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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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Financial Statements
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July 30, 2016
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January 30, 2016
|
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August 1, 2015
|
||||||
Assets
|
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|
||||
Current assets
|
|
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|
||||||
Cash and cash equivalents
|
$
|
1,861
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|
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$
|
1,976
|
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$
|
1,800
|
|
Short-term investments
|
1,590
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|
|
1,305
|
|
|
1,695
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|||
Receivables, net
|
926
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1,162
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|
|
1,025
|
|
|||
Merchandise inventories
|
4,908
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5,051
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4,995
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|
|||
Other current assets
|
409
|
|
|
392
|
|
|
465
|
|
|||
Total current assets
|
9,694
|
|
|
9,886
|
|
|
9,980
|
|
|||
Property and equipment, net
|
2,295
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|
|
2,346
|
|
|
2,235
|
|
|||
Goodwill
|
425
|
|
|
425
|
|
|
425
|
|
|||
Intangibles, net
|
18
|
|
|
18
|
|
|
18
|
|
|||
Other assets
|
822
|
|
|
813
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|
|
868
|
|
|||
Non-current assets held for sale
|
—
|
|
|
31
|
|
|
33
|
|
|||
Total assets
|
$
|
13,254
|
|
|
$
|
13,519
|
|
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$
|
13,559
|
|
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|
||||||
Liabilities and equity
|
|
|
|
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|
||||||
Current liabilities
|
|
|
|
|
|
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|
|
|||
Accounts payable
|
$
|
4,800
|
|
|
$
|
4,450
|
|
|
$
|
4,680
|
|
Unredeemed gift card liabilities
|
369
|
|
|
409
|
|
|
371
|
|
|||
Deferred revenue
|
380
|
|
|
357
|
|
|
316
|
|
|||
Accrued compensation and related expenses
|
272
|
|
|
384
|
|
|
285
|
|
|||
Accrued liabilities
|
840
|
|
|
802
|
|
|
778
|
|
|||
Accrued income taxes
|
96
|
|
|
128
|
|
|
26
|
|
|||
Current portion of long-term debt
|
43
|
|
|
395
|
|
|
382
|
|
|||
Total current liabilities
|
6,800
|
|
|
6,925
|
|
|
6,838
|
|
|||
Long-term liabilities
|
794
|
|
|
877
|
|
|
879
|
|
|||
Long-term debt
|
1,341
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|
|
1,339
|
|
|
1,220
|
|
|||
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, $0.10 par value: Authorized — 1.0 billion shares; Issued and outstanding — 317,000,000, 324,000,000 and 344,000,000 shares, respectively
|
32
|
|
|
32
|
|
|
34
|
|
|||
Prepaid share repurchase
|
—
|
|
|
(55
|
)
|
|
—
|
|
|||
Additional paid-in capital
|
—
|
|
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—
|
|
|
198
|
|
|||
Retained earnings
|
3,991
|
|
|
4,130
|
|
|
4,092
|
|
|||
Accumulated other comprehensive income
|
296
|
|
|
271
|
|
|
298
|
|
|||
Total equity
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4,319
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4,378
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|
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4,622
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|||
Total liabilities and equity
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$
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13,254
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$
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13,519
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$
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13,559
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Three Months Ended
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Six Months Ended
|
||||||||||||
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July 30, 2016
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August 1, 2015
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July 30, 2016
|
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August 1, 2015
|
||||||||
Revenue
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$
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8,533
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$
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8,528
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$
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16,976
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$
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17,086
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Cost of goods sold
|
6,471
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6,433
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12,769
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12,953
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|
||||
Restructuring charges – cost of goods sold
|
—
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(3
|
)
|
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—
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|
5
|
|
||||
Gross profit
|
2,062
|
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|
2,098
|
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|
4,207
|
|
|
4,128
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|
||||
Selling, general and administrative expenses
|
1,773
|
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|
1,811
|
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|
3,517
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|
|
3,577
|
|
||||
Restructuring charges
|
—
|
|
|
(1
|
)
|
|
29
|
|
|
177
|
|
||||
Operating income
|
289
|
|
|
288
|
|
|
661
|
|
|
374
|
|
||||
Other income (expense)
|
|
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|
|
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|
||||||
Gain on sale of investments
|
—
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—
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|
2
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|
|
2
|
|
||||
Investment income and other
|
8
|
|
|
4
|
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|
14
|
|
|
11
|
|
||||
Interest expense
|
(18
|
)
|
|
(20
|
)
|
|
(38
|
)
|
|
(40
|
)
|
||||
Earnings from continuing operations before income tax expense
|
279
|
|
|
272
|
|
|
639
|
|
|
347
|
|
||||
Income tax expense
|
97
|
|
|
108
|
|
|
231
|
|
|
146
|
|
||||
Net earnings from continuing operations
|
182
|
|
|
164
|
|
|
408
|
|
|
201
|
|
||||
Gain from discontinued operations (Note 2), net of tax benefit (expense) of $(10), $-, $(7) and $3, respectively
|
16
|
|
|
—
|
|
|
19
|
|
|
92
|
|
||||
Net earnings
|
$
|
198
|
|
|
$
|
164
|
|
|
$
|
427
|
|
|
$
|
293
|
|
|
|
|
|
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|
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|
||||||||
Basic earnings per share
|
|
|
|
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
0.57
|
|
|
$
|
0.47
|
|
|
$
|
1.27
|
|
|
$
|
0.57
|
|
Discontinued operations
|
0.05
|
|
|
—
|
|
|
0.06
|
|
|
0.26
|
|
||||
Basic earnings per share
|
$
|
0.62
|
|
|
$
|
0.47
|
|
|
$
|
1.33
|
|
|
$
|
0.83
|
|
|
|
|
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|
||||||||
Diluted earnings per share
|
|
|
|
|
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|
||||||||
Continuing operations
|
$
|
0.56
|
|
|
$
|
0.46
|
|
|
$
|
1.26
|
|
|
$
|
0.57
|
|
Discontinued operations
|
0.05
|
|
|
—
|
|
|
0.05
|
|
|
0.25
|
|
||||
Diluted earnings per share
|
$
|
0.61
|
|
|
$
|
0.46
|
|
|
$
|
1.31
|
|
|
$
|
0.82
|
|
|
|
|
|
|
|
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|
||||||||
Dividends declared per common share
|
$
|
0.28
|
|
|
$
|
0.23
|
|
|
$
|
1.01
|
|
|
$
|
0.97
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
320.8
|
|
|
349.6
|
|
|
322.2
|
|
|
351.0
|
|
||||
Diluted
|
322.9
|
|
|
353.9
|
|
|
324.8
|
|
|
355.8
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 30, 2016
|
|
August 1, 2015
|
|
July 30, 2016
|
|
August 1, 2015
|
||||||||
Net earnings
|
$
|
198
|
|
|
$
|
164
|
|
|
$
|
427
|
|
|
$
|
293
|
|
Foreign currency translation adjustments
|
(20
|
)
|
|
(32
|
)
|
|
25
|
|
|
(17
|
)
|
||||
Reclassification of foreign currency translation adjustments into earnings due to sale of business
|
—
|
|
|
—
|
|
|
—
|
|
|
(67
|
)
|
||||
Comprehensive income
|
$
|
178
|
|
|
$
|
132
|
|
|
$
|
452
|
|
|
$
|
209
|
|
|
Best Buy Co., Inc.
|
|
|
|
|
|||||||||||||||||||||||||||||
|
Common
Shares
|
|
Common
Stock
|
|
Prepaid Share Repurchase
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
Best Buy
Co., Inc.
|
|
Non-
controlling
Interests
|
|
Total
|
|||||||||||||||||
Balances at January 30, 2016
|
324
|
|
|
$
|
32
|
|
|
$
|
(55
|
)
|
|
$
|
—
|
|
|
$
|
4,130
|
|
|
$
|
271
|
|
|
$
|
4,378
|
|
|
$
|
—
|
|
|
$
|
4,378
|
|
Net earnings, six months ended July 30, 2016
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
427
|
|
|
—
|
|
|
427
|
|
|
—
|
|
|
427
|
|
||||||||
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
—
|
|
|
25
|
|
|
25
|
|
|
—
|
|
|
25
|
|
||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
57
|
|
|
—
|
|
|
—
|
|
|
57
|
|
|
—
|
|
|
57
|
|
||||||||
Restricted stock vested and stock options exercised
|
3
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
20
|
|
||||||||
Settlement of accelerated share repurchase
|
—
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
55
|
|
||||||||
Issuance of common stock under employee stock purchase plan
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||||||
Tax benefit from stock options exercised, restricted stock vesting and employee stock purchase plan
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||||||
Common stock dividends, $1.01 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(328
|
)
|
|
—
|
|
|
(328
|
)
|
|
—
|
|
|
(328
|
)
|
||||||||
Repurchase of common stock
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
(84
|
)
|
|
(238
|
)
|
|
—
|
|
|
(322
|
)
|
|
—
|
|
|
(322
|
)
|
||||||||
Balances at July 30, 2016
|
317
|
|
|
$
|
32
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,991
|
|
|
$
|
296
|
|
|
$
|
4,319
|
|
|
$
|
—
|
|
|
$
|
4,319
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balances at January 31, 2015
|
352
|
|
|
$
|
35
|
|
|
$
|
—
|
|
|
$
|
437
|
|
|
$
|
4,141
|
|
|
$
|
382
|
|
|
$
|
4,995
|
|
|
$
|
5
|
|
|
$
|
5,000
|
|
Net earnings, six months ended August 1, 2015
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
293
|
|
|
—
|
|
|
293
|
|
|
—
|
|
|
293
|
|
||||||||
Other comprehensive (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(17
|
)
|
|
(17
|
)
|
|
—
|
|
|
(17
|
)
|
||||||||
Reclassification of foreign currency translation adjustments into earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(67
|
)
|
|
(67
|
)
|
|
—
|
|
|
(67
|
)
|
||||||||
Sale of noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
55
|
|
||||||||
Restricted stock vested and stock options exercised
|
1
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
24
|
|
||||||||
Issuance of common stock under employee stock purchase plan
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||||||
Tax benefit from stock options exercised, restricted stock vesting and employee stock purchase plan
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||||
Common stock dividends, $0.97 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(342
|
)
|
|
—
|
|
|
(342
|
)
|
|
—
|
|
|
(342
|
)
|
||||||||
Repurchase of common stock
|
(9
|
)
|
|
(1
|
)
|
|
—
|
|
|
(323
|
)
|
|
—
|
|
|
—
|
|
|
(324
|
)
|
|
—
|
|
|
(324
|
)
|
||||||||
Balances at August 1, 2015
|
344
|
|
|
$
|
34
|
|
|
$
|
—
|
|
|
$
|
198
|
|
|
$
|
4,092
|
|
|
$
|
298
|
|
|
$
|
4,622
|
|
|
$
|
—
|
|
|
$
|
4,622
|
|
|
Six Months Ended
|
||||||
|
July 30, 2016
|
|
August 1, 2015
|
||||
Operating activities
|
|
|
|
||||
Net earnings
|
$
|
427
|
|
|
$
|
293
|
|
Adjustments to reconcile net earnings to total cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation
|
327
|
|
|
326
|
|
||
Restructuring charges
|
29
|
|
|
182
|
|
||
Gain on sale of business, net
|
—
|
|
|
(99
|
)
|
||
Stock-based compensation
|
57
|
|
|
55
|
|
||
Deferred income taxes
|
—
|
|
|
(41
|
)
|
||
Other, net
|
(38
|
)
|
|
10
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables
|
240
|
|
|
268
|
|
||
Merchandise inventories
|
160
|
|
|
168
|
|
||
Other assets
|
(29
|
)
|
|
(9
|
)
|
||
Accounts payable
|
355
|
|
|
(335
|
)
|
||
Other liabilities
|
(159
|
)
|
|
(284
|
)
|
||
Income taxes
|
(81
|
)
|
|
(226
|
)
|
||
Total cash provided by operating activities
|
1,288
|
|
|
308
|
|
||
|
|
|
|
||||
Investing activities
|
|
|
|
|
|
||
Additions to property and equipment
|
(276
|
)
|
|
(293
|
)
|
||
Purchases of investments
|
(1,388
|
)
|
|
(1,303
|
)
|
||
Sales of investments
|
1,112
|
|
|
1,064
|
|
||
Proceeds from sale of business, net of cash transferred upon sale
|
—
|
|
|
92
|
|
||
Proceeds from property disposition
|
56
|
|
|
—
|
|
||
Change in restricted assets
|
(4
|
)
|
|
(46
|
)
|
||
Settlement of net investment hedges
|
5
|
|
|
8
|
|
||
Total cash used in investing activities
|
(495
|
)
|
|
(478
|
)
|
||
|
|
|
|
||||
Financing activities
|
|
|
|
|
|
||
Repurchase of common stock
|
(271
|
)
|
|
(321
|
)
|
||
Repayments of debt
|
(374
|
)
|
|
(13
|
)
|
||
Dividends paid
|
(328
|
)
|
|
(341
|
)
|
||
Issuance of common stock
|
23
|
|
|
28
|
|
||
Other, net
|
17
|
|
|
7
|
|
||
Total cash used in financing activities
|
(933
|
)
|
|
(640
|
)
|
||
Effect of exchange rate changes on cash
|
25
|
|
|
(16
|
)
|
||
Decrease in cash and cash equivalents
|
(115
|
)
|
|
(826
|
)
|
||
Cash and cash equivalents at beginning of period, excluding held for sale
|
1,976
|
|
|
2,432
|
|
||
Cash and cash equivalents held for sale at beginning of period
|
—
|
|
|
194
|
|
||
Cash and cash equivalents at end of period
|
$
|
1,861
|
|
|
$
|
1,800
|
|
1.
|
Basis of Presentation
|
Balance Sheet
|
August 1, 2015 Reported
|
|
ASU 2015-03 & 2015-15 Adjustments
|
|
ASU 2015-17 Adjustments
|
|
August 1, 2015 Adjusted
|
||||||||
Other current assets
|
$
|
730
|
|
|
$
|
(2
|
)
|
|
$
|
(263
|
)
|
|
$
|
465
|
|
Other assets
|
610
|
|
|
(5
|
)
|
|
263
|
|
|
868
|
|
||||
Total assets
|
$
|
13,566
|
|
|
$
|
(7
|
)
|
|
$
|
—
|
|
|
$
|
13,559
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term debt
|
$
|
1,227
|
|
|
$
|
(7
|
)
|
|
$
|
—
|
|
|
$
|
1,220
|
|
Total liabilities & equity
|
$
|
13,566
|
|
|
$
|
(7
|
)
|
|
$
|
—
|
|
|
$
|
13,559
|
|
2.
|
Discontinued Operations
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 30, 2016
|
|
August 1, 2015
|
|
July 30, 2016
|
|
August 1, 2015
|
||||||||
Revenue
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
217
|
|
Gain (loss) from discontinued operations before income tax benefit (expense)
|
26
|
|
|
—
|
|
|
26
|
|
|
(10
|
)
|
||||
Income tax benefit (expense)
|
(10
|
)
|
|
—
|
|
|
(7
|
)
|
|
3
|
|
||||
Gain on sale of discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
99
|
|
||||
Net gain from discontinued operations
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
92
|
|
•
|
Quoted prices for similar assets or liabilities in active markets;
|
•
|
Quoted prices for identical or similar assets or liabilities 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 at
|
||||||||||
|
Fair Value Hierarchy
|
|
July 30, 2016
|
|
January 30, 2016
|
|
August 1, 2015
|
||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|||
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|||
Money market funds
|
Level 1
|
|
$
|
87
|
|
|
$
|
51
|
|
|
$
|
21
|
|
Commercial paper
|
Level 2
|
|
—
|
|
|
265
|
|
|
65
|
|
|||
Time deposits
|
Level 2
|
|
169
|
|
|
306
|
|
|
62
|
|
|||
Short-term investments
|
|
|
|
|
|
|
|
||||||
Corporate bonds
|
Level 2
|
|
6
|
|
|
193
|
|
|
402
|
|
|||
Commercial paper
|
Level 2
|
|
170
|
|
|
122
|
|
|
240
|
|
|||
Time deposits
|
Level 2
|
|
1,414
|
|
|
990
|
|
|
1,053
|
|
|||
Other current assets
|
|
|
|
|
|
|
|
|
|||||
Commercial paper
|
Level 2
|
|
60
|
|
|
—
|
|
|
—
|
|
|||
Foreign currency derivative instruments
|
Level 2
|
|
1
|
|
|
18
|
|
|
21
|
|
|||
Time deposits
|
Level 2
|
|
79
|
|
|
79
|
|
|
90
|
|
|||
Other assets
|
|
|
|
|
|
|
|
||||||
Interest rate swap derivative instruments
|
Level 2
|
|
27
|
|
|
25
|
|
|
13
|
|
|||
Auction rate securities
|
Level 3
|
|
2
|
|
|
2
|
|
|
2
|
|
|||
Marketable securities that fund deferred compensation
|
Level 1
|
|
95
|
|
|
96
|
|
|
98
|
|
|||
|
|
|
|
|
|
|
|
||||||
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|||
Accrued Liabilities
|
|
|
|
|
|
|
|
|
|
|
|||
Foreign currency derivative instruments
|
Level 2
|
|
5
|
|
|
1
|
|
|
—
|
|
|
Impairments
|
|
Remaining Net Carrying Value
(1)
|
||||||||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
|
||||||||||||||||
|
July 30, 2016
|
|
August 1, 2015
|
|
July 30, 2016
|
|
August 1, 2015
|
|
July 30, 2016
|
|
August 1, 2015
|
||||||||||||
Property and equipment (non-restructuring)
|
$
|
3
|
|
|
$
|
15
|
|
|
$
|
8
|
|
|
$
|
26
|
|
|
$
|
—
|
|
|
$
|
9
|
|
Restructuring activities
(2)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Tradename
|
—
|
|
|
—
|
|
|
—
|
|
|
40
|
|
|
—
|
|
|
—
|
|
||||||
Property and equipment
|
—
|
|
|
1
|
|
|
7
|
|
|
30
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
3
|
|
|
$
|
16
|
|
|
$
|
15
|
|
|
$
|
96
|
|
|
$
|
—
|
|
|
$
|
9
|
|
(1)
|
Remaining net carrying value approximates fair value. Because assets subject to long-lived asset impairment are not measured at fair value on a recurring basis, certain fair value measurements presented in the table may reflect values at earlier measurement dates and may no longer represent the fair values at
July 30, 2016
, and
August 1, 2015
.
|
(2)
|
See Note 5,
Restructuring Charges
, for additional information.
|
|
Goodwill
|
|
Indefinite-lived Tradenames
|
||||||||||||
|
Domestic
|
|
Domestic
|
|
International
|
|
Total
|
||||||||
Balances at January 31, 2015
|
$
|
425
|
|
|
$
|
18
|
|
|
$
|
39
|
|
|
$
|
57
|
|
Changes in foreign currency exchange rates
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Canada brand restructuring
(1)
|
—
|
|
|
—
|
|
|
(40
|
)
|
|
(40
|
)
|
||||
Balances at August 1, 2015
|
$
|
425
|
|
|
$
|
18
|
|
|
$
|
—
|
|
|
$
|
18
|
|
(1)
|
Represents the Future Shop tradename impairment as a result of the Canadian brand consolidation in the first quarter of fiscal 2016. See Note 5,
Restructuring Charges
, for further discussion of the Canadian brand consolidation.
|
|
July 30, 2016
|
|
January 30, 2016
|
|
August 1, 2015
|
||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Cumulative
Impairment
|
|
Gross
Carrying
Amount
|
|
Cumulative
Impairment
|
|
Gross
Carrying
Amount
|
|
Cumulative
Impairment
|
||||||||||||
Goodwill
|
$
|
1,100
|
|
|
$
|
(675
|
)
|
|
$
|
1,100
|
|
|
$
|
(675
|
)
|
|
$
|
1,100
|
|
|
$
|
(675
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 30, 2016
|
|
August 1, 2015
|
|
July 30, 2016
|
|
August 1, 2015
|
||||||||
Renew Blue Phase 2
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
25
|
|
|
$
|
—
|
|
Canadian brand consolidation
|
2
|
|
|
(4
|
)
|
|
1
|
|
|
184
|
|
||||
Renew Blue
(1)
|
—
|
|
|
—
|
|
|
3
|
|
|
(2
|
)
|
||||
Other restructuring activities
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total restructuring charges
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
$
|
29
|
|
|
$
|
182
|
|
(1)
|
Represents activity related to our remaining vacant space liability, primarily in our International segment, for our Renew Blue restructuring program which began in the fourth quarter of fiscal 2013. We may continue to incur immaterial adjustments to the liability for changes in sublease assumptions or potential lease buyouts. In addition, lease payments for vacated stores will continue until leases expire or are terminated. The remaining vacant space liability was
$10 million
at
July 30, 2016
.
|
(2)
|
Represents activity related to our remaining vacant space liability for U.S. large-format store closures in fiscal 2013. We may continue to incur immaterial adjustments to the liability for changes in sublease assumptions or potential lease buyouts. In addition, lease payments for vacated stores will continue until leases expire or are terminated. The remaining vacant space liability was
$14 million
at
July 30, 2016
.
|
|
Domestic
|
||||||
|
July 30, 2016
|
||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||
Property and equipment impairments
|
$
|
—
|
|
|
$
|
7
|
|
Termination benefits
|
(2
|
)
|
|
18
|
|
||
Total Renew Blue - Phase 2 restructuring charges
|
$
|
(2
|
)
|
|
$
|
25
|
|
|
Termination
Benefits
|
||
Balances at January 30, 2016
|
$
|
—
|
|
Charges
|
19
|
|
|
Cash payments
|
(15
|
)
|
|
Adjustments
(1)
|
(2
|
)
|
|
Balances at July 30, 2016
|
$
|
2
|
|
|
International
|
||||||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
|
|
||||||||||||||
|
July 30, 2016
|
|
August 1, 2015
|
|
July 30, 2016
|
|
August 1, 2015
|
|
Cumulative Amount
|
||||||||||
Inventory write-downs
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
3
|
|
Property and equipment impairments
|
—
|
|
|
1
|
|
|
—
|
|
|
30
|
|
|
30
|
|
|||||
Tradename impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
40
|
|
|
40
|
|
|||||
Termination benefits
|
—
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
25
|
|
|||||
Facility closure and other costs
|
2
|
|
|
(2
|
)
|
|
1
|
|
|
85
|
|
|
103
|
|
|||||
Total Canadian brand consolidation restructuring charges
|
$
|
2
|
|
|
$
|
(4
|
)
|
|
$
|
1
|
|
|
$
|
184
|
|
|
$
|
201
|
|
|
Termination
Benefits
|
|
Facility
Closure and
Other Costs
|
|
Total
|
||||||
Balances at January 30, 2016
|
$
|
2
|
|
|
$
|
64
|
|
|
$
|
66
|
|
Charges
|
—
|
|
|
1
|
|
|
1
|
|
|||
Cash payments
|
(1
|
)
|
|
(18
|
)
|
|
(19
|
)
|
|||
Adjustments
(1)
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Changes in foreign currency exchange rates
|
—
|
|
|
4
|
|
|
4
|
|
|||
Balances at July 30, 2016
|
$
|
1
|
|
|
$
|
50
|
|
|
$
|
51
|
|
|
Termination
Benefits
|
|
Facility
Closure and
Other Costs
|
|
Total
|
||||||
Balances at January 31, 2015
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Charges
|
27
|
|
|
104
|
|
|
131
|
|
|||
Cash payments
|
(21
|
)
|
|
(18
|
)
|
|
(39
|
)
|
|||
Adjustments
(1)
|
(2
|
)
|
|
(4
|
)
|
|
(6
|
)
|
|||
Changes in foreign currency exchange rates
|
—
|
|
|
(3
|
)
|
|
(3
|
)
|
|||
Balances at August 1, 2015
|
$
|
4
|
|
|
$
|
79
|
|
|
$
|
83
|
|
|
July 30, 2016
|
|
January 30, 2016
|
|
August 1, 2015
|
||||||
2016 Notes
|
$
|
—
|
|
|
$
|
350
|
|
|
$
|
350
|
|
2018 Notes
|
500
|
|
|
500
|
|
|
500
|
|
|||
2021 Notes
|
650
|
|
|
650
|
|
|
650
|
|
|||
Interest rate swap valuation adjustments
|
27
|
|
|
25
|
|
|
13
|
|
|||
Subtotal
|
1,177
|
|
|
1,525
|
|
|
1,513
|
|
|||
Debt discounts and issuance costs
|
(6
|
)
|
|
(7
|
)
|
|
(8
|
)
|
|||
Financing lease obligations
|
181
|
|
|
178
|
|
|
52
|
|
|||
Capital lease obligations
|
32
|
|
|
38
|
|
|
45
|
|
|||
Total long-term debt
|
1,384
|
|
|
1,734
|
|
|
1,602
|
|
|||
Less: current portion
(1)
|
(43
|
)
|
|
(395
|
)
|
|
(382
|
)
|
|||
Total long-term debt, less current portion
|
$
|
1,341
|
|
|
$
|
1,339
|
|
|
$
|
1,220
|
|
(1)
|
Our 2016 Notes, due March 15, 2016, were classified in our current portion of long-term debt as of
January 30, 2016
and
August 1, 2015
, respectively. In March 2016, we repaid the 2016 Notes using existing cash resources.
|
|
July 30, 2016
|
|
January 30, 2016
|
|
August 1, 2015
|
||||||||||||||||||
Contract Type
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
||||||||||||
Derivatives designated as net investment hedges
(1)
|
$
|
1
|
|
|
$
|
5
|
|
|
$
|
15
|
|
|
$
|
1
|
|
|
$
|
17
|
|
|
$
|
—
|
|
Derivatives designated as interest rate swaps
(2)
|
27
|
|
|
—
|
|
|
25
|
|
|
—
|
|
|
13
|
|
|
—
|
|
||||||
No hedge designation (foreign exchange forward contracts)
(1)
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
4
|
|
|
—
|
|
||||||
Total
|
$
|
28
|
|
|
$
|
5
|
|
|
$
|
43
|
|
|
$
|
1
|
|
|
$
|
34
|
|
|
$
|
—
|
|
(1)
|
The fair value is recorded in other current assets or accrued liabilities.
|
(2)
|
The fair value is recorded in other assets or long-term liabilities.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||||||
|
July 30, 2016
|
|
August 1, 2015
|
|
July 30, 2016
|
|
August 1, 2015
|
||||||||||||||||||||||||
Contract Type
|
Pre-tax Gain(Loss) Recognized in OCI
|
|
Gain(Loss) Reclassified from Accumulated OCI to Earnings (Effective Portion)
|
|
Pre-tax Gain(Loss) Recognized in OCI
|
|
Gain(Loss) Reclassified from Accumulated OCI to Earnings (Effective Portion)
|
|
Pre-tax Gain(Loss) Recognized in OCI
|
|
Gain(Loss) Reclassified from Accumulated OCI to Earnings (Effective Portion)
|
|
Pre-tax Gain(Loss) Recognized in OCI
|
|
Gain(Loss) Reclassified from Accumulated OCI to Earnings (Effective Portion)
|
||||||||||||||||
Derivatives designated as net investment hedges
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
(16
|
)
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
Gain (Loss) Recognized within SG&A
|
||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
Contract Type
|
July 30, 2016
|
|
August 1, 2015
|
|
July 30, 2016
|
|
August 1, 2015
|
||||||||
No hedge designation (foreign exchange forward contracts)
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
(3
|
)
|
|
$
|
(4
|
)
|
|
Gain (Loss) Recognized within Interest Expense
|
||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
Contract Type
|
July 30, 2016
|
|
August 1, 2015
|
|
July 30, 2016
|
|
August 1, 2015
|
||||||||
Interest rate swap gain
|
$
|
12
|
|
|
$
|
8
|
|
|
$
|
2
|
|
|
$
|
12
|
|
Adjustments to carrying value of long-term debt
|
(12
|
)
|
|
(8
|
)
|
|
(2
|
)
|
|
(12
|
)
|
||||
Net impact on Condensed Consolidated Statements of Earnings
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Notional Amount
|
||||||||||
Contract Type
|
July 30, 2016
|
|
January 30, 2016
|
|
August 1, 2015
|
||||||
Derivatives designated as net investment hedges
|
$
|
203
|
|
|
$
|
208
|
|
|
$
|
207
|
|
Derivatives designated as interest rate swaps
|
750
|
|
|
750
|
|
|
750
|
|
|||
No hedge designation (foreign exchange forward contracts)
|
41
|
|
|
94
|
|
|
163
|
|
|||
Total
|
$
|
994
|
|
|
$
|
1,052
|
|
|
$
|
1,120
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 30, 2016
|
|
August 1, 2015
|
|
July 30, 2016
|
|
August 1, 2015
|
||||||||
Numerator
|
|
|
|
|
|
|
|
|
|
||||||
Net earnings from continuing operations
|
$
|
182
|
|
|
$
|
164
|
|
|
$
|
408
|
|
|
$
|
201
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Denominator
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding
|
320.8
|
|
|
349.6
|
|
|
322.2
|
|
|
351.0
|
|
||||
Dilutive effect of stock compensation plan awards
|
2.1
|
|
|
4.3
|
|
|
2.6
|
|
|
4.8
|
|
||||
Weighted-average common shares outstanding, assuming dilution
|
322.9
|
|
|
353.9
|
|
|
324.8
|
|
|
355.8
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net earnings per share from continuing operations
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.57
|
|
|
$
|
0.47
|
|
|
$
|
1.27
|
|
|
$
|
0.57
|
|
Diluted
|
$
|
0.56
|
|
|
$
|
0.46
|
|
|
$
|
1.26
|
|
|
$
|
0.57
|
|
|
Foreign Currency Translation
|
||
Balances at April 30, 2016
|
$
|
316
|
|
Foreign currency translation adjustments
|
(20
|
)
|
|
Balances at July 30, 2016
|
$
|
296
|
|
|
|
||
|
Foreign Currency Translation
|
||
Balances at January 30, 2016
|
$
|
271
|
|
Foreign currency translation adjustments
|
25
|
|
|
Balances at July 30, 2016
|
$
|
296
|
|
|
|
||
|
Foreign Currency Translation
|
||
Balances at May 2, 2015
|
$
|
330
|
|
Foreign currency translation adjustments
|
(32
|
)
|
|
Balances at August 1, 2015
|
$
|
298
|
|
|
|
||
|
Foreign Currency Translation
|
||
Balances at January 31, 2015
|
$
|
382
|
|
Foreign currency translation adjustments
|
(17
|
)
|
|
Reclassification of foreign currency translation adjustments into earnings due to sale of business
|
(67
|
)
|
|
Balances at August 1, 2015
|
$
|
298
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 30, 2016
|
|
August 1, 2015
|
|
July 30, 2016
|
|
August 1, 2015
|
||||||||
Total cost of shares repurchased
|
|
|
|
|
|
|
|
||||||||
Open market
(1)
|
$
|
221
|
|
|
$
|
324
|
|
|
$
|
277
|
|
|
$
|
324
|
|
Settlement of January 2016 ASR
|
—
|
|
|
—
|
|
|
45
|
|
|
—
|
|
||||
Total
|
$
|
221
|
|
|
$
|
324
|
|
|
$
|
322
|
|
|
$
|
324
|
|
|
|
|
|
|
|
|
|
||||||||
Average price per share
|
|
|
|
|
|
|
|
||||||||
Open market
|
$
|
30.65
|
|
|
$
|
34.02
|
|
|
$
|
30.98
|
|
|
$
|
34.02
|
|
Settlement of January 2016 ASR
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
28.55
|
|
|
$
|
—
|
|
Average
|
$
|
30.65
|
|
|
$
|
34.02
|
|
|
$
|
30.62
|
|
|
$
|
34.02
|
|
|
|
|
|
|
|
|
|
||||||||
Number of shares repurchased and retired
|
|
|
|
|
|
|
|
||||||||
Open market
(1)
|
7.2
|
|
|
9.5
|
|
|
8.9
|
|
|
9.5
|
|
||||
Settlement of January 2016 ASR
|
—
|
|
|
—
|
|
|
1.6
|
|
|
—
|
|
||||
Total
|
7.2
|
|
|
9.5
|
|
|
10.5
|
|
|
9.5
|
|
(1)
|
As of
July 30, 2016
,
$5.8 million
, or
0.2 million
shares, in trades remained unsettled. As of
August 1, 2015
,
$2.5 million
, or
0.1 million
shares, in trades remained unsettled. The liability for unsettled trades is included in Accrued liabilities in the Condensed Consolidated Balance Sheets.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 30, 2016
|
|
August 1, 2015
|
|
July 30, 2016
|
|
August 1, 2015
|
||||||||
Domestic
|
$
|
7,889
|
|
|
$
|
7,878
|
|
|
$
|
15,718
|
|
|
$
|
15,768
|
|
International
|
644
|
|
|
650
|
|
|
1,258
|
|
|
1,318
|
|
||||
Total revenue
|
$
|
8,533
|
|
|
$
|
8,528
|
|
|
$
|
16,976
|
|
|
$
|
17,086
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 30, 2016
|
|
August 1, 2015
|
|
July 30, 2016
|
|
August 1, 2015
|
||||||||
Domestic
|
$
|
289
|
|
|
$
|
309
|
|
|
$
|
661
|
|
|
$
|
613
|
|
International
|
—
|
|
|
(21
|
)
|
|
—
|
|
|
(239
|
)
|
||||
Total operating income
|
289
|
|
|
288
|
|
|
661
|
|
|
374
|
|
||||
Other income (expense)
|
|
|
|
|
|
|
|
||||||||
Gain on sale of investments
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||
Investment income and other
|
8
|
|
|
4
|
|
|
14
|
|
|
11
|
|
||||
Interest expense
|
(18
|
)
|
|
(20
|
)
|
|
(38
|
)
|
|
(40
|
)
|
||||
Earnings from continuing operations before income tax expense
|
$
|
279
|
|
|
$
|
272
|
|
|
$
|
639
|
|
|
$
|
347
|
|
|
July 30, 2016
|
|
January 30, 2016
|
|
August 1, 2015
|
||||||
Domestic
|
$
|
11,968
|
|
|
$
|
12,318
|
|
|
$
|
12,328
|
|
International
|
1,286
|
|
|
1,201
|
|
|
1,231
|
|
|||
Total assets
|
$
|
13,254
|
|
|
$
|
13,519
|
|
|
$
|
13,559
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Overview
|
•
|
Business Strategy Update
|
•
|
Results of Operations
|
•
|
Liquidity and Capital Resources
|
•
|
Off-Balance-Sheet Arrangements and Contractual Obligations
|
•
|
Significant Accounting Policies and Estimates
|
•
|
New Accounting Pronouncements
|
•
|
Safe Harbor Statement Under the Private Securities Litigation Reform Act
|
•
|
Home Theater: Our market-leading customer experience around 4K and large screen premium technologies and our 79 Magnolia Design Center stores within a store, continue to drive sales growth. During the second quarter of fiscal
|
•
|
Appliances: We leveraged our 200 Pacific Kitchen & Home stores within a store to deliver 8.2% comparable sales growth in the second quarter of fiscal 2017 versus 20.7% comparable sales growth in the second quarter of fiscal 2016. During the quarter, we implemented a number of improvements to our installation and delivery capabilities, including the ability for online and in-store customers to choose a shorter delivery time window at the point of purchase. In the long term, we believe these innovative improvements will contribute to the continued growth of our appliance business. However, they did result in short-term disruptions that negatively impacted this quarter's comparable sales growth rate.
|
•
|
Computing: In computing, similar to home theater, our partnerships with key vendors, the strength of our market-leading position and our focus on assortment management and solution selling have created a superior customer experience.
|
•
|
Mobile: As expected, revenue declined during the first half of fiscal 2017. We expect this trend to reverse in the second half of fiscal 2017, as anticipated product launches stimulate consumer demand and as we lap the sales declines seen in the category last year.
|
•
|
Entertainment: We continue to expand our presence in virtual reality. By Holiday, we expect to be selling an expanded assortment of virtual reality products in the vast majority of our stores, and we expect to have more than 500 stores equipped with demonstration stations so customers can try out this exciting new technology. We believe virtual reality has the potential to contribute to our growth in the future, but we do not expect a material financial impact this fiscal year, given the timing of launches, inventory availability and the fact that we are early in the cycle.
|
•
|
Services: We continue to drive improvements in our service quality and increase our Net Promoter Score. As expected, overall services comparable sales declined during the second quarter of fiscal 2017 due to the carryover effect of the pricing investments we made in September 2015, as well as the ongoing reduction of repair revenue driven by lower frequency of claims on our extended warranties. We did see less of a sales decline this quarter compared to the past several quarters, and as we begin to anniversary the pricing investment, we expect comparable sales in our services business to be flat to slightly positive in the second half of fiscal 2017.
|
•
|
Online: Our 23.7% Domestic segment online comparable sales growth was driven by the continued improvements to our digital customer experience and enhanced dot-com capabilities. These include, for example, faster shipping, responsive design, a more streamlined checkout process, improved search functionality, better visibility for open box and clearance items and more relevant product recommendations. Also, in our mobile app, we have implemented distilled reviews on over 40,000 SKUs. This means customers don't have to wade through hundreds or sometimes thousands of reviews, but can instead read a quick summary of the pros and cons of a product. In addition, across platforms we can show customers products that are available in the store closest to them and show which products are actually displayed in stores near them if they are interested in experiencing the product before they buy. Our e-commerce focus has evolved from a phase of building foundations to a phase of driving innovations for our customers, and we are excited about the customer experience improvements still in the pipeline yet for this fiscal year.
|
•
|
Retail stores: Given the complexity of technology and the needs of our customers, our stores are a key asset for us. The level of proficiency and engagement of our associates is continuing to increase as manifested by the significant increase of our Net Promoter Scores. This is the result of a deliberate and systematic effort to lift the capabilities and performance of each individual associate. This effort includes investment in training and daily coaching with a heightened focus on product knowledge and selling skills. Additionally, we are ensuring that our store general managers and assistant managers remain with their stores longer, allowing them to be more effective at training, coaching and more broadly leading their teams. We are also improving our store associate retention rates, particularly across our sales roles.
|
•
|
International segment: Our Canadian transformation is continuing to make good progress. As reflected in our revenue performance, customer retention is proving to be higher than expected. Our team is focused on continuing to invest in our stores and online channel, to improve the customer experience and financial performance, something that has been enabled by the consolidation of the two brands we had in Canada. Similar to the Domestic segment, we are partnering with key vendors to upgrade our Canadian stores.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 30, 2016
|
|
August 1, 2015
|
|
July 30, 2016
|
|
August 1, 2015
|
||||||||
Revenue
|
$
|
8,533
|
|
|
$
|
8,528
|
|
|
$
|
16,976
|
|
|
$
|
17,086
|
|
Revenue % gain (decline)
|
0.1
|
%
|
|
0.8
|
%
|
|
(0.6
|
)%
|
|
(0.1
|
)%
|
||||
Comparable sales % gain
(1)
|
0.8
|
%
|
|
3.8
|
%
|
|
0.4
|
%
|
|
2.2
|
%
|
||||
Restructuring charges – cost of goods sold
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
$
|
5
|
|
Gross profit
|
$
|
2,062
|
|
|
$
|
2,098
|
|
|
$
|
4,207
|
|
|
$
|
4,128
|
|
Gross profit as a % of revenue
(2)
|
24.2
|
%
|
|
24.6
|
%
|
|
24.8
|
%
|
|
24.2
|
%
|
||||
SG&A
|
$
|
1,773
|
|
|
$
|
1,811
|
|
|
$
|
3,517
|
|
|
$
|
3,577
|
|
SG&A as a % of revenue
(2)
|
20.8
|
%
|
|
21.2
|
%
|
|
20.7
|
%
|
|
20.9
|
%
|
||||
Restructuring charges
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
29
|
|
|
$
|
177
|
|
Operating income
|
$
|
289
|
|
|
$
|
288
|
|
|
$
|
661
|
|
|
$
|
374
|
|
Operating income as a % of revenue
|
3.4
|
%
|
|
3.4
|
%
|
|
3.9
|
%
|
|
2.2
|
%
|
||||
Net earnings from continuing operations
|
$
|
182
|
|
|
$
|
164
|
|
|
$
|
408
|
|
|
$
|
201
|
|
Earnings from discontinued operations
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
92
|
|
Net earnings
|
$
|
198
|
|
|
$
|
164
|
|
|
$
|
427
|
|
|
$
|
293
|
|
Diluted earnings per share from continuing operations
|
$
|
0.56
|
|
|
$
|
0.46
|
|
|
$
|
1.26
|
|
|
$
|
0.57
|
|
Diluted earnings per share
|
$
|
0.61
|
|
|
$
|
0.46
|
|
|
$
|
1.31
|
|
|
$
|
0.82
|
|
(1)
|
The Canadian brand consolidation that was initiated in the first quarter of fiscal 2016 had a material impact on a year-over-year basis on the Canadian retail stores and the website. As such, beginning in the first quarter of fiscal 2016, all store and website revenue was removed from the comparable sales base, and an International segment (comprised of Canada and Mexico) comparable sales metric has not been provided. Therefore, the Consolidated comparable sales for the three and six months ended July 30, 2016, and August 1, 2015, equal the Domestic segment comparable sales.
|
(2)
|
Because retailers vary in how they record costs of operating their supply chain between cost of goods sold and 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
January 30, 2016
.
|
|
Three Months Ended
|
|
Six Months Ended
|
||
|
July 30, 2016
|
|
July 30, 2016
|
||
Comparable sales impact
|
0.8
|
%
|
|
0.4
|
%
|
Non-comparable sales
(1)
|
(0.3
|
)%
|
|
(0.5
|
)%
|
Impact of foreign currency exchange rate fluctuations
|
(0.4
|
)%
|
|
(0.5
|
)%
|
Total revenue increase (decrease)
|
0.1
|
%
|
|
(0.6
|
)%
|
(1)
|
Non-comparable sales reflects the impact of all revenue in our International segment, net store opening and closing activity, as well as the impact of revenue streams not included within our comparable sales calculation, such as profit sharing benefits, certain credit card revenue, gift card breakage, commercial sales and sales of merchandise to wholesalers and dealers, as applicable.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 30, 2016
|
|
August 1, 2015
|
|
July 30, 2016
|
|
August 1, 2015
|
||||||||
Revenue
|
$
|
7,889
|
|
|
$
|
7,878
|
|
|
$
|
15,718
|
|
|
$
|
15,768
|
|
Revenue % gain (decline)
|
0.1
|
%
|
|
3.9
|
%
|
|
(0.3
|
)%
|
|
2.6
|
%
|
||||
Comparable sales % gain
(1)
|
0.8
|
%
|
|
3.8
|
%
|
|
0.4
|
%
|
|
2.2
|
%
|
||||
Gross profit
|
$
|
1,895
|
|
|
$
|
1,946
|
|
|
$
|
3,881
|
|
|
$
|
3,832
|
|
Gross profit as a % of revenue
|
24.0
|
%
|
|
24.7
|
%
|
|
24.7
|
%
|
|
24.3
|
%
|
||||
SG&A
|
$
|
1,608
|
|
|
$
|
1,636
|
|
|
$
|
3,195
|
|
|
$
|
3,220
|
|
SG&A as a % of revenue
|
20.4
|
%
|
|
20.8
|
%
|
|
20.3
|
%
|
|
20.4
|
%
|
||||
Restructuring charges
|
$
|
(2
|
)
|
|
$
|
1
|
|
|
$
|
25
|
|
|
$
|
(1
|
)
|
Operating income
|
$
|
289
|
|
|
$
|
309
|
|
|
$
|
661
|
|
|
$
|
613
|
|
Operating income as a % of revenue
|
3.7
|
%
|
|
3.9
|
%
|
|
4.2
|
%
|
|
3.9
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Selected Online Revenue Data
|
|
|
|
|
|
|
|
||||||||
Online revenue as a % of total segment revenue
|
10.6
|
%
|
|
8.6
|
%
|
|
10.6
|
%
|
|
8.6
|
%
|
||||
Comparable online sales % gain
(1)
|
23.7
|
%
|
|
17.0
|
%
|
|
23.8
|
%
|
|
10.8
|
%
|
(1)
|
Comparable online sales is included in the comparable sales calculation.
|
|
Three Months Ended
|
|
Six Months Ended
|
||
|
July 30, 2016
|
|
July 30, 2016
|
||
Comparable sales impact
|
0.8
|
%
|
|
0.4
|
%
|
Non-comparable sales
(1)
|
(0.7
|
)%
|
|
(0.7
|
)%
|
Total revenue increase (decrease)
|
0.1
|
%
|
|
(0.3
|
)%
|
(1)
|
Non-comparable sales reflects the impact of net store opening and closing activity, as well as, the impact of revenue streams not included within our comparable sales calculation, such as profit sharing benefits, certain credit card revenue, gift card breakage, commercial sales and sales of merchandise to wholesalers and dealers, as applicable.
|
|
Fiscal 2017
|
|
Fiscal 2016
|
||||||||||||||||||||
|
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
|
1,036
|
|
|
—
|
|
|
(1
|
)
|
|
1,035
|
|
|
1,049
|
|
|
—
|
|
|
(2
|
)
|
|
1,047
|
|
Best Buy Mobile stand-alone
|
338
|
|
|
—
|
|
|
(4
|
)
|
|
334
|
|
|
362
|
|
|
—
|
|
|
(6
|
)
|
|
356
|
|
Pacific Sales stand-alone
|
28
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|
29
|
|
|
—
|
|
|
—
|
|
|
29
|
|
Magnolia Audio Video stand-alone
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
(1
|
)
|
|
1
|
|
Total Domestic segment stores
|
1,402
|
|
|
—
|
|
|
(5
|
)
|
|
1,397
|
|
|
1,442
|
|
|
—
|
|
|
(9
|
)
|
|
1,433
|
|
|
Revenue Mix
|
|
Comparable Sales
|
||||||||
|
Three Months Ended
|
|
Three Months Ended
|
||||||||
|
July 30, 2016
|
|
August 1, 2015
|
|
July 30, 2016
|
|
August 1, 2015
|
||||
Consumer Electronics
|
33
|
%
|
|
32
|
%
|
|
4.0
|
%
|
|
7.3
|
%
|
Computing and Mobile Phones
|
46
|
%
|
|
47
|
%
|
|
0.3
|
%
|
|
1.5
|
%
|
Entertainment
|
5
|
%
|
|
6
|
%
|
|
(18.0
|
)%
|
|
(2.0
|
)%
|
Appliances
|
11
|
%
|
|
10
|
%
|
|
8.2
|
%
|
|
20.7
|
%
|
Services
|
5
|
%
|
|
5
|
%
|
|
(7.2
|
)%
|
|
(13.1
|
)%
|
Other
|
—
|
%
|
|
—
|
%
|
|
n/a
|
|
|
n/a
|
|
Total
|
100
|
%
|
|
100
|
%
|
|
0.8
|
%
|
|
3.8
|
%
|
•
|
Consumer Electronics:
The
4.0%
comparable sales gain was driven primarily by an increase in the sales of 4K and large screen televisions and related home theater accessories.
|
•
|
Computing and Mobile Phones:
The
0.3%
comparable sales gain was primarily due to an increase in wearables and computer sales partially offset by continued industry declines in mobile phones.
|
•
|
Entertainment:
The
18.0%
comparable sales decline was driven by declines in gaming hardware due to continued industry declines as well as declines in music and movies.
|
•
|
Appliances:
The
8.2%
comparable sales gain was a result of continued growth in major appliances sales as well as the expansion of Pacific Kitchen & Home stores within a store.
|
•
|
Services:
The
7.2%
comparable sales decline was due to investments in services pricing and the lower frequency of claims on our extended warranties, which reduces our repair revenue.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 30, 2016
|
|
August 1, 2015
|
|
July 30, 2016
|
|
August 1, 2015
|
||||||||
Revenue
|
$
|
644
|
|
|
$
|
650
|
|
|
$
|
1,258
|
|
|
$
|
1,318
|
|
Revenue % decline
|
(1.0
|
)%
|
|
(25.6
|
)%
|
|
(4.6
|
)%
|
|
(23.9
|
)%
|
||||
Comparable sales % gain (decline)
(1)
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
||||
Restructuring charges – cost of goods sold
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
$
|
5
|
|
Gross profit
|
$
|
167
|
|
|
$
|
152
|
|
|
$
|
326
|
|
|
$
|
296
|
|
Gross profit as a % of revenue
|
25.9
|
%
|
|
23.4
|
%
|
|
25.9
|
%
|
|
22.5
|
%
|
||||
SG&A
|
$
|
165
|
|
|
$
|
175
|
|
|
$
|
322
|
|
|
$
|
357
|
|
SG&A as a % of revenue
|
25.6
|
%
|
|
26.9
|
%
|
|
25.6
|
%
|
|
27.1
|
%
|
||||
Restructuring charges
|
$
|
2
|
|
|
$
|
(2
|
)
|
|
$
|
4
|
|
|
$
|
178
|
|
Operating income (loss)
|
$
|
—
|
|
|
$
|
(21
|
)
|
|
$
|
—
|
|
|
$
|
(239
|
)
|
Operating income (loss) as a % of revenue
|
—
|
%
|
|
(3.2
|
)%
|
|
0.0
|
%
|
|
(18.1
|
)%
|
(1)
|
On March 28, 2015, we consolidated the Future Shop and Best Buy stores and websites in Canada under the Best Buy brand. This resulted in the permanent closure of 66 Future Shop stores, the conversion of 65 Future Shop stores to Best Buy stores and the elimination of the Future Shop website. The Canadian brand consolidation had a material impact on a year-over-year basis on the Canadian retail stores and the website. As such, beginning in the first quarter of fiscal 2016, all store and website revenue was removed from the comparable sales base, and an International segment (comprised of Canada and Mexico) comparable sales metric has not been provided.
|
|
Three Months Ended
|
|
Six Months Ended
|
||
|
July 30, 2016
|
|
July 30, 2016
|
||
Non-comparable sales
(1)
|
4.1
|
%
|
|
1.4
|
%
|
Impact of foreign currency exchange rate fluctuations
|
(5.1
|
)%
|
|
(6.0
|
)%
|
Total revenue decrease
|
(1.0
|
)%
|
|
(4.6
|
)%
|
(1)
|
Non-comparable sales reflects the impact of net store opening and closing activity, including the Canadian brand consolidation activity, as well as, the impact of revenue streams not included within our comparable sales calculation, such as profit sharing benefits, certain credit card revenue, gift card breakage, commercial sales and sales of merchandise to wholesalers and dealers.
|
|
Fiscal 2017
|
|
Fiscal 2016
|
||||||||||||||||||||
|
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
|
||||||||
Canada
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Best Buy
|
135
|
|
|
—
|
|
|
—
|
|
|
135
|
|
|
136
|
|
|
—
|
|
|
—
|
|
|
136
|
|
Best Buy Mobile stand-alone
|
56
|
|
|
—
|
|
|
(2
|
)
|
|
54
|
|
|
56
|
|
|
—
|
|
|
—
|
|
|
56
|
|
Mexico
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Best Buy
|
18
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
18
|
|
Express
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
Total International segment stores
|
215
|
|
|
—
|
|
|
(2
|
)
|
|
213
|
|
|
215
|
|
|
—
|
|
|
—
|
|
|
215
|
|
|
Revenue Mix
|
||||
|
Three Months Ended
|
||||
|
July 30, 2016
|
|
August 1, 2015
|
||
Consumer Electronics
|
29
|
%
|
|
31
|
%
|
Computing and Mobile Phones
|
48
|
%
|
|
48
|
%
|
Entertainment
|
6
|
%
|
|
7
|
%
|
Appliances
|
7
|
%
|
|
7
|
%
|
Services
|
8
|
%
|
|
6
|
%
|
Other
|
2
|
%
|
|
1
|
%
|
Total
|
100
|
%
|
|
100
|
%
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 30, 2016
|
|
August 1, 2015
|
|
July 30, 2016
|
|
August 1, 2015
|
||||||||
Operating income
|
$
|
289
|
|
|
$
|
288
|
|
|
$
|
661
|
|
|
$
|
374
|
|
Net CRT settlements
(1)
|
—
|
|
|
(8
|
)
|
|
(161
|
)
|
|
(75
|
)
|
||||
Restructuring charges – COGS
(2)
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
5
|
|
||||
Other Canadian brand consolidation charges - SG&A
(3)
|
1
|
|
|
2
|
|
|
1
|
|
|
5
|
|
||||
Non-restructuring asset impairments - SG&A
(4)
|
3
|
|
|
14
|
|
|
8
|
|
|
25
|
|
||||
Restructuring charges
(2)
|
—
|
|
|
(1
|
)
|
|
29
|
|
|
177
|
|
||||
Non-GAAP operating income
|
$
|
293
|
|
|
$
|
292
|
|
|
$
|
538
|
|
|
$
|
511
|
|
|
|
|
|
|
|
|
|
||||||||
Income tax expense
|
$
|
97
|
|
|
$
|
108
|
|
|
$
|
231
|
|
|
$
|
146
|
|
Effective tax rate
|
34.8
|
%
|
|
39.8
|
%
|
|
36.2
|
%
|
|
42.1
|
%
|
||||
Income tax impact of non-GAAP adjustments
(5)
|
1
|
|
|
(6
|
)
|
|
(46
|
)
|
|
31
|
|
||||
Non-GAAP income tax expense
|
$
|
98
|
|
|
$
|
102
|
|
|
$
|
185
|
|
|
$
|
177
|
|
Non-GAAP effective tax rate
|
34.7
|
%
|
|
37.1
|
%
|
|
36.1
|
%
|
|
36.8
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Net earnings from continuing operations
|
$
|
182
|
|
|
$
|
164
|
|
|
$
|
408
|
|
|
$
|
201
|
|
Net CRT settlements
(1)
|
—
|
|
|
(8
|
)
|
|
(161
|
)
|
|
(75
|
)
|
||||
Restructuring charges – COGS
(2)
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
5
|
|
||||
Other Canadian brand consolidation charges - SG&A
(3)
|
1
|
|
|
2
|
|
|
1
|
|
|
5
|
|
||||
Non-restructuring asset impairments - SG&A
(4)
|
3
|
|
|
14
|
|
|
8
|
|
|
25
|
|
||||
Restructuring charges
(2)
|
—
|
|
|
(1
|
)
|
|
29
|
|
|
177
|
|
||||
Gain on sale of investments
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
||||
Income tax impact of non-GAAP adjustments
(5)
|
(1
|
)
|
|
6
|
|
|
46
|
|
|
(31
|
)
|
||||
Non-GAAP net earnings from continuing operations
|
$
|
185
|
|
|
$
|
174
|
|
|
$
|
329
|
|
|
$
|
305
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per share from continuing operations
|
$
|
0.56
|
|
|
$
|
0.46
|
|
|
$
|
1.26
|
|
|
$
|
0.57
|
|
Per share impact of net CRT settlements
(1)
|
—
|
|
|
(0.02
|
)
|
|
(0.50
|
)
|
|
(0.21
|
)
|
||||
Per share impact of restructuring charges - COGS
(2)
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
|
0.01
|
|
||||
Per share impact of other Canadian brand consolidation charges SG&A
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
||||
Per share impact of non-restructuring asset impairments - SG&A
(4)
|
0.01
|
|
|
0.04
|
|
|
0.03
|
|
|
0.07
|
|
||||
Per share impact of restructuring charges
(2)
|
—
|
|
|
—
|
|
|
0.09
|
|
|
0.50
|
|
||||
Per share impact of gain on sale of investments
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
||||
Per share income tax impact of non-GAAP adjustments
(5)
|
—
|
|
|
0.02
|
|
|
0.14
|
|
|
(0.09
|
)
|
||||
Non-GAAP diluted earnings per share from continuing operations
|
$
|
0.57
|
|
|
$
|
0.49
|
|
|
$
|
1.01
|
|
|
$
|
0.86
|
|
(1)
|
Represents CRT litigation settlements related to the United States reached in each reported period, net of related legal fees and costs. Settlements relate to products purchased and sold in prior fiscal years. Refer to Note 12,
Contingencies
, in the Notes to Condensed Consolidated Financial Statements for additional information.
|
(2)
|
Refer to Note 5,
Restructuring Charges
, in the Notes to Condensed Consolidated Financial Statements for additional information regarding the nature of these charges. For the three months ended August 1, 2015, a benefit of $1 million related to the United States and a charge of the $5 million related to Canada. For the six months ended July 30, 2016, $25 million related to the United States and $4 million related to Canada. For the six months ended August 1, 2015, a benefit of $1 million related to the United States and a charge of $183 million related to Canada.
|
(3)
|
Represents charges related to the Canadian brand consolidation initiated in the first quarter of fiscal 2016, primarily due to retention bonuses and other store-related costs that were a direct result of the consolidation but did not qualify as restructuring charges.
|
(4)
|
Refer to Note 3,
Fair Value Measurements
, in the Notes to Condensed Consolidated Financial Statements for additional information regarding the nature of these charges. For the three months ended July 30, 2016, the entire balance related to the United States. For the three months ended August 1, 2015, $11 million related to the United States and $3 million related to Canada. For the six months ended July 30, 2016, $7 million related to the United States and $1 million related to Canada. For the six months ended August 1, 2015, $22 million related to the United States and $3 million related to Canada.
|
(5)
|
Income tax impact of non-GAAP adjustments is the summation of the calculated income tax charge related to each non-GAAP non-income tax adjustment. The non-GAAP adjustments relate primarily to adjustments in the United States and Canada; therefore, the income tax charge is calculated using the statutory tax rates of 38% and 26.4%, respectively, applied to non-GAAP adjustments of each country.
|
|
July 30, 2016
|
|
January 30, 2016
|
|
August 1, 2015
|
||||||
Cash and cash equivalents
|
$
|
1,861
|
|
|
$
|
1,976
|
|
|
$
|
1,800
|
|
Short-term investments
|
1,590
|
|
|
1,305
|
|
|
1,695
|
|
|||
Total cash and cash equivalents and short-term investments
|
$
|
3,451
|
|
|
$
|
3,281
|
|
|
$
|
3,495
|
|
|
Six Months Ended
|
||||||
|
July 30, 2016
|
|
August 1, 2015
|
||||
Total cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
1,288
|
|
|
$
|
308
|
|
Investing activities
|
(495
|
)
|
|
(478
|
)
|
||
Financing activities
|
(933
|
)
|
|
(640
|
)
|
||
Effect of exchange rate changes on cash
|
25
|
|
|
(16
|
)
|
||
Decrease in cash and cash equivalents
|
$
|
(115
|
)
|
|
$
|
(826
|
)
|
Rating Agency
|
|
Rating
|
|
Outlook
|
Standard & Poor's
|
|
BBB-
|
|
Stable
|
Moody's
|
|
Baa1
|
|
Stable
|
Fitch
|
|
BBB-
|
|
Stable
|
Non-GAAP debt to EBITDAR =
|
Non-GAAP debt
|
|
EBITDAR
|
|
|
July 30, 2016
(1)
|
|
January 30, 2016
(1)(2)
|
|
August 1, 2015
(1)(2)
|
||||||
Debt (including current portion)
|
$
|
1,384
|
|
|
$
|
1,734
|
|
|
$
|
1,609
|
|
Capitalized operating lease obligations (5 times rental expense)
(2)
|
3,847
|
|
|
3,916
|
|
|
4,030
|
|
|||
Non-GAAP debt
|
$
|
5,231
|
|
|
$
|
5,650
|
|
|
$
|
5,639
|
|
|
|
|
|
|
|
||||||
Net earnings from continuing operations
|
$
|
1,014
|
|
|
$
|
807
|
|
|
$
|
841
|
|
Interest expense, net
|
60
|
|
|
65
|
|
|
56
|
|
|||
Income tax expense
|
588
|
|
|
503
|
|
|
492
|
|
|||
Depreciation and amortization expense
|
658
|
|
|
656
|
|
|
655
|
|
|||
Rental expense
|
769
|
|
|
783
|
|
|
806
|
|
|||
Restructuring charges and other
(3)
|
91
|
|
|
263
|
|
|
151
|
|
|||
EBITDAR
|
$
|
3,180
|
|
|
$
|
3,077
|
|
|
$
|
3,001
|
|
|
|
|
|
|
|
||||||
Debt to net earnings ratio
|
1.4
|
|
|
2.1
|
|
|
1.9
|
|
|||
Non-GAAP debt to EBITDAR ratio
|
1.6
|
|
|
1.8
|
|
|
1.9
|
|
(1)
|
Debt is reflected as of the balance sheet dates for each of the respective fiscal periods, 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 five 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. Historically, we used a capitalized lease multiple of eight times annual rent expense; however, due to changes in the average remaining lease life of our operating leases, we have lowered the multiple to five. The prior period calculations have been updated to reflect the use of the changes.
|
(3)
|
Includes the impact of restructuring charges, non-restructuring asset impairments and CRT litigation settlements.
|
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
|
Fiscal Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program
(1)
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
(1)
|
||||||
May 1, 2016 through May 28, 2016
|
|
868,192
|
|
|
$
|
31.79
|
|
|
868,192
|
|
|
$
|
2,860,000,000
|
|
May 29, 2016 through July 2, 2016
|
|
4,752,727
|
|
|
$
|
30.11
|
|
|
4,752,727
|
|
|
$
|
2,717,000,000
|
|
July 3, 2016 through July 30, 2016
|
|
1,602,853
|
|
|
$
|
31.63
|
|
|
1,602,853
|
|
|
$
|
2,667,000,000
|
|
Total Fiscal 2017 Second Quarter
|
|
7,223,772
|
|
|
$
|
30.65
|
|
|
7,223,772
|
|
|
|
(1)
|
We have a $5.0 billion share repurchase program that was authorized by our Board in June 2011. At the beginning of the
second quarter
of fiscal
2017
, there was $2.9 billion available for share repurchases. The "Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program" reflects the
$221 million
we purchased in the
second quarter
of fiscal
2017
pursuant to such program. There is no expiration date governing the period over which we can repurchase shares under the June 2011 share repurchase program. For additional information see Note 10,
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
|
|
Restated Articles of Incorporation (incorporated herein by reference to the Definitive Proxy Statement filed by Best Buy Co., Inc. on May 12, 2009)
|
|
|
|
3.2
|
|
Amended and Restated By-Laws (incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K filed by Best Buy Co., Inc. on September 26, 2013)
|
|
|
|
10.1
|
|
Form of Best Buy Co. Inc. Longer Term Incentive Program Award Agreement for Non-U.S. Directors (2016)
|
|
|
|
10.2
|
|
Five-Year Credit Agreement dated as of June 27, 2016, among Best Buy Co., Inc., the Subsidiary Guarantors, the Lenders and JP Morgan Chase Bank, N.A., as administrative agent (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Best Buy Co., Inc. on June 30, 2016)
|
|
|
|
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 2017, filed with the SEC on September 2, 2016, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets at July 30, 2016, January 30, 2016, and August 1, 2015, (ii) the Condensed Consolidated Statements of Earnings for the three and six months ended July 30, 2016, and August 1, 2015, (iii) the Condensed Consolidated Statements of Comprehensive Income for the three and six months ended July 30, 2016, and August 1, 2015, (iv) the Condensed Consolidated Statements of Cash Flows for the six months ended July 20, 2016, and August 1, 2015, (v) the Condensed Consolidated Statements of Changes in Shareholders’ Equity for the six months ended July 30, 2016, and August 1, 2015 and (vi) 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 2, 2016
|
By:
|
/s/ HUBERT JOLY
|
|
|
Hubert Joly
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
Date: September 2, 2016
|
By:
|
/s/ CORIE BARRY
|
|
|
Corie Barry
|
|
|
Chief Financial Officer
|
|
|
|
Date: September 2, 2016
|
By:
|
/s/ MATHEW R. WATSON
|
|
|
Mathew R. Watson
|
|
|
Vice President, Finance – Controller and Chief Accounting Officer
|
1.
|
Grant of Award
. In consideration of your service on the Board of Directors of the Company (“
Board
”), the Company hereby grants to you the award set forth in the Award Notification (the “
Award
”) subject to the terms and conditions of this Agreement and the Best Buy Co., Inc. 2014 Omnibus Incentive Plan (the “
Plan
”). In the event of any conflict between this Agreement and the Plan, 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.
|
2.
|
Restricted Stock Units
. A “
Restricted
Stock Unit
” is a right to receive a share of the Company’s common stock (“
Share
”) upon the lapse of the restrictions set forth in this Agreement.
|
(a)
|
Restrictions
. During the time you serve on the Board (the “
Holding Period
”), the Restricted Stock Units are subject to the restrictions described in this Agreement and the Plan (the “
Restrictions
”). During the Holding Period, the Restricted Stock Units may not be assigned, transferred (other than by will or the laws of descent and distribution), pledged or hypothecated (whether by operation of law or otherwise) or otherwise conveyed or encumbered, and shall not be subject to execution, attachment or similar process. Any attempted assignment, transfer, pledge, hypothecation or other disposition contrary to the provisions this Agreement or the Plan, or the levy of any execution, attachment or similar process upon the Restricted Stock Units, shall be void and unenforceable against the Company. The Restricted Stock Units are subject to forfeiture to Best Buy as provided in this Agreement and the Plan.
|
(b)
|
Vesting
. Except as otherwise set forth herein, so long as your service on the Board continues, the Restricted Stock Units shall vest in accordance with the vesting schedule stated in the Award Notification. If your service on the Board is terminated for any reason other than Cause, a pro rata portion (based on your length of service during the applicable vesting period) of any unvested Restricted Stock Units will vest as of such termination date. If your service on the Board is terminated for Cause, all Restricted Stock Units, whether vested or not as of the date of termination pursuant to the vesting schedule, will be forfeited as of the date of termination.
|
(c)
|
Issuance of Shares; Holding Period
.
Within 30 days from the end of the Holding
Period, the Shares underlying the Restricted Stock Units that have vested as of the end of the Holding Period will be delivered to you.
|
3.
|
Restrictive Covenants and Remedies
. By accepting the Award, you specifically agree to the restrictive covenants contained in this Section 3 (the “
Restrictive Covenants
”) and you agree that the Restrictive Covenants and the remedies described herein are reasonable and necessary to protect the legitimate interests of the Company Group.
|
(a)
|
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 service to the Company 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.
|
(b)
|
Non-Solicitation
. During the Holding Period and for one year following the termination of your service on the Board, you shall not:
|
(i)
|
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;
|
(ii)
|
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;
|
(iii)
|
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;
|
(iv)
|
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
|
(v)
|
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
.
|
(c)
|
Partial Invalidity
. If any portion of this Section 3 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.
|
(d)
|
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 monetary damages for any such harm would, therefore, be an inadequate remedy. 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
|
(e)
|
Claw Back & Recovery
.
|
(i)
|
In the event (i) you breach any of the Restrictive Covenants, (ii) you engage in conduct materially adverse to the interests of the Company, including any material violations of any Company policy, (iii) you engage in intentional misconduct that caused or contributed to the restatement of any financial statements of the Company, (iv) you materially violate the terms of any agreement to which you and a member of the Company Group is a party or (v) you engage in a criminal act, fraud, or violation of any securities laws, then notwithstanding any other provision of this Agreement to the contrary, the Company, in its sole discretion, may take one or more of the following actions with respect to your Award (and shall, in any event, take all action required by applicable law):
|
(A)
|
cause the immediate forfeiture of any of your then unvested Restricted Stock Units;
|
(B)
|
require you to immediately return to the Company any Shares issued under any Restricted Stock Units that are still under your control; and
|
(C)
|
require you to promptly pay to the Company an amount equal to the fair market value of all Shares included in your Award that are no longer under your control (as measured on the date of issuance of any Shares issued under any Restricted Stock Units).
|
(ii)
|
The Committee shall have sole discretion to determine what constitutes the conduct described in Section 3(e)(i) above.
|
(iii)
|
In addition to the Company’s rights set forth above, you agree your Award and the value of any portion of your Award no longer under your control shall be subject to recovery or other penalties pursuant to (i) any Company clawback policy, as may be adopted or amended from time to time, or (ii) any applicable law, rule or regulation, or applicable stock exchange rule, including without limitation, the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act.
|
(f)
|
Right of Set Off
.
By accepting the Award, you agree that any member of the Company Group may set off any amount owed to you (including fees or other compensation, fringe benefits or vacation pay) against any amounts you owe under this Section 3. You also agree that if the Company does not recover by means of set-off the full amount you owe, calculated as set forth above, you agree to immediately pay the unpaid balance to the Company.
|
4.
|
General Terms and Conditions
.
|
(a)
|
Rights as a Shareholder
. You will have no rights as a shareholder with respect to any Shares issuable under the Restricted Stock Units until you have actually received such Shares in accordance with the terms of this Agreement and the Plan. This means that you will not have the right to vote as a shareholder nor the right to receive dividend payments. Upon issuance of Shares, you will have all of
|
(b)
|
Nature of Grant
.
In accepting the Award, you acknowledge, understand and agree that:
|
(i)
|
the Plan is established voluntarily by Best Buy, it is discretionary in nature and it may be modified, amended, suspended or terminated by Best Buy at any time;
|
(ii)
|
the grant of the Award is voluntary and occasional and does not create any contractual or other right to receive future grants of restricted stock units, or benefits in lieu of restricted stock units, even if restricted stock units have been granted in the past;
|
(iii)
|
all decisions with respect to future grants of restricted stock units, if any, will be at the sole discretion of Best Buy;
|
(iv)
|
you are voluntarily participating in the Plan;
|
(v)
|
the Award and your participation in the Plan will not create a right to continued service on the Board or derogate from any right of Best Buy’s shareholders to remove you from the Board at any time in accordance with Best Buy’s bylaws and any applicable law;
|
(vi)
|
the future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty;
|
(vii)
|
no claim or entitlement to compensation or damages shall arise from forfeiture of the Award resulting from your ceasing to provide service to Best Buy (for any reason whatsoever);
|
(viii)
|
unless otherwise provided in the Plan or by Best Buy in its discretion, the Award and the benefits evidenced by this Agreement do not create any entitlement to have the Award or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the Shares; and
|
(ix)
|
Best Buy shall not be liable for any foreign exchange rate fluctuation between your local currency and the United States Dollar that may affect the value of the Award or any amounts due to you pursuant to the settlement of the Award or the subsequent sale of any Shares acquired upon settlement.
|
(c)
|
Participant’s Acknowledgements
.
|
(i)
|
Committee’s Sole Discretion
. The Committee has sole discretion to make decisions regarding your Award, and to interpret all terms of this Agreement. You agree that all decisions regarding and interpretations of this Agreement by the Committee are binding, conclusive, final and non-appealable.
|
(ii)
|
Taxes
.
|
(A)
|
Regardless of any action the Company takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to your participation in the Plan (“
Tax-Related Items
”), you acknowledge that the ultimate liability for all Tax-Related Items is and remains your responsibility and may exceed the amount, if any, actually withheld by the Company. You further acknowledge that the Company (a) makes no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Restricted Stock Units, including, but not limited to, the grant or vesting of the Restricted Stock Units, the issuance of Shares upon settlement of the Restricted Stock Units, the subsequent sale of such Shares and the receipt of any dividends; and (b) does not commit to and is under no obligation to structure the terms of the Award or any aspect of the Restricted Stock Units to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result. Further, if you have become subject to Tax-Related Items in more than one jurisdiction, you acknowledge that the Company may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
|
(B)
|
To the extent the Company has a withholding obligation with respect to Tax-Related Items, you authorize the Company or its agent, at the Company’s discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following:
|
(1)
|
withholding from any cash compensation paid to you by the Company;
|
(2)
|
withholding from proceeds of the sale of Shares acquired upon settlement of the Restricted Stock Units either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization); or
|
(3)
|
withholding in Shares to be issued upon settlement of the Restricted Stock Units.
|
(C)
|
Depending on the withholding method, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum applicable rates in which case you may receive a refund of any over-withheld amount in cash and will have no entitlement to the common stock equivalent. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, you are deemed to have been issued the full number of Shares
|
(D)
|
You shall pay to the Company any amount of Tax-Related Items that the Company may be required to withhold or account for as a result of your participation in the Plan that cannot be satisfied by the means described in this Section 4(c)(ii). The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares if you fail to comply with your obligations in connection with the Tax-Related Items.
|
(E)
|
The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding your participation in the Plan, or your acquisition or sale of the underlying Shares. You acknowledge that the grant, vesting or any payment with respect to the Award, and the sale or other disposition of the Shares acquired as a result of the Award may have tax consequences under federal, state, local or international tax laws. You further acknowledge that you are relying solely on your own professional tax and investment advisors with respect to any and all such matters (and are not relying, in any manner, on the Company or any of its employees or representatives). You understand and agree that any and all Tax-Related Items are solely your responsibility without any expectation or understanding that the Company or any of its employees or representatives will pay or reimburse you for such Tax-Related Items.
|
(d)
|
Severability
. In the event that any provision in the Plan or this Agreement is held to be invalid, illegal or unenforceable or would disqualify the Plan or this Agreement under any law, the invalid, illegal or unenforceable provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan or this Agreement, such provision shall be stricken as to the applicable jurisdiction or Shares, and the remainder of the Plan or this Agreement shall remain in full force and effect.
|
(e)
|
Governing Law, Jurisdiction and Venue
.
The laws of Minnesota, without regard to the conflict of law provisions, shall apply to all questions concerning this Agreement. You and the Company 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.
|
(f)
|
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 costs, expenses (including reasonable legal fees) or 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.
|
(g)
|
Appendix
. Notwithstanding any provisions in this Agreement, the grant of the Award shall be subject to any special terms and conditions set forth in the attached country-specific appendix to this Agreement (the “
Appendix
”). If you relocate to one of the countries included in the Appendix, the special terms and conditions for such country will apply to you, to the extent the Company determines that the
|
(h)
|
Imposition of Other Requirements
. The Company reserves the right to impose other requirements on your participation in the Plan, on the Award and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Plan, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
|
(i)
|
Compliance with Law
. Notwithstanding any other provision of the Plan or this Agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the Shares, the Company shall not be required to deliver any Shares issuable upon settlement of the Restricted Stock Units prior to the completion of any registration or qualification of the Shares under any local, state, federal or foreign securities or exchange control law or under rulings or regulations of the U.S. Securities and Exchange Commission (“
SEC
”) or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any local, state, federal or foreign governmental agency, which registration, qualification or approval the Company shall, in its absolute discretion, deem necessary or advisable. You understand that the Company is under no obligation to register or qualify the Shares with the SEC or any state or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares. Further, you agree that Best Buy shall have unilateral authority to amend the Plan and this Agreement without your consent to the extent necessary to comply with securities or other laws applicable to issuance of the Shares.
|
(j)
|
Insider Trading Restrictions/Market Abuse Laws
. You acknowledge that you may be subject to insider trading restrictions and/or market abuse laws, which may affect your ability to acquire or sell Shares or rights to Shares under the Plan during such times as you are considered to have “inside information” regarding Best Buy (as defined by applicable laws in your country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Best Buy insider trading policy. You acknowledge that it is your responsibility to comply with any applicable restrictions, and you are advised to speak to your personal advisor on this matter.
|
(k)
|
Waiver
. You acknowledge that a waiver by Best Buy of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by you or any other award recipient.
|
(l)
|
Data Privacy
.
You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this Agreement and any other award materials by Best Buy for the exclusive purpose of implementing, administering and managing your participation in the Plan.
|
(m)
|
Electronic Delivery and Participation
. Best Buy may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. You hereby consent to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by Best Buy or a third party designated by Best Buy. Further, the parties hereto shall be entitled to rely on delivery of a facsimile or other electronic copy of this Agreement, and delivery by either party of such facsimile or electronic copy shall be legally effective to create a valid and binding agreement between the parties in accordance with the terms hereof.
|
(n)
|
Language
. If you have received this Agreement, or any other document related to your Award and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
|
(o)
|
Foreign Asset/Account Reporting Requirements; Exchange Controls
. Your country may have certain foreign asset and/or account reporting requirements and exchange controls which may affect your ability to acquire or hold Shares pursuant to the Plan or cash received from participating in the Plan (including from any dividends received or sale proceeds arising from the sale of the Shares) in a brokerage or bank account outside your country. You understand that you may be required to report such accounts, assets or transactions to the tax or other authorities in your country. You also may be required to repatriate sale proceeds or other funds received as a result of your participation in the Plan to your country through a designated bank or broker within a certain time after receipt. You acknowledge that it is your responsibility to be compliant with all such requirements, and that you should consult your personal legal and tax advisors on this matter.
|
5.
|
Definitions
.
Capitalized terms used but not defined in this Agreement are defined in the Plan or, if not defined therein, will have the following meanings:
|
(a)
|
“
Cause
” for termination of your service with the Company Group shall, solely for purposes of this Agreement, is deemed to exist if you:
|
(i)
|
are charged with, convicted of or enter a plea of guilty or
nolo contendere
to: (a) a felony (or a crime of comparable magnitude under applicable law), (b) any crime involving moral turpitude,
|
(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, or any individual or individuals the Board authorizes to act on its or their behalf, acting within the scope of its or their authority;
|
(iv)
|
fail to comply with the policies or practices of the Company Group;
|
(v)
|
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;
|
(vi)
|
are determined, in the sole judgment of the Board or any individual or individuals the Board authorizes to act on its or their behalf, to have engaged in a pattern of poor performance;
|
(vii)
|
are determined, in the sole judgment of the Board or any individual or individuals the Board authorizes to act on its or their behalf, to have willfully engaged in conduct that is harmful to the Company Group, monetarily or otherwise;
|
(viii)
|
breach any provision of this Agreement or any other agreement between you and any member of the Company Group; or
|
(ix)
|
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.
|
(b)
|
“
Company Group
” means, collectively, Best Buy Co, Inc. and its subsidiaries.
|
(c)
|
“
Committee
” means the Compensation and Human Resources Committee of the Board of Directors of Best Buy Co., Inc.
|
(d)
|
“
Confidential Information
” means all “Confidential Information” as that term is defined in Best Buy’s Confidentiality Policy, and includes, without limitation, any and all information in whatever form, whether written, electronically stored, orally transmitted or memorized relating to trade secrets, customer lists, records and other information regarding customers, price lists and pricing policies, financial information, records, ledgers and information, purchase orders, agreements and related data, business development and strategic plans, products and technologies, product tests, manufacturing costs, product or service pricing, sales and marketing plans, research and development plans, personnel and employment records, files, data and policies (regardless of whether the information pertains to you or employees of the Company Group), tax information, business and sales methods and operations, business correspondence, memoranda and other records, inventions, improvements and discoveries, processes and methods, business operations and related data formulae, computer records and related
|
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 2, 2016
|
/s/ HUBERT JOLY
|
|
Hubert Joly
|
|
Chairman 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;
|
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 2, 2016
|
/s/ CORIE BARRY
|
|
Corie Barry
|
|
Chief Financial Officer
|
Date: September 2, 2016
|
/s/ HUBERT JOLY
|
|
Hubert Joly
|
|
Chairman and Chief Executive Officer
|
Date: September 2, 2016
|
/s/ CORIE BARRY
|
|
Corie Barry
|
|
Chief Financial Officer
|