inc. on August 27, 2012)
|
|
|
|
31.1
|
|
Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
31.2
|
|
Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
32.1
|
|
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(1)
|
|
|
|
32.2
|
|
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(1)
|
|
|
|
101
|
|
The following financial information from our Quarterly Report on Form 10-Q for the second quarter of fiscal 2013, filed with the SEC on September 6, 2012, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets at August 4, 2012; March 3, 2012; and July 30, 2011, (ii) the Condensed Consolidated Statements of Earnings and Comprehensive Income for the three and six months ended August 4, 2012, and July 30, 2011, (iii) the Consolidated Statements of Cash Flows for the six months ended August 4, 2012, and July 30, 2011, (iv) the Consolidated Statements of Changes in Shareholders’ Equity for the six months ended August 4, 2012, and July 30, 2011, and (v) the Notes to Condensed Consolidated Financial Statements.
|
(1)
|
The certifications in Exhibit 32.1 and Exhibit 32.2 to this Quarterly Report on Form 10-Q shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.
|
|
BEST BUY CO., INC.
|
|
|
(Registrant)
|
|
|
|
|
Date: September 6, 2012
|
By:
|
/s/ HUBERT JOLY
|
|
|
Hubert Joly
|
|
|
President and Chief Executive Officer
|
|
|
(duly authorized and principal executive officer)
|
|
|
|
Date: September 6, 2012
|
By:
|
/s/ JAMES L. MUEHLBAUER
|
|
|
James L. Muehlbauer
|
|
|
Executive Vice President — Finance
|
|
|
and Chief Financial Officer
|
|
|
(duly authorized and principal financial officer)
|
|
|
|
Date: September 6, 2012
|
By:
|
/s/ SUSAN S. GRAFTON
|
|
|
Susan S. Grafton
|
|
|
Senior Vice President, Controller
|
|
|
and Chief Accounting Officer
|
|
|
(duly authorized and principal accounting officer)
|
I.
|
The Award and the Plan
.
|
II.
|
Terms of Cash Award.
If you voluntarily terminate employment with the Company Group before the first anniversary of Best Buy's non-interim Chief Executive Officer being appointed, the Cash Award will be subject to recovery by Best Buy.
|
III.
|
Terms of Restricted Share Grant.
|
3.1.
|
Time-Based Restricted Shares: Restricted Period
. Until your Restricted Shares vest as provided below, they are subject to the restrictions described in Section 3.2 (the "Restrictions") during the period (the “Restricted Period”) beginning on the Award Date and ending three years later. The Restrictions will lapse and the Restricted Shares will become transferable and non-forfeitable in cumulative installments as follows, unless otherwise provided in this Agreement:
|
Award Date
|
25%
|
1
st
Anniversary of Award Date
|
25%
|
2
nd
Anniversary of Award Date
|
25%
|
3
rd
Anniversary of Award Date
|
25%
|
3.2.
|
Restrictions
. The Restricted Shares are subject to forfeiture or recovery at any time pursuant to Article III and, during the Restricted Period, are also subject to the following Restrictions:
|
(a)
|
The Restricted Shares are subject to forfeiture to Best Buy as provided in this Agreement and the Plan.
|
(b)
|
During the Restricted Period, you may not sell, assign, pledge or otherwise transfer the Restricted Shares (or any interest in or right to the Restricted Shares), other than by will or the laws of descent and distribution, and any such attempted transfer will be void.
|
3.3.
|
Effect of Retirement, Disability, Death or other Termination of Employment
. Your employment with the Company Group may be terminated by your employer at any time for any reason (with or without advance notice). Subject to the forfeiture provisions of Article IV and the exception in paragraph (d) of this Section 3.3:
|
(a)
|
If your employment with the Company Group is terminated by reason of your Qualified Retirement or death, or you become Disabled during the Restricted Period, the Restrictions will lapse and Restricted Shares that are unvested as of the date of termination will become non-forfeitable and transferable.
|
(b)
|
If, during the Restricted Period, and within 12 months following a Change in Control, you terminate your employment with the Company Group for Good Reason, the restrictions will lapse and the Restricted Shares will become non-forfeitable and transferable as of the date of such termination.
|
(c)
|
If, during the Restricted Period, your employment is terminated by the Company Group for reasons other than Cause, the restrictions will lapse and the Restricted Shares will become non-forfeitable and transferable as of the date of such termination.
|
(d)
|
If your employment is terminated during the Restricted Period for any other reason, your rights to all Restricted Shares that are not vested as of the date of termination will be immediately and irrevocably forfeited.
|
3.4.
|
Limitation of Rights Regarding Shares
. Until issuance of the Restricted Shares, you will not have any rights of a shareholder with respect to the Restricted Shares. Upon issuance of the Restricted Shares, you will, subject to the Restrictions and Article IV, have all of the rights of a shareholder with respect to the Restricted Shares, unless and until the Restricted Shares are forfeited or recovered by Best Buy under this Agreement or the Plan, except that you will not have the right to vote the Restricted Shares during the Restricted Period.
|
3.5.
|
Income Taxes
. You are liable for any federal and state income or other taxes applicable upon the lapse of the Restrictions on any Restricted Shares, and your subsequent disposition of any Restricted Shares that have become vested; and you acknowledge that you should consult with your own tax advisor regarding the applicable tax consequences. Upon the lapse of Restrictions on any Restricted Shares, Best Buy will withhold from those Restricted Shares the number of Shares having a Fair Market Value equal to the amount of all applicable taxes required by Best Buy to be withheld upon the lapse of the Restrictions on those Restricted Shares.
|
IV.
|
Restrictive Covenants and Remedies.
By accepting this Award, you agree to the restrictions and agreements contained in this Article (the “Restrictive Covenants”); and you agree that the Restrictive Covenants and the remedies described in this Article are reasonable and necessary to protect the legitimate interests of the Company Group, and do not supersede any other restrictive covenants you may also be subject to under other agreement(s).
|
4.1.
|
Confidentiality.
In consideration of the Award, you acknowledge that the Company Group operates in a competitive environment and has a substantial interest in protecting its Confidential Information, and you agree, during your employment with the Company Group and thereafter, to maintain the confidentiality of the Company Group's Confidential Information and to use such Confidential Information for the exclusive benefit of the Company Group.
|
4.2.
|
Competitive Activity
. During your employment with the Company Group and for one year following the earlier of (i) termination of your employment for any reason whatsoever or (ii) the last scheduled award vesting date, you shall not engage in any Competitive Activity. Because the Company Group's business competes on a global basis, your obligations hereunder shall apply anywhere in the world. In the event that any portion of this Section 4.2 regarding “Competitive Activity” shall be determined by any court of competent jurisdiction to be unenforceable because it is unreasonably restrictive in any respect, it shall be interpreted to extend over the maximum period of time for which it reasonably may be enforced and to the maximum extent for which it reasonably may be enforced in all other respects, and enforced as so interpreted, all as determined by such court in such action. You acknowledge the uncertainty of the law in this respect and expressly stipulate that this Agreement is to be given the construction that renders its provisions valid and enforceable to the maximum extent (not exceeding its express terms) possible under applicable law.
|
4.3.
|
Non-Solicitation
. During your employment and for one year following the earlier of (i) termination of your employment for any reason whatsoever or (ii) the last scheduled award vesting date, you shall not:
|
a.
|
induce or attempt to induce any employee of the Company Group to leave the employ of Company Group, or in any way interfere adversely with the relationship between any such employee and Company Group;
|
b.
|
induce or attempt to induce any employee of Company Group to work for, render services to, provide advice to, or supply Confidential Information of Company Group to any third person, firm, or corporation;
|
c.
|
employ, or otherwise pay for services rendered by, any employee of Company Group in any business enterprise with which you may be associated, connected or affiliated;
|
d.
|
induce or attempt to induce any customer, supplier, licensee, licensor or other business relation of Company Group to cease doing business with Company Group, or in any way interfere with the then existing business relationship between any such customer, supplier, licensee, licensor or other business relation and Company Group; or
|
e.
|
assist, solicit, or encourage any other person, directly or indirectly, in carrying out any activity set forth above that would be prohibited by any of the provisions of this Agreement if such activity were carried out by you. In particular, you will not, directly or indirectly, induce any employee of Company Group to carry out any such activity.
|
4.4.
|
Non-Disparagement.
During your employment and for one year following the earlier of (i) termination of your employment for any reason whatsoever or (ii) the last scheduled award vesting date, you shall not make any statements, written or verbal, or cause or encourage others to make any statements, written or verbal, that defame, disparage or in any way criticize the personal or business reputation, practices, or conduct of the Company Group, its employees, directors, and officers. This prohibition extends to statements, written or verbal, made to anyone, including but not limited to, the news media, investors, potential investors, any board of directors or advisory board or directors, industry analysts, competitors, strategic partners, vendors, employees (past and present), and clients.
|
4.5.
|
Violation of Restrictive Covenants
. In consideration of the terms of the Award, you agree to be bound by the Restrictive Covenants set forth above and agree that, if you violate any provision of the Restrictive Covenants, then, notwithstanding any other provision of this Agreement, (a) the Cash Award will be subject to recovery by Best Buy, (b) any unvested Restricted Shares shall be cancelled and forfeited and any rights thereto shall become null and void; and (c) you shall immediately return to the Company any vested Restricted Shares still under your control and shall promptly reimburse to the Company the fair market value (as measured on the vesting date of Restricted Shares,) of any such Shares that are no longer under your control. In addition, if you violate the Non-Disclosure provision, you may be subject to disciplinary action, up to and including employment termination.
|
4.6.
|
Committee Discretion
. You may be released from your Restrictive Covenant under this Article IV only if, and to the extent that, the Committee (or its duly appointed agent) determines in its sole discretion that such action is in the best interests of the Company Group.
|
4.7
|
Recovery Policy.
Amounts paid under the Agreement shall be subject to recovery by Best Buy in accordance with and to the maximum extent required under the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act. As described in Article II, in addition, if you voluntarily terminate employment with the Company Group before the first anniversary of Best Buy's non-interim Chief Executive Officer being appointed, the Cash Award will be subject to recovery by Best Buy.
|
4.8
|
Right of Set-Off
. By accepting this Agreement, you consent to a deduction from any amounts any member of the Company Group owes you from time to time (including amounts owed to you as wages or other compensation, fringe benefits or vacation pay, as well as any other
|
4.9
|
Partial Invalidity
. If any portion of this Article IV is determined by any court of competent jurisdiction to be unenforceable in any respect, it shall be interpreted to be valid to the maximum extent for which it reasonably may be enforced, and enforced as so interpreted, all as determined by such court in such action. You acknowledge the uncertainty of the law in this respect and expressly stipulate that this Agreement is to be given the construction that renders its provisions valid and enforceable to the maximum extent (not exceeding its express terms) possible under applicable law.
|
4.10
|
Remedy for Breach
. You agree that a breach of any of the Restrictive Covenants would cause material and irreparable harm to the Company Group that would be difficult or impossible to measure, and that damages or other legal remedies available to the Company Group for any such injury would, therefore, be an inadequate remedy for any such breach. Accordingly, you agree that if you breach any Restrictive Covenant, the Company Group shall be entitled, in addition to and without limitation upon all other remedies the Company Group may have under this Agreement, at law or otherwise, to obtain injunctive or other appropriate equitable relief, without bond or other security, to restrain any such breach. Such equitable relief in any court shall be available to the Company Group in lieu of, or prior to or pending determination in any arbitration proceeding. You further agree that the duration of the Restrictive Covenant shall be extended by the same amount of time that you are in breach of any Restrictive Covenant.
|
V.
|
General Terms and Conditions
.
|
5.1.
|
Employment and Terms of Plan
. This Agreement does not guarantee your continued employment nor alter the right of any member of the Company Group to terminate your employment at any time. This Award is granted pursuant to the Plan and is subject to its terms. In the event of any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan will govern.
By your acceptance of this Award, you acknowledge receipt of a copy of the Prospectus for the Plan and your agreement to the terms and conditions of the Plan and this Agreement.
|
5.2.
|
Governing Law, Jurisdiction and Venue
. This Agreement is governed by, and subject to, the laws of the State of Minnesota, without regard to the conflict of law provisions, as provided in the Plan. You and Best Buy agree that the state and federal courts located in the State of Minnesota shall have personal jurisdiction over the parties to this Agreement, and that the sole venues to adjudicate any dispute arising under this Agreement shall be the District Courts of Hennepin County, State of Minnesota and the United States District Court for the District of Minnesota; and each party waives any argument that any other forum would be more convenient or proper.
|
5.3.
|
Costs of Enforcement
. In addition to any other remedy to which any member of the Company Group is entitled under this Agreement, you agree that the Company Group shall be entitled to recover from you any and all attorney, expert and consulting fees, costs and disbursements reasonably incurred by the Company Group to enforce any provision of this Agreement, or to otherwise defend itself from any claim brought by you or any of your beneficiaries against any member of the Company Group under any provision of this Agreement.
|
(I)
|
are charged with, convicted of or enter a plea of guilty or
nolo contendere
to: (a) a felony, (b) any crime involving moral turpitude, dishonesty, breach of trust or unethical business conduct, or (c) any crime involving the business of the Company Group;
|
(II)
|
in the performance of your duties for the Company Group or otherwise to the detriment of the Company Group, engage in: (a) dishonesty that is harmful to the Company Group, monetarily or otherwise, (b) willful or gross misconduct, (c) willful or gross neglect, (d) fraud, (e) misappropriation, (f) embezzlement, or (g) theft;
|
(III)
|
disobey the directions of the Board acting within the scope of its authority;
|
(IV)
|
fail to comply with the policies or practices of the Company Group;
|
(V)
|
fail to devote substantially all of your business time and effort to the Company Group;
|
(VI)
|
are adjudicated in any civil suit, or acknowledge in writing in any agreement or stipulation, to have committed any theft, embezzlement, fraud, or other act of dishonesty involving any other person;
|
(VII)
|
are determined, in the sole judgment of the Board or any individual or individuals the Board authorizes to act on its behalf, to have engaged in a pattern of poor performance;
|
(VIII)
|
are determined, in the sole judgment of the Board or any individual or individuals the Board authorizes to act on its behalf, to have engaged in conduct that is harmful to the Company Group, monetarily or otherwise;
|
(IX)
|
breach any provision of this Agreement (including but not limited to Section 4.1, concerning Confidential Information) or any other agreement between you and any member of the Company Group; or
|
(X)
|
engage in any activity intended to benefit any entity at the expense of the Company Group or intended to benefit any competitor of the Company Group.
|
(I)
|
any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of Best Buy representing 50% or more of the combined voting power of Best Buy's then outstanding securities excluding, at the time of their original acquisition, from the calculation of securities beneficially owned by such Person, any securities acquired directly from Best Buy or its Affiliates or in connection with a transaction described in clause (a) of paragraph III below; or
|
(II)
|
individuals who at the Award Date constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of Best Buy) whose appointment or election by the Board or nomination for election by Best Buy's shareholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the Award Date or whose appointment, election or nomination for election was previously so approved or recommended, cease for any reason to constitute a majority thereof; or
|
(III)
|
there is consummated a merger or consolidation of Best Buy or any Affiliate with any other company, other than (a) a merger or consolidation which would result in the voting securities of Best Buy outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of Best Buy or any Affiliate, at least 50% of the combined voting power of the voting securities of Best Buy or such surviving entity or parent thereof outstanding immediately after such merger or consolidation, or (b) a merger or consolidation effected to implement a recapitalization of Best Buy (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly of securities of Best Buy representing 50% or more of the combined voting power of Best Buy's then outstanding securities; or
|
(IV)
|
the shareholders of Best Buy approve a plan of complete liquidation of Best Buy or there is consummated an agreement for the sale or disposition by Best Buy of all or substantially all Best Buy's assets, other than a sale or disposition by Best Buy of all or substantially all of Best Buy's assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by shareholders of Best Buy in substantially the same proportions as their ownership of Best Buy immediately before such sale; or
|
(V)
|
the Board determines in its sole discretion that a change in control of Best Buy has occurred.
|
(VI)
|
Notwithstanding the foregoing, a “Change in Control” will not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of Best Buy immediately before such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of Best Buy immediately following such transaction or series of transactions.
|
(I)
|
own or hold, directly or beneficially, as a shareholder (other than as a shareholder with less than 1% of the outstanding common stock of a publicly traded corporation), option holder, warrant holder, partner, member or other equity or security owner or holder any company or business that derives more than 25% of its revenue from the Restricted Activities (as defined below), or any company or business controlling, controlled by or under common control with any company or business directly engaged in such Restricted Activities (any of the foregoing, a "Restricted Company") or
|
(II)
|
engage or participate as an employee, director, officer, manager, executive, partner, independent contractor, board member, consultant or technical or business advisor (or any foreign equivalents of the foregoing) in the Restricted Activities.
|
|
“Good Reason” will mean the occurrence of any of the following events following a Change in Control, except for the occurrence of such an event in connection with your death, the termination of your employment with the Company Group by your employer (or any successor company or affiliated entity then employing you for Cause, or any termination of your employment for Disability:
|
|
|
(I)
|
the assignment of employment duties or responsibilities that are not substantially comparable or greater in responsibility and status to the employment duties and responsibilities held by you immediately before the Change in Control;
|
(II)
|
a material reduction in your base salary as in effect immediately before the Change in Control; or
|
(III)
|
being required to work in a location more than 50 miles from your office location immediately before the Change in Control, except for requirements of temporary travel on the Company Group's business to an extent substantially consistent with your business travel obligations immediately before the Change in Control.
|
1.
|
The Award and the Plan
. Pursuant to the Best Buy Co., Inc. 2004 Omnibus Stock and Incentive Plan, as amended (the “
Plan
”) and this Long-Term Incentive Program Buy-Out Award Agreement (“
Agreement
”), as of the Award Date set forth above (the “
Award Date
”), Best Buy Co., Inc. (“
Best Buy
”) grants to Hubert Joly (“
you
”) the Awards set forth below (collectively, this “
Award
”):
|
1.1.
|
An option to purchase
700,935
Shares of Best Buy common stock (the “
Option
”) at the option price of
$18.02
per Share;
|
1.2.
|
332,964
time-based restricted stock units payable in one (1) Share for each restricted stock unit becoming vested and nonforfeitable in accordance with the terms of this Award (the “
RSUs
”); and
|
1.3.
|
199,906
of performance stock units payable in one (1) Share for each performance share unit becoming earned (upon attainment of target performance (or such lesser (or no) or greater number of performance stock units as are earned hereunder, all in accordance with Appendix A hereto)), vested and nonforfeitable in accordance with the terms of this Award (the “
PSUs
”).
|
2.
|
Terms of Option Grant
.
|
2.1.
|
Duration, Vesting and Exercisability of Option
. The Option expires on the tenth (10th) anniversary of the Award Date (the “
Expiration Date
”). You may exercise the Option in cumulative installments of one-quarter (1/4) of the Option each, with the first such installment becoming vested and exercisable on the Award Date and the remaining three such installments becoming vested and exercisable successively on each of the first three anniversaries of the Award Date, provided that you are employed on the date such installment is scheduled to so vest (except as provided in Section 3.4(a)(ii)). The Option may only be exercised by you during your lifetime, and may not be assigned or transferred other than by will or the laws of descent and distribution.
|
2.2.
|
Exercise and Tax Withholding
. The Option may be exercised in whole or in part by written notice to Best Buy (through the Plan administrator or other means as shall be specified by Best Buy from time-to-time) stating the number of Shares to be purchased under the Option and the method of payment. The notice must be accompanied by payment in full of the exercise price for all Shares designated in the notice. Payment of the exercise price may be made by cash, check, delivery of previously owned Shares having a Fair Market Value on the date of exercise that is equal to the exercise price, or withholding of Shares that would otherwise be issued upon such exercise having a Fair Market Value on the date of exercise that is equal to the exercise price, or a combination thereof. The Option is a Non-Qualified Stock Option that is not eligible for treatment as a qualified or incentive stock option for federal income tax purposes. You are liable for any federal and state income or other taxes applicable upon the grant or exercise of the Option or any disposition of the underlying Shares; and you acknowledge that you should consult with your own tax advisor regarding the applicable tax consequences. Prior to exercising the Option, you will pay or make adequate arrangements satisfactory to Best Buy to satisfy all applicable taxes. In this regard, you authorize Best Buy, or its respective agents, at their discretion, to satisfy the obligations with regard to all taxes by one or a combination of the following: (i) withholding from your wages or other cash compensation paid to you by Best Buy; or (ii) withholding from proceeds of the sale of shares of Best Buy common stock acquired at exercise of the Option either through a voluntary sale or through a mandatory sale arranged by Best Buy (on your behalf pursuant to this authorization); or (iii) withholding in shares of Best Buy common stock to be issued at exercise of the Option. You have no rights in the Shares subject to the Option until such Shares are received by you upon exercise of the Option.
|
2.3.
|
Limited Exercise Rights after your Qualified Retirement, Disability, Death or other Termination of Employment
. Your employment with the Company Group (as defined in Appendix B) may be terminated by your employer at any time for any reason (with or without advance notice). Subject to the forfeiture provisions of Article 4 and the exceptions in paragraph (e) of this Section 2.3:
|
(a)
|
If you resign or otherwise voluntarily terminate your employment with the Company Group without Good Reason (and not due to Disability, death or Qualified Retirement), you will have 90 days after the date of your termination to exercise the Option, to the extent the Option had become vested as of your termination date.
|
(b)
|
Upon your Qualified Retirement (as defined in Appendix B) from the Company Group, you will have three (3) years after the effective date of your retirement to exercise the Option, to the extent the Option had become vested as of your termination date.
|
(c)
|
If you die while employed by the Company Group, the representative of your estate or your heirs will have one (1) year after the date of your death to exercise the Option, to the extent the Option had become vested as of the date of your death. If you become Disabled while employed with the Company Group, you will have one (1) year after the effective date of such classification to exercise the Option, to the extent the Option had become vested as of your termination date.
|
(d)
|
If your employment with the Company Group is terminated by your employer without Cause (and not due to your Disability), or if you resign or otherwise voluntarily terminate your employment with the Company Group for Good Reason, you will have two (2) years after the date of your termination to exercise the Option, to the extent the Option had become vested as of your termination date.
|
(e)
|
In no case, however, may the Option be exercised after the Expiration Date. The Option may not be exercised following termination of your employment with the Company Group for Cause.
|
3.
|
Terms of Time-Based Restricted Stock Units and Performance-Based Restricted Stock Units
.
|
3.1.
|
Time-Based Restricted Stock Units: Vesting and Payment
.
|
(a)
|
Until your RSUs vest as provided below, they are subject to the restrictions described in Section 3.3 during the period (the “
Restricted Period
”) beginning on the Award Date and ending three years later. Except as otherwise provided in Section 3.3, Section 3.4 and Article 4, the RSUs will vest and become nonforfeitable in thirty-six equal monthly installments of
9,249
Shares, with each such installment becoming vested on the
Fourth
day of the month commencing with
October 4, 2012
and each successive month thereafter until becoming fully vested and nonforfeitable, provided that you are employed on the date such installment is scheduled to so vest (except as provided at Section 3.4(a)(i)).
|
(b)
|
RSUs, to the extent vested, will be payable to you, subject to Section 5.4, within 30 days following your separation from service with the Company Group, in the form of either book-entry registration or a stock certificate representing one (1) Share for each restricted stock unit that had so vested.
|
3.2.
|
Performance Share Units: Performance Period; Performance Goals; Vesting; and Payment
.
|
(a)
|
Your PSUs are subject to the Performance Goal during the Performance Period as defined and set forth in Appendix A hereto. Your PSUs also are subject to your continued employment until the last day of the Performance Period, except as set forth in Section 3.4(a)(iii).
|
(b)
|
Provided that you satisfy the continued employment requirement of Section 3.2(a) (or Section 3.4(a)(iii), as may apply), such number of PSUs will become earned, vested and nonforfeitable on the last day of the Performance Period as satisfies the Performance Goal and such earned and vested PSUs will be payable to you thirty (30) days following the last day of the Performance Period (or such earlier date as may apply under Section 3.4(a)(iii)), provided that to the extent that the value of such PSUs exceeds the specified annual calendar year limit in Section 4(d)(ii) of the Plan, the excess shall be paid on January 15
th
of successive calendar years using up in each such year the maximum amount permitted to be paid in each such year under such Section 4(d)(ii) as to performance-based compensation. Payment of your earned and vested PSUs will be in the form of either book-entry registration or a stock certificate representing one (1) Share for each performance share unit that had become so earned and vested. The Compensation and Human Resources
|
(c)
|
The foregoing provisions of this Section 3.2 to the contrary notwithstanding, upon the occurrence of a Change of Control, the Compensation and Human Resources Committee will thereupon determine and certify, in accordance with Section 162(m) and based on the Performance Goal as set forth in Appendix A as of the date of such Change of Control, whether and to what extent the Performance Goal may have been attained through the date of such Change of Control, and you will be deemed to have earned the greater of (i) such number of PSUs as would have been earned based on the attainment of Target performance under the Performance Goal or (ii) such number of PSUs as would be earned based on the actual Performance Goal attained as so certified by the Compensation and Human Resources Committee. In such event, your obligation to continue employment until the last day of the Performance Period under Section 3.2(a) (except as provided in Section 3.4(a)(iii)) shall be unaffected by such Change of Control. “Change of Control” has the meaning defined in Appendix B hereto.
|
3.3.
|
Limit on Transfers
. You may not sell, assign, pledge or otherwise transfer the RSUs or PSUs at any time (or any interest in or right therein), other than by will or the laws of descent and distribution, and any such attempted transfer will be void.
|
3.4.
|
Effect of Retirement, Disability, Death or other Termination of Employment
. Your employment with the Company Group may be terminated by your employer at any time in accordance with the Employment Agreement. Subject to the forfeiture provisions of Article 4:
|
(a)
|
If your employment with the Company Group is terminated by reason of your death, you become Disabled, your employment is involuntarily terminated by the Company Group without Cause or you voluntarily terminate your employment for Good Reason at any time before the Option or the RSUs, respectively, have become fully vested or the PSUs have become earned and vested:
|
i.
|
the unvested RSUs will become fully vested, nonforfeitable and payable to you in accordance with Section 3.1 hereof;
|
ii.
|
the unvested portion of the Option will become fully vested and exercisable on the date of termination;
|
iii.
|
the PSUs will become earned (to the extent not previously deemed earned under Section 3.2(c)) to the extent that the Performance Goals have been attained through the date of termination and a pro rata portion of such earned number of PSUs will become immediately vested and payable to you within thirty (30) days following the date of termination or the earliest such later date as is required to satisfy Section 409A of the Code; provided that to the extent the value of such PSUs exceeds the specified annual calendar year limit in Section 4(d)(ii) of the Plan, the excess shall be paid on January 15
th
of successive calendar years using up in each such year the maximum amount permitted to be paid in such year under such Section 4(d)(ii) as to performance-based compensation; and further provided that, if such termination is within two (2) years after a Change in Control that satisfies the requirements of Treasury Regulation 1.409A-3(i)(5), the full amount shall be paid on such termination or such later date as is required to comply with Section 409A of the Code. For such purpose, (x) the Compensation and Human Resources Committee will thereupon determine and certify the attainment of the Performance Goals and the resulting number, if any, of PSUs as have become earned and (y) the pro rata portion will equal the fraction of such earned PSUs the numerator of which is the number of days you were employed through the date of termination and the denominator of which is 1,095; and
|
iv.
|
Your right to vesting, and consequent payment, of the unvested portion of your Option, RSUs and PSUs under this Section 3.4, pursuant to an involuntary termination of your employment by the Company Group without Cause (and not due to Disability) or your voluntary termination for Good Reason, is subject to your providing a complete release of all claims to the Company Group, not later than forty-five (45) days following the date of your termination of employment, in the form of Agreement and Release of Claims set forth as Exhibit B of the Employment Agreement.
|
v.
|
For purposes of this Award, “Cause”, “Good Reason” and “Disability” have the meaning as defined in the Employment Agreement.
|
(b)
|
If your employment is involuntarily terminated by the Company Group for Cause, the vested but unexercised portion of the Option will be immediately forfeited and such portion of the Option will be immediately cancelled. You may retain all other vested equity.
|
(c)
|
If your employment terminates for any reason other than as set forth in Section 3.4(a) or 3.4(b), such portion of each of the Option, RSUs and PSUs, that had not previously become vested, and earned (as applies), on the date of termination will be immediately forfeited and such portion of the Award will be immediately cancelled.
|
3.5.
|
Dividend Equivalents
. You will be entitled to an accrual of dividend equivalents with respect to the RSUs and PSUs under this Award from the Award Date until the date such RSUs and PSUs, respectively, are paid, as follows:
|
(a)
|
As of each dividend date for holders of Shares, a dollar amount equal to the amount of the dividend that would have been paid on the number of Shares equal to the number of RSUs and PSUs, as applies, held by you under this Award as of the close of business on the record date for such dividend will be converted into a number of RSUs or PSUs, as applies, equal to the number of whole and fractional Shares that could have been purchased at the closing price on the dividend payment date with such dollar amount. In the case of any dividend declared on Shares which is payable in Shares, you will be credited with an additional number of RSUs and PSUs, as applies, equal to the product of (x) the number of RSUs or PSUs, as applies then held by you on the related dividend record date and the (y) the number of Shares (including any fraction thereof) distributable as a dividend on a Share.
|
(b)
|
Such accrued dividend equivalents will be paid to you at such time and in accordance with Section 3.1(b), Section 3.2(b) or Section 3.4(a), as applies, but in each such case only to the extent that the RSUs on which such dividend equivalents were credited have become vested and payable and the PSUs on which such dividend equivalents were credited have become earned, vested and payable.
|
3.6.
|
Limitation of Rights Regarding Shares
. Until issuance of the Shares, you will not have any rights of a shareholder with respect to your RSUs or your PSUs.
|
3.7.
|
Income Taxes
. You are liable for any federal and state income or other taxes applicable upon the payment of vested RSUs and of earned and vested PSUs, and your subsequent disposition of any Shares paid with respect to such RSUs that have become vested and PSUs that have become earned and vested; and you acknowledge that you should consult with your own tax advisor regarding the applicable tax consequences. Upon the payment of Shares with respect to your vested RSUs and earned and vested PSUs (including RSUs and PSUs credited as accrued dividend equivalents thereon), Best Buy will withhold from those Shares the number of Shares having a Fair Market Value equal to the amount of the minimum applicable taxes required by Best Buy to be withheld upon the payment of those RSUs and PSUs as apply.
|
4.
|
Restrictive Covenants and Remedies
. By accepting this Award, you agree to the restrictions and agreements contained in Section 11 and Attachment B of the Employment Agreement (“
Restrictive Covenants
”) and the remedies in Section 9 of the Employment Agreement, and you agree that the Restrictive Covenants and the remedies described in such provisions of the Employment Agreement are reasonable and necessary to protect the legitimate interests of the Company Group.
|
5.
|
General Terms and Conditions
.
|
5.1.
|
Employment and Terms of Plan
. This Agreement does not guarantee your continued employment nor alter the right of any member of the Company Group to terminate your employment at any time. This Award is granted pursuant to the Plan and is subject to its terms. In the event of any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan will govern. By your acceptance of this Award, you acknowledge receipt of a copy of the Prospectus for the Plan and your agreement to the terms and conditions of the Plan and this Agreement.
|
5.2.
|
Governing Law, Jurisdiction and Venue
. The Performance Award and the provisions of this Agreement are governed by, and subject to, the laws of the State of Minnesota, without regard to the conflict of law provisions, as provided in the Plan. You and Best Buy agree that the state and federal courts located in the State of Minnesota shall have personal jurisdiction over the parties to this Agreement, and that the sole venues to adjudicate any dispute arising under this Agreement shall be the District Courts of Hennepin County, State of Minnesota and the United States District Court for the District of Minnesota; and each party waives any argument that any other forum would be more convenient or proper. Notwithstanding the foregoing or any provision of the Plan as to determinations, interpretations or disputes, all such determinations, interpretations and/or disputes shall be subject to a
de novo
|
5.3.
|
Section 409A
.
|
(a)
|
Anything herein to the contrary notwithstanding, this Agreement shall be interpreted so as to comply with or satisfy an exemption from Section 409A of the Code and the regulations and guidance promulgated thereunder (collectively, “Section 409A”). The Compensation and Human Resources Committee may in good faith make the minimum modifications to this Agreement as it may deem appropriate to comply with Section 409A while to the maximum extent reasonably possible maintaining the original intent and economic benefit to you and the Company Group of the applicable provision.
|
(b)
|
To the extent required by Section 409A(a)(2)(B)(i), to the extent that you are a specified employee, payment of RSUs and PSUs to you upon your separation from service will be delayed and paid promptly after the earlier of the date that is six (6) months after the date of such separation from service or the date of your death after such separation from service. For purposes hereof, (x) any reference to your termination of employment under this Agreement shall mean your separation from service, (y) the occurrence of your “separation from service” will be determined in accordance with the default provisions of Treasury Regulation Section 1.409A-1(h) and (z) whether you are a “specified employee” will be determined in accordance with the default provisions of Treasury Regulation Section 1.409A-1(i) with the “identification date” to be December 31 and the “effective date” to be the April 1 following the identification date (as such terms are used under such regulation). Notwithstanding anything in this Agreement to the contrary, your employment shall not be deemed to have been terminated unless and until you have incurred a “separation from service” within the meaning of Section 409A.
|
(c)
|
For purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii), your right to receive any installment payments under this Agreement shall be treated as a right to receive a series of separate payments and, accordingly, each installment payment under this Agreement shall at all times be considered a separate and distinct payment.
|
(d)
|
To the extent that the right to payment of your RSUs or your PSUs is subject to your providing a release of claims to the Company Group (under Section 3.4(a)(iv)) that is not revoked, and as a result of the timing of when you provide such release of claims such payment could be made in either of two of your taxable years, such payment shall be made in the later such taxable year.
|
Best Buy Co., Inc.
|
|
By:
|
|
Title:
|
|
|
|
Hubert Joly
|
1.
|
Performance Goal; Performance Period; PSUs Earned
. The number of performance stock units that may be earned under this Award is based on the attainment of the following performance goal:
|
2.
|
Total Shareholder Return” or “TSR”
. Total Shareholder Return” or “TSR” means total shareholder return as applied to Best Buy or each company in the S&P 500 Index, meaning common stock price appreciation from the beginning to the end of the Performance Period, plus dividends and distributions made or declared (assuming for such purpose that such dividends or distributions are reinvested in Best Buy common stock or of any such company in the S&P 500 Index) during the Performance Period, expressed as a percentage return. For purposes of determining common stock price appreciation as applied to Best Buy hereunder, the applicable stock price will be the Fair Market Value (as defined in the Plan) of Best Buy common stock, as applies.
|
3.
|
Calculation
. For purposes of the Award and this Appendix A, the number of PSUs earned will be calculated as follows:
|
4.
|
Rules
. The following rules apply to the computation of the number of PSUs earned:
|
(i)
|
any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of Best Buy representing 50% or more of the combined voting power of Best Buy's then outstanding securities excluding, at the time of their original acquisition, from the calculation of securities beneficially owned by such Person, any securities acquired directly from Best Buy or its Affiliates or in connection with a transaction described in clause (a) of paragraph III below; or
|
(ii)
|
individuals who at the Award Date constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of Best Buy) whose appointment or election by the Board or nomination for election by Best Buy's shareholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the Award Date or whose appointment, election or nomination for election was previously so approved or recommended, cease for any reason to constitute a majority thereof; or
|
(iii)
|
there is consummated a merger or consolidation of Best Buy or any Affiliate with any other company, other than (a) a merger or consolidation which would result in the voting securities of Best Buy outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of Best Buy or any Affiliate, at least 50% of the combined voting power of the voting securities of Best Buy or such surviving entity or parent thereof outstanding immediately after such merger or consolidation, or (b) a merger or consolidation effected to implement a recapitalization of Best Buy (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly of securities of Best Buy representing 50% or more of the combined voting power of Best Buy's then outstanding securities; or
|
(iv)
|
the shareholders of Best Buy approve a plan of complete liquidation of Best Buy or there is consummated an agreement for the sale or disposition by Best Buy of all or substantially all Best Buy's assets, other than a sale or disposition by Best Buy of all or substantially all of Best Buy's assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by shareholders of Best Buy in substantially the same proportions as their ownership of Best Buy immediately before such sale; or
|
(v)
|
the Board determines in its sole discretion that a change in control of Best Buy has occurred.
|
(vi)
|
Notwithstanding the foregoing, a “Change in Control” will not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of Best Buy immediately before such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of Best Buy immediately following such transaction or series of transactions.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Best Buy Co., Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: September 6, 2012
|
/s/ HUBERT JOLY
|
|
Hubert Joly
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Best Buy Co., Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: September 6, 2012
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/s/ JAMES L. MUEHLBAUER
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James L. Muehlbauer
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Executive Vice President — Finance
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and Chief Financial Officer
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Date: September 6, 2012
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/s/ HUBERT JOLY
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Hubert Joly
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President and Chief Executive Officer
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Date: September 6, 2012
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/s/ JAMES L. MUEHLBAUER
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James L. Muehlbauer
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Executive Vice President — Finance
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and Chief Financial Officer
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