|
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
|
Minnesota
|
|
41-0907483
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
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7601 Penn Avenue South
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|
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Richfield, Minnesota
|
|
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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|
|
|
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Smaller reporting company
¨
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Emerging growth company
¨
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Item 1.
|
Financial Statements
|
|
July 29, 2017
|
|
January 28, 2017
|
|
July 30, 2016
|
||||||
Assets
|
|
|
|
|
|
|
|
||||
Current assets
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
1,365
|
|
|
$
|
2,240
|
|
|
$
|
1,861
|
|
Short-term investments
|
2,125
|
|
|
1,681
|
|
|
1,590
|
|
|||
Receivables, net
|
965
|
|
|
1,347
|
|
|
926
|
|
|||
Merchandise inventories
|
5,167
|
|
|
4,864
|
|
|
4,908
|
|
|||
Other current assets
|
456
|
|
|
384
|
|
|
409
|
|
|||
Total current assets
|
10,078
|
|
|
10,516
|
|
|
9,694
|
|
|||
Property and equipment, net
|
2,327
|
|
|
2,293
|
|
|
2,295
|
|
|||
Goodwill
|
425
|
|
|
425
|
|
|
425
|
|
|||
Other assets
|
614
|
|
|
622
|
|
|
840
|
|
|||
Total assets
|
$
|
13,444
|
|
|
$
|
13,856
|
|
|
$
|
13,254
|
|
|
|
|
|
|
|
||||||
Liabilities and equity
|
|
|
|
|
|
||||||
Current liabilities
|
|
|
|
|
|
|
|
|
|||
Accounts payable
|
$
|
5,072
|
|
|
$
|
4,984
|
|
|
$
|
4,800
|
|
Unredeemed gift card liabilities
|
383
|
|
|
427
|
|
|
369
|
|
|||
Deferred revenue
|
427
|
|
|
418
|
|
|
380
|
|
|||
Accrued compensation and related expenses
|
309
|
|
|
358
|
|
|
272
|
|
|||
Accrued liabilities
|
787
|
|
|
865
|
|
|
840
|
|
|||
Accrued income taxes
|
83
|
|
|
26
|
|
|
96
|
|
|||
Current portion of long-term debt
|
44
|
|
|
44
|
|
|
43
|
|
|||
Total current liabilities
|
7,105
|
|
|
7,122
|
|
|
6,800
|
|
|||
Long-term liabilities
|
682
|
|
|
704
|
|
|
794
|
|
|||
Long-term debt
|
1,310
|
|
|
1,321
|
|
|
1,341
|
|
|||
Equity
|
|
|
|
|
|
|
|
|
|||
Preferred stock, $1.00 par value: Authorized — 400,000 shares; Issued and outstanding — none
|
—
|
|
|
—
|
|
|
—
|
|
|||
Common stock, $0.10 par value: Authorized — 1.0 billion shares; Issued and outstanding — 300,000,000, 311,000,000 and 317,000,000 shares, respectively
|
30
|
|
|
31
|
|
|
32
|
|
|||
Retained earnings
|
3,996
|
|
|
4,399
|
|
|
3,991
|
|
|||
Accumulated other comprehensive income
|
321
|
|
|
279
|
|
|
296
|
|
|||
Total equity
|
4,347
|
|
|
4,709
|
|
|
4,319
|
|
|||
Total liabilities and equity
|
$
|
13,444
|
|
|
$
|
13,856
|
|
|
$
|
13,254
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 29, 2017
|
|
July 30, 2016
|
|
July 29, 2017
|
|
July 30, 2016
|
||||||||
Revenue
|
$
|
8,940
|
|
|
$
|
8,533
|
|
|
$
|
17,468
|
|
|
$
|
16,976
|
|
Cost of goods sold
|
6,787
|
|
|
6,471
|
|
|
13,293
|
|
|
12,769
|
|
||||
Gross profit
|
2,153
|
|
|
2,062
|
|
|
4,175
|
|
|
4,207
|
|
||||
Selling, general and administrative expenses
|
1,830
|
|
|
1,773
|
|
|
3,552
|
|
|
3,517
|
|
||||
Restructuring charges
|
2
|
|
|
—
|
|
|
2
|
|
|
29
|
|
||||
Operating income
|
321
|
|
|
289
|
|
|
621
|
|
|
661
|
|
||||
Other income (expense)
|
|
|
|
|
|
|
|
|
|
||||||
Gain on sale of investments
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Investment income and other
|
7
|
|
|
8
|
|
|
18
|
|
|
14
|
|
||||
Interest expense
|
(18
|
)
|
|
(18
|
)
|
|
(37
|
)
|
|
(38
|
)
|
||||
Earnings from continuing operations before income tax expense
|
310
|
|
|
279
|
|
|
602
|
|
|
639
|
|
||||
Income tax expense
|
101
|
|
|
97
|
|
|
205
|
|
|
231
|
|
||||
Net earnings from continuing operations
|
209
|
|
|
182
|
|
|
397
|
|
|
408
|
|
||||
Gain from discontinued operations (Note 2), net of tax benefit (expense) of $0, $(10), $0 and $(7), respectively
|
—
|
|
|
16
|
|
|
—
|
|
|
19
|
|
||||
Net earnings
|
$
|
209
|
|
|
$
|
198
|
|
|
$
|
397
|
|
|
$
|
427
|
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share
|
|
|
|
|
|
|
|
|
|
||||||
Continuing operations
|
$
|
0.69
|
|
|
$
|
0.57
|
|
|
$
|
1.29
|
|
|
$
|
1.27
|
|
Discontinued operations
|
—
|
|
|
0.05
|
|
|
—
|
|
|
0.06
|
|
||||
Basic earnings per share
|
$
|
0.69
|
|
|
$
|
0.62
|
|
|
$
|
1.29
|
|
|
$
|
1.33
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per share
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
0.67
|
|
|
$
|
0.56
|
|
|
$
|
1.27
|
|
|
$
|
1.26
|
|
Discontinued operations
|
—
|
|
|
0.05
|
|
|
—
|
|
|
0.05
|
|
||||
Diluted earnings per share
|
$
|
0.67
|
|
|
$
|
0.61
|
|
|
$
|
1.27
|
|
|
$
|
1.31
|
|
|
|
|
|
|
|
|
|
||||||||
Dividends declared per common share
|
$
|
0.34
|
|
|
$
|
0.28
|
|
|
$
|
0.68
|
|
|
$
|
1.01
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding
|
|
|
|
|
|
|
|
|
|
||||||
Basic
|
304.1
|
|
|
320.8
|
|
|
306.7
|
|
|
322.2
|
|
||||
Diluted
|
310.8
|
|
|
322.9
|
|
|
313.0
|
|
|
324.8
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 29, 2017
|
|
July 30, 2016
|
|
July 29, 2017
|
|
July 30, 2016
|
||||||||
Net earnings
|
$
|
209
|
|
|
$
|
198
|
|
|
$
|
397
|
|
|
$
|
427
|
|
Foreign currency translation adjustments
|
55
|
|
|
(20
|
)
|
|
42
|
|
|
25
|
|
||||
Comprehensive income
|
$
|
264
|
|
|
$
|
178
|
|
|
$
|
439
|
|
|
$
|
452
|
|
|
Six Months Ended
|
||||||
|
July 29, 2017
|
|
July 30, 2016
|
||||
Operating activities
|
|
|
|
||||
Net earnings
|
$
|
397
|
|
|
$
|
427
|
|
Adjustments to reconcile net earnings to total cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
329
|
|
|
327
|
|
||
Restructuring charges
|
2
|
|
|
29
|
|
||
Stock-based compensation
|
67
|
|
|
57
|
|
||
Deferred income taxes
|
9
|
|
|
—
|
|
||
Other, net
|
(2
|
)
|
|
(29
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables
|
401
|
|
|
239
|
|
||
Merchandise inventories
|
(285
|
)
|
|
161
|
|
||
Other assets
|
(45
|
)
|
|
(29
|
)
|
||
Accounts payable
|
15
|
|
|
355
|
|
||
Other liabilities
|
(237
|
)
|
|
(159
|
)
|
||
Income taxes
|
41
|
|
|
(81
|
)
|
||
Total cash provided by operating activities
|
692
|
|
|
1,297
|
|
||
|
|
|
|
||||
Investing activities
|
|
|
|
|
|
||
Additions to property and equipment
|
(296
|
)
|
|
(276
|
)
|
||
Purchases of investments
|
(2,221
|
)
|
|
(1,388
|
)
|
||
Sales of investments
|
1,806
|
|
|
1,112
|
|
||
Proceeds from property disposition
|
2
|
|
|
56
|
|
||
Other, net
|
1
|
|
|
5
|
|
||
Total cash used in investing activities
|
(708
|
)
|
|
(491
|
)
|
||
|
|
|
|
||||
Financing activities
|
|
|
|
|
|
||
Repurchase of common stock
|
(771
|
)
|
|
(271
|
)
|
||
Repayments of debt
|
(19
|
)
|
|
(374
|
)
|
||
Dividends paid
|
(208
|
)
|
|
(328
|
)
|
||
Issuance of common stock
|
125
|
|
|
23
|
|
||
Other, net
|
(1
|
)
|
|
8
|
|
||
Total cash used in financing activities
|
(874
|
)
|
|
(942
|
)
|
||
Effect of exchange rate changes on cash
|
18
|
|
|
25
|
|
||
Decrease in cash, cash equivalents and restricted cash
|
(872
|
)
|
|
(111
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
2,433
|
|
|
2,161
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
1,561
|
|
|
$
|
2,050
|
|
|
Common
Shares
|
|
Common
Stock
|
|
Prepaid Share Repurchase
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
|
|||||||||||||
Balances at January 28, 2017
|
311
|
|
|
$
|
31
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,399
|
|
|
$
|
279
|
|
|
$
|
4,709
|
|
Adoption of ASU 2016-09
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
(12
|
)
|
|
—
|
|
|
(2
|
)
|
||||||
Net earnings, six months ended July 29, 2017
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
397
|
|
|
—
|
|
|
397
|
|
||||||
Other comprehensive loss, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|
42
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
67
|
|
|
—
|
|
|
—
|
|
|
67
|
|
||||||
Restricted stock vested and stock options exercised
|
5
|
|
|
—
|
|
|
—
|
|
|
121
|
|
|
—
|
|
|
—
|
|
|
121
|
|
||||||
Issuance of common stock under employee stock purchase plan
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||
Common stock dividends, $0.68 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(209
|
)
|
|
—
|
|
|
(209
|
)
|
||||||
Repurchase of common stock
|
(16
|
)
|
|
(1
|
)
|
|
—
|
|
|
(201
|
)
|
|
(579
|
)
|
|
—
|
|
|
(781
|
)
|
||||||
Balances at July 29, 2017
|
300
|
|
|
$
|
30
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,996
|
|
|
$
|
321
|
|
|
$
|
4,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balances at January 30, 2016
|
324
|
|
|
$
|
32
|
|
|
$
|
(55
|
)
|
|
$
|
—
|
|
|
$
|
4,130
|
|
|
$
|
271
|
|
|
$
|
4,378
|
|
Net earnings, six months ended July 30, 2016
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
427
|
|
|
—
|
|
|
427
|
|
||||||
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
25
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
57
|
|
|
—
|
|
|
—
|
|
|
57
|
|
||||||
Restricted stock vested and stock options exercised
|
3
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
||||||
Settlement of accelerated share repurchase
|
—
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
55
|
|
||||||
Issuance of common stock under employee stock purchase plan
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||
Tax benefit from stock options exercised, restricted stock vesting and employee stock purchase plan
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||||
Common stock dividends, $1.01 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(328
|
)
|
|
—
|
|
|
(328
|
)
|
||||||
Repurchase of common stock
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
(84
|
)
|
|
(238
|
)
|
|
—
|
|
|
(322
|
)
|
||||||
Balances at July 30, 2016
|
317
|
|
|
$
|
32
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,991
|
|
|
$
|
296
|
|
|
$
|
4,319
|
|
1.
|
Basis of Presentation
|
•
|
Minor changes to the timing of recognition of revenues related to gift cards and loyalty programs;
|
•
|
Changes to certain immaterial revenues that are currently reported on a gross basis, to be reported on a net basis (with no change in timing of recognition) with consequently no impacts to earnings; and
|
•
|
The balance sheet presentation of our sales returns reserve, which will be shown as a separate asset and liability versus the current net presentation.
|
•
|
ASU 2015-11,
Inventory: Simplifying the Measurement of Inventory
. The adoption did not have a material impact on our results of operations, cash flows or financial position.
|
•
|
ASU 2016-09,
Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting
. Excess tax benefits and tax deficiencies are now recognized in our provision for income taxes as a discrete event rather than as a component of stockholders’ equity. In addition, we elected to account for forfeitures as they occur. The cumulative effect of this policy change amounted to
$12 million
, net of tax, and was recorded as a reduction to our retained earnings opening balance. Finally, we elected to present the Condensed Consolidated Statements of Cash Flows on a retrospective transition method, and prior periods have been adjusted to present excess tax benefits as cash flows from operating activities.
|
•
|
ASU 2016-15,
Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments
, and ASU 2016-18,
Statement of Cash Flows: Restricted Cash
. The retrospective adoption increased our beginning and ending cash balance within our statement of cash flows. The adoption had no other material impacts to our cash flow statement and had no impact on our results of operations or financial position.
|
|
July 30, 2016 Reported
|
|
ASU 2016-09 Adjustment
|
|
ASU 2016-15 Adjustment
|
|
ASU 2016-18 Adjustment
|
|
July 30, 2016 Adjusted
|
||||||||||
Operating activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Other, net
|
$
|
(38
|
)
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(29
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Receivables
|
240
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
239
|
|
|||||
Merchandise inventories
|
160
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
161
|
|
|||||
Total cash provided by operating activities
|
1,288
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
1,297
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Investing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Change in restricted assets
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|||||
Total cash used in investing activities
|
(495
|
)
|
|
—
|
|
|
—
|
|
|
4
|
|
|
(491
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Financing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Other, net
|
17
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
8
|
|
|||||
Total cash used in financing activities
|
(933
|
)
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
(942
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Decrease in cash, cash equivalents and restricted cash
|
(115
|
)
|
|
—
|
|
|
—
|
|
|
4
|
|
|
(111
|
)
|
|||||
Cash, cash equivalents and restricted cash at beginning of period
|
1,976
|
|
|
—
|
|
|
—
|
|
|
185
|
|
|
2,161
|
|
|||||
Cash, cash equivalents and restricted cash at end of period
|
$
|
1,861
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
189
|
|
|
$
|
2,050
|
|
|
July 29, 2017
|
|
January 28, 2017
|
|
July 30, 2016
|
||||||
Cash and cash equivalents
|
$
|
1,365
|
|
|
$
|
2,240
|
|
|
$
|
1,861
|
|
Restricted cash included in Other current assets
|
196
|
|
|
193
|
|
|
189
|
|
|||
Total cash, cash equivalents and restricted cash
|
$
|
1,561
|
|
|
$
|
2,433
|
|
|
$
|
2,050
|
|
2.
|
Discontinued Operations
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 29, 2017
|
|
July 30, 2016
|
|
July 29, 2017
|
|
July 30, 2016
|
||||||||
Gain from discontinued operations before income tax expense
|
$
|
—
|
|
|
$
|
26
|
|
|
$
|
—
|
|
|
$
|
26
|
|
Income tax expense
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
(7
|
)
|
||||
Net gain from discontinued operations
|
$
|
—
|
|
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
19
|
|
3.
|
Fair Value Measurements
|
•
|
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 Hierarchy
|
|
Fair Value at
|
||||||||||
|
|
July 29, 2017
|
|
January 28, 2017
|
|
July 30, 2016
|
|||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|||
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|||
Money market funds
|
Level 1
|
|
$
|
175
|
|
|
$
|
290
|
|
|
$
|
87
|
|
Commercial paper
|
Level 2
|
|
60
|
|
|
—
|
|
|
—
|
|
|||
Time deposits
|
Level 2
|
|
16
|
|
|
15
|
|
|
169
|
|
|||
Short-term investments
|
|
|
|
|
|
|
|
||||||
Corporate bonds
|
Level 2
|
|
—
|
|
|
—
|
|
|
6
|
|
|||
Commercial paper
|
Level 2
|
|
299
|
|
|
349
|
|
|
170
|
|
|||
Time deposits
|
Level 2
|
|
1,826
|
|
|
1,332
|
|
|
1,414
|
|
|||
Other current assets
|
|
|
|
|
|
|
|
|
|||||
Money market funds
|
Level 1
|
|
2
|
|
|
7
|
|
|
—
|
|
|||
Commercial paper
|
Level 2
|
|
60
|
|
|
60
|
|
|
60
|
|
|||
Foreign currency derivative instruments
|
Level 2
|
|
—
|
|
|
2
|
|
|
1
|
|
|||
Time deposits
|
Level 2
|
|
101
|
|
|
100
|
|
|
79
|
|
|||
Other assets
|
|
|
|
|
|
|
|
||||||
Marketable securities that fund deferred compensation
|
Level 1
|
|
97
|
|
|
96
|
|
|
95
|
|
|||
Interest rate swap derivative instruments
|
Level 2
|
|
16
|
|
|
13
|
|
|
27
|
|
|||
Auction rate securities
|
Level 3
|
|
—
|
|
|
—
|
|
|
2
|
|
|||
|
|
|
|
|
|
|
|
||||||
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|||
Accrued liabilities
|
|
|
|
|
|
|
|
|
|
|
|||
Foreign currency derivative instruments
|
Level 2
|
|
15
|
|
|
3
|
|
|
5
|
|
|
Impairments
|
|
Remaining Net Carrying Value
(1)
|
||||||||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
|
||||||||||||||||
|
July 29, 2017
|
|
July 30, 2016
|
|
July 29, 2017
|
|
July 30, 2016
|
|
July 29, 2017
|
|
July 30, 2016
|
||||||||||||
Property and equipment (non-restructuring)
|
$
|
1
|
|
|
$
|
3
|
|
|
$
|
6
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Property and equipment (restructuring)
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
1
|
|
|
$
|
3
|
|
|
$
|
6
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(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 29, 2017
, and
July 30, 2016
.
|
(2)
|
See Note 5,
Restructuring Charges
, for additional information.
|
4.
|
Goodwill and Intangible Assets
|
|
July 29, 2017
|
|
January 28, 2017
|
|
July 30, 2016
|
||||||
Goodwill
|
$
|
425
|
|
|
$
|
425
|
|
|
$
|
425
|
|
Intangible assets included in Other assets
|
18
|
|
|
18
|
|
|
18
|
|
|
July 29, 2017
|
|
January 28, 2017
|
|
July 30, 2016
|
||||||||||||||||||
|
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
|
|
5.
|
Restructuring Charges
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 29, 2017
|
|
July 30, 2016
|
|
July 29, 2017
|
|
July 30, 2016
|
||||||||
Renew Blue Phase 2
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
25
|
|
Canadian brand consolidation
|
(1
|
)
|
|
2
|
|
|
(1
|
)
|
|
1
|
|
||||
Renew Blue
(1)
|
3
|
|
|
—
|
|
|
3
|
|
|
3
|
|
||||
Other restructuring activities
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total restructuring charges
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
29
|
|
(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
$12 million
at
July 29, 2017
.
|
(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
$8 million
at
July 29, 2017
.
|
|
Domestic
|
||||||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
|
Cumulative Amount
|
||||||||||||||
|
July 29, 2017
|
|
July 30, 2016
|
|
July 29, 2017
|
|
July 30, 2016
|
|
July 29, 2017
|
||||||||||
Property and equipment impairments
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
8
|
|
Termination benefits
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
18
|
|
|
18
|
|
|||||
Total restructuring charges
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
25
|
|
|
$
|
26
|
|
|
Termination
Benefits
|
||
Balances at January 30, 2016
|
$
|
—
|
|
Charges
|
19
|
|
|
Cash payments
|
(15
|
)
|
|
Adjustments
(1)
|
(2
|
)
|
|
Balances at July 30, 2016
|
$
|
2
|
|
(1)
|
Adjustments to termination benefits represent changes in retention assumptions.
|
|
International
|
||||||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
|
Cumulative Amount
|
||||||||||||||
|
July 29, 2017
|
|
July 30, 2016
|
|
July 29, 2017
|
|
July 30, 2016
|
|
July 29, 2017
|
||||||||||
Inventory write-downs
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
Property and equipment impairments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|||||
Tradename impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40
|
|
|||||
Termination benefits
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|||||
Facility closure and other costs
|
(1
|
)
|
|
2
|
|
|
(1
|
)
|
|
1
|
|
|
104
|
|
|||||
Total restructuring charges
|
$
|
(1
|
)
|
|
$
|
2
|
|
|
$
|
(1
|
)
|
|
$
|
1
|
|
|
$
|
202
|
|
|
Termination
Benefits
|
|
Facility
Closure and
Other Costs
|
|
Total
|
||||||
Balances at January 28, 2017
|
$
|
—
|
|
|
$
|
34
|
|
|
$
|
34
|
|
Charges
|
—
|
|
|
—
|
|
|
—
|
|
|||
Cash payments
|
—
|
|
|
(10
|
)
|
|
(10
|
)
|
|||
Adjustments
(1)
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Changes in foreign currency exchange rates
|
—
|
|
|
1
|
|
|
1
|
|
|||
Balances at July 29, 2017
|
$
|
—
|
|
|
$
|
24
|
|
|
$
|
24
|
|
|
|
|
|
|
|
||||||
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
|
|
(1)
|
Adjustments to facility closure and other costs represent changes in sublease assumptions.
|
|
July 29, 2017
|
|
January 28, 2017
|
|
July 30, 2016
|
||||||
2018 Notes
|
$
|
500
|
|
|
$
|
500
|
|
|
$
|
500
|
|
2021 Notes
|
650
|
|
|
650
|
|
|
650
|
|
|||
Interest rate swap valuation adjustments
|
16
|
|
|
13
|
|
|
27
|
|
|||
Subtotal
|
1,166
|
|
|
1,163
|
|
|
1,177
|
|
|||
Debt discounts and issuance costs
|
(4
|
)
|
|
(5
|
)
|
|
(6
|
)
|
|||
Financing lease obligations
|
166
|
|
|
177
|
|
|
181
|
|
|||
Capital lease obligations
|
26
|
|
|
30
|
|
|
32
|
|
|||
Total long-term debt
|
1,354
|
|
|
1,365
|
|
|
1,384
|
|
|||
Less: current portion
|
44
|
|
|
44
|
|
|
43
|
|
|||
Total long-term debt, less current portion
|
$
|
1,310
|
|
|
$
|
1,321
|
|
|
$
|
1,341
|
|
7.
|
Derivative Instruments
|
|
July 29, 2017
|
|
January 28, 2017
|
|
July 30, 2016
|
||||||||||||||||||
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
||||||||||||
Derivatives designated as net investment hedges
(1)
|
$
|
—
|
|
|
$
|
13
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
5
|
|
Derivatives designated as interest rate swaps
(2)
|
16
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
27
|
|
|
—
|
|
||||||
No hedge designation (foreign exchange forward contracts)
(1)
|
—
|
|
|
2
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
16
|
|
|
$
|
15
|
|
|
$
|
15
|
|
|
$
|
3
|
|
|
$
|
28
|
|
|
$
|
5
|
|
(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.
|
|
July 29, 2017
|
|
January 28, 2017
|
|
July 30, 2016
|
||||||
Derivatives designated as net investment hedges
|
$
|
205
|
|
|
$
|
205
|
|
|
$
|
203
|
|
Derivatives designated as interest rate swaps
|
1,000
|
|
|
750
|
|
|
750
|
|
|||
No hedge designation (foreign exchange forward contracts)
|
48
|
|
|
43
|
|
|
41
|
|
|||
Total
|
$
|
1,253
|
|
|
$
|
998
|
|
|
$
|
994
|
|
8.
|
Earnings per Share
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 29, 2017
|
|
July 30, 2016
|
|
July 29, 2017
|
|
July 30, 2016
|
||||||||
Numerator
|
|
|
|
|
|
|
|
|
|
||||||
Net earnings from continuing operations
|
$
|
209
|
|
|
$
|
182
|
|
|
$
|
397
|
|
|
$
|
408
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding
|
304.1
|
|
|
320.8
|
|
|
306.7
|
|
|
322.2
|
|
||||
Dilutive effect of stock compensation plan awards
|
6.7
|
|
|
2.1
|
|
|
6.3
|
|
|
2.6
|
|
||||
Weighted-average common shares outstanding, assuming dilution
|
310.8
|
|
|
322.9
|
|
|
313.0
|
|
|
324.8
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net earnings per share from continuing operations
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.69
|
|
|
$
|
0.57
|
|
|
$
|
1.29
|
|
|
$
|
1.27
|
|
Diluted
|
$
|
0.67
|
|
|
$
|
0.56
|
|
|
$
|
1.27
|
|
|
$
|
1.26
|
|
9.
|
Comprehensive Income
|
|
Foreign Currency Translation
|
||
Balances at April 29, 2017
|
$
|
266
|
|
Foreign currency translation adjustments
|
55
|
|
|
Balances at July 29, 2017
|
$
|
321
|
|
|
|
||
Balances at January 28, 2017
|
$
|
279
|
|
Foreign currency translation adjustments
|
42
|
|
|
Balances at July 29, 2017
|
$
|
321
|
|
|
|
||
Balances at April 30, 2016
|
$
|
316
|
|
Foreign currency translation adjustments
|
(20
|
)
|
|
Balances at July 30, 2016
|
$
|
296
|
|
|
|
||
Balances at January 30, 2016
|
$
|
271
|
|
Foreign currency translation adjustments
|
25
|
|
|
Balances at July 30, 2016
|
$
|
296
|
|
10.
|
Repurchase of Common Stock
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 29, 2017
|
|
July 30, 2016
|
|
July 29, 2017
|
|
July 30, 2016
|
||||||||
Total cost of shares repurchased
|
|
|
|
|
|
|
|
||||||||
Open market
(1)
|
$
|
397
|
|
|
$
|
221
|
|
|
$
|
781
|
|
|
$
|
277
|
|
Settlement of January 2016 ASR
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
45
|
|
||||
Total
|
$
|
397
|
|
|
$
|
221
|
|
|
$
|
781
|
|
|
$
|
322
|
|
|
|
|
|
|
|
|
|
||||||||
Average price per share
|
|
|
|
|
|
|
|
||||||||
Open market
|
$
|
55.07
|
|
|
$
|
30.65
|
|
|
$
|
50.38
|
|
|
$
|
30.98
|
|
Settlement of January 2016 ASR
(2)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
28.55
|
|
Average
|
$
|
55.07
|
|
|
$
|
30.65
|
|
|
$
|
50.38
|
|
|
$
|
30.62
|
|
|
|
|
|
|
|
|
|
||||||||
Number of shares repurchased and retired
|
|
|
|
|
|
|
|
||||||||
Open market
(1)
|
7.2
|
|
|
7.2
|
|
|
15.5
|
|
|
8.9
|
|
||||
Settlement of January 2016 ASR
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
1.6
|
|
||||
Total
|
7.2
|
|
|
7.2
|
|
|
15.5
|
|
|
10.5
|
|
(1)
|
As of
July 29, 2017
,
$18 million
, or
0.3 million
shares, in trades remained unsettled. As of
July 30, 2016
,
$6 million
, or
0.2 million
shares, in trades remained unsettled. The liability for unsettled trades is included in Accrued liabilities in the Condensed Consolidated Balance Sheets.
|
(2)
|
See Note 7,
Shareholders' Equity
, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended
January 28, 2017
, for additional information regarding the January 2016 ASR.
|
11.
|
Segments
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 29, 2017
|
|
July 30, 2016
|
|
July 29, 2017
|
|
July 30, 2016
|
||||||||
Domestic
|
$
|
8,272
|
|
|
$
|
7,889
|
|
|
$
|
16,184
|
|
|
$
|
15,718
|
|
International
|
668
|
|
|
644
|
|
|
1,284
|
|
|
1,258
|
|
||||
Total revenue
|
$
|
8,940
|
|
|
$
|
8,533
|
|
|
$
|
17,468
|
|
|
$
|
16,976
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 29, 2017
|
|
July 30, 2016
|
|
July 29, 2017
|
|
July 30, 2016
|
||||||||
Domestic
|
$
|
316
|
|
|
$
|
289
|
|
|
$
|
614
|
|
|
$
|
661
|
|
International
|
5
|
|
|
—
|
|
|
7
|
|
|
—
|
|
||||
Total operating income
|
321
|
|
|
289
|
|
|
621
|
|
|
661
|
|
||||
Other income (expense)
|
|
|
|
|
|
|
|
||||||||
Gain on sale of investments
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Investment income and other
|
7
|
|
|
8
|
|
|
18
|
|
|
14
|
|
||||
Interest expense
|
(18
|
)
|
|
(18
|
)
|
|
(37
|
)
|
|
(38
|
)
|
||||
Earnings from continuing operations before income tax expense
|
$
|
310
|
|
|
$
|
279
|
|
|
$
|
602
|
|
|
$
|
639
|
|
|
July 29, 2017
|
|
January 28, 2017
|
|
July 30, 2016
|
||||||
Domestic
|
$
|
11,972
|
|
|
$
|
12,496
|
|
|
$
|
11,968
|
|
International
|
1,472
|
|
|
1,360
|
|
|
1,286
|
|
|||
Total assets
|
$
|
13,444
|
|
|
$
|
13,856
|
|
|
$
|
13,254
|
|
12.
|
Contingencies
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Overview
|
•
|
Business Strategy Update
|
•
|
Best Buy 2020: Building the New Blue
|
•
|
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
|
1.
|
Explore and pursue growth opportunities around maximizing the multi-channel retail business and providing services and solutions that solve real customer needs and help us build deeper customer relationships.
|
2.
|
Improve our execution in key areas that support our growth strategy.
|
3.
|
Continue to reduce costs and drive efficiencies throughout the business.
|
4.
|
Build the capabilities necessary to deliver on the first three priorities, which involves making investments in people and systems to drive growth, execution and efficiencies.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 29, 2017
|
|
July 30, 2016
|
|
July 29, 2017
|
|
July 30, 2016
|
||||||||
Revenue
|
$
|
8,940
|
|
|
$
|
8,533
|
|
|
$
|
17,468
|
|
|
$
|
16,976
|
|
Revenue % growth (decline)
|
4.8
|
%
|
|
0.1
|
%
|
|
2.9
|
%
|
|
(0.6
|
)%
|
||||
Comparable sales % gain
(1)
|
5.4
|
%
|
|
0.8
|
%
|
|
3.5
|
%
|
|
0.4
|
%
|
||||
Gross profit
|
$
|
2,153
|
|
|
$
|
2,062
|
|
|
$
|
4,175
|
|
|
$
|
4,207
|
|
Gross profit as a % of revenue
(2)
|
24.1
|
%
|
|
24.2
|
%
|
|
23.9
|
%
|
|
24.8
|
%
|
||||
SG&A
|
$
|
1,830
|
|
|
$
|
1,773
|
|
|
$
|
3,552
|
|
|
$
|
3,517
|
|
SG&A as a % of revenue
(2)
|
20.5
|
%
|
|
20.8
|
%
|
|
20.3
|
%
|
|
20.7
|
%
|
||||
Restructuring charges
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
29
|
|
Operating income
|
$
|
321
|
|
|
$
|
289
|
|
|
$
|
621
|
|
|
$
|
661
|
|
Operating income as a % of revenue
|
3.6
|
%
|
|
3.4
|
%
|
|
3.6
|
%
|
|
3.9
|
%
|
||||
Net earnings from continuing operations
|
$
|
209
|
|
|
$
|
182
|
|
|
$
|
397
|
|
|
$
|
408
|
|
Earnings from discontinued operations, net of tax
|
$
|
—
|
|
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
19
|
|
Net earnings
|
$
|
209
|
|
|
$
|
198
|
|
|
$
|
397
|
|
|
$
|
427
|
|
Diluted earnings per share from continuing operations
|
$
|
0.67
|
|
|
$
|
0.56
|
|
|
$
|
1.27
|
|
|
$
|
1.26
|
|
Diluted earnings per share
|
$
|
0.67
|
|
|
$
|
0.61
|
|
|
$
|
1.27
|
|
|
$
|
1.31
|
|
(1)
|
Due to the Canadian brand consolidation impact on our International segment comparable sales metric, Consolidated comparable sales for the three and six months ended July 30, 2016, equal the Domestic segment comparable sales. Refer to the
Overview
section within this Item 2. MD&A for more information.
|
(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,
|
|
Three Months Ended
|
|
Six Months Ended
|
||
|
July 29, 2017
|
|
July 29, 2017
|
||
Comparable sales impact
|
5.2
|
%
|
|
3.3
|
%
|
Non-comparable sales impact
(1)
|
(0.2
|
)%
|
|
(0.3
|
)%
|
Foreign currency exchange rate fluctuation impact
|
(0.2
|
)%
|
|
(0.1
|
)%
|
Total revenue increase
|
4.8
|
%
|
|
2.9
|
%
|
(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.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 29, 2017
|
|
July 30, 2016
|
|
July 29, 2017
|
|
July 30, 2016
|
||||||||
Revenue
|
$
|
8,272
|
|
|
$
|
7,889
|
|
|
$
|
16,184
|
|
|
$
|
15,718
|
|
Revenue % growth (decline)
|
4.9
|
%
|
|
0.1
|
%
|
|
3.0
|
%
|
|
(0.3
|
)%
|
||||
Comparable sales % gain (decline)
(1)
|
5.4
|
%
|
|
0.8
|
%
|
|
3.4
|
%
|
|
0.4
|
%
|
||||
Gross profit
|
$
|
1,985
|
|
|
$
|
1,895
|
|
|
$
|
3,856
|
|
|
$
|
3,881
|
|
Gross profit as a % of revenue
|
24.0
|
%
|
|
24.0
|
%
|
|
23.8
|
%
|
|
24.7
|
%
|
||||
SG&A
|
$
|
1,669
|
|
|
$
|
1,608
|
|
|
$
|
3,242
|
|
|
$
|
3,195
|
|
SG&A as a % of revenue
|
20.2
|
%
|
|
20.4
|
%
|
|
20.0
|
%
|
|
20.3
|
%
|
||||
Restructuring charges
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
25
|
|
Operating income
|
$
|
316
|
|
|
$
|
289
|
|
|
$
|
614
|
|
|
$
|
661
|
|
Operating income as a % of revenue
|
3.8
|
%
|
|
3.7
|
%
|
|
3.8
|
%
|
|
4.2
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Selected Online Revenue Data
|
|
|
|
|
|
|
|
||||||||
Total online revenue
|
$
|
1,096
|
|
|
$
|
835
|
|
|
$
|
2,114
|
|
|
$
|
1,667
|
|
Online revenue as a % of total segment revenue
|
13.2
|
%
|
|
10.6
|
%
|
|
13.1
|
%
|
|
10.6
|
%
|
||||
Comparable online sales % gain
(1)
|
31.2
|
%
|
|
23.7
|
%
|
|
26.8
|
%
|
|
23.8
|
%
|
(1)
|
Comparable online sales is included in the comparable sales calculation.
|
|
Three Months Ended
|
|
Six Months Ended
|
||
|
July 29, 2017
|
|
July 29, 2017
|
||
Comparable sales impact
|
5.2
|
%
|
|
3.3
|
%
|
Non-comparable sales impact
(1)
|
(0.3
|
)%
|
|
(0.3
|
)%
|
Total revenue increase
|
4.9
|
%
|
|
3.0
|
%
|
(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.
|
|
2018
|
|
2017
|
||||||||||||||||||||
|
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
|
1,024
|
|
|
—
|
|
|
—
|
|
|
1,024
|
|
|
1,036
|
|
|
—
|
|
|
(1
|
)
|
|
1,035
|
|
Best Buy Mobile
|
298
|
|
|
—
|
|
|
(6
|
)
|
|
292
|
|
|
338
|
|
|
—
|
|
|
(4
|
)
|
|
334
|
|
Pacific Sales
|
28
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|
28
|
|
|
—
|
|
|
—
|
|
|
28
|
|
Total Domestic segment stores
|
1,350
|
|
|
—
|
|
|
(6
|
)
|
|
1,344
|
|
|
1,402
|
|
|
—
|
|
|
(5
|
)
|
|
1,397
|
|
|
Revenue Mix
|
|
Comparable Sales
|
||||||||
|
Three Months Ended
|
|
Three Months Ended
|
||||||||
|
July 29, 2017
|
|
July 30, 2016
|
|
July 29, 2017
|
|
July 30, 2016
|
||||
Consumer Electronics
|
32
|
%
|
|
33
|
%
|
|
2.5
|
%
|
|
4.0
|
%
|
Computing and Mobile Phones
|
47
|
%
|
|
46
|
%
|
|
6.7
|
%
|
|
0.3
|
%
|
Entertainment
|
6
|
%
|
|
5
|
%
|
|
15.4
|
%
|
|
(18.0
|
)%
|
Appliances
|
11
|
%
|
|
11
|
%
|
|
5.8
|
%
|
|
8.2
|
%
|
Services
|
4
|
%
|
|
5
|
%
|
|
1.5
|
%
|
|
(7.2
|
)%
|
Other
|
—
|
%
|
|
—
|
%
|
|
n/a
|
|
|
n/a
|
|
Total
|
100
|
%
|
|
100
|
%
|
|
5.4
|
%
|
|
0.8
|
%
|
•
|
Consumer Electronics:
Comparable sales gain was driven primarily by smart home and digital imaging products.
|
•
|
Computing and Mobile Phones:
Comparable sales gain was driven by gains in computing, wearables and mobile phones, partially offset by declines in tablets.
|
•
|
Entertainment:
Comparable sales gain was driven primarily by gaming hardware.
|
•
|
Appliances:
Comparable sales gain was driven primarily by large appliances.
|
•
|
Services:
Comparable sales gain was primarily driven by higher installation and delivery services within our home theater and appliance categories and continued growth in our warranty business in the computing category.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 29, 2017
|
|
July 30, 2016
|
|
July 29, 2017
|
|
July 30, 2016
|
||||||||
Revenue
|
$
|
668
|
|
|
$
|
644
|
|
|
$
|
1,284
|
|
|
$
|
1,258
|
|
Revenue % growth (decline)
|
3.7
|
%
|
|
(1.0
|
)%
|
|
2.1
|
%
|
|
(4.6
|
)%
|
||||
Comparable sales % gain
(1)
|
4.7
|
%
|
|
n/a
|
|
|
4.4
|
%
|
|
n/a
|
|
||||
Gross profit
|
$
|
168
|
|
|
$
|
167
|
|
|
$
|
319
|
|
|
$
|
326
|
|
Gross profit as a % of revenue
|
25.1
|
%
|
|
25.9
|
%
|
|
24.8
|
%
|
|
25.9
|
%
|
||||
SG&A
|
$
|
161
|
|
|
$
|
165
|
|
|
$
|
310
|
|
|
$
|
322
|
|
SG&A as a % of revenue
|
24.1
|
%
|
|
25.6
|
%
|
|
24.1
|
%
|
|
25.6
|
%
|
||||
Restructuring charges
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
4
|
|
Operating income
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
—
|
|
Operating income as a % of revenue
|
0.7
|
%
|
|
—
|
%
|
|
0.5
|
%
|
|
—
|
%
|
(1)
|
Due to the Canadian brand consolidation impact on our International segment comparable sales metric, we did not report an International segment comparable sales metric for the
three
or
six
months ended
July 30, 2016
. Refer to the
Overview
section within this Item 2. MD&A for more information.
|
|
Three Months Ended
|
|
Six Months Ended
|
||
|
July 29, 2017
|
|
July 29, 2017
|
||
Comparable sales impact
|
4.7
|
%
|
|
4.2
|
%
|
Non-comparable sales impact
(1)
|
1.2
|
%
|
|
(0.3
|
)%
|
Foreign currency exchange rate fluctuation impact
|
(2.2
|
)%
|
|
(1.8
|
)%
|
Total revenue increase
|
3.7
|
%
|
|
2.1
|
%
|
(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.
|
|
2018
|
|
2017
|
||||||||||||||||||||
|
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
|
134
|
|
|
—
|
|
|
—
|
|
|
134
|
|
|
135
|
|
|
—
|
|
|
—
|
|
|
135
|
|
Best Buy Mobile
|
53
|
|
|
—
|
|
|
—
|
|
|
53
|
|
|
56
|
|
|
—
|
|
|
(2
|
)
|
|
54
|
|
Mexico
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Best Buy
|
20
|
|
|
2
|
|
|
—
|
|
|
22
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
18
|
|
Best Buy Express
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
Total International segment stores
|
212
|
|
|
2
|
|
|
—
|
|
|
214
|
|
|
215
|
|
|
—
|
|
|
(2
|
)
|
|
213
|
|
|
Revenue Mix
|
|
Comparable Sales
|
|||||||
|
Three Months Ended
|
|
Three Months Ended
|
|||||||
|
July 29, 2017
|
|
July 30, 2016
|
|
July 29, 2017
|
|
July 30, 2016
(1)
|
|||
Consumer Electronics
|
31
|
%
|
|
29
|
%
|
|
7.3
|
%
|
|
n/a
|
Computing and Mobile Phones
|
47
|
%
|
|
48
|
%
|
|
0.3
|
%
|
|
n/a
|
Entertainment
|
5
|
%
|
|
6
|
%
|
|
0.5
|
%
|
|
n/a
|
Appliances
|
9
|
%
|
|
7
|
%
|
|
30.8
|
%
|
|
n/a
|
Services
|
6
|
%
|
|
8
|
%
|
|
(1.3
|
)%
|
|
n/a
|
Other
|
2
|
%
|
|
2
|
%
|
|
n/a
|
|
|
n/a
|
Total
|
100
|
%
|
|
100
|
%
|
|
4.7
|
%
|
|
n/a
|
(1)
|
Due to the Canadian brand consolidation impact on our International segment comparable sales metric, we did not report an International segment comparable sales metric for the three months ended
July 30, 2016
. Refer to the Overview section within this Item 2. MD&A for more information.
|
•
|
Consumer Electronics:
Comparable sales gain was driven primarily by smart home products, portable audio and large screen televisions.
|
•
|
Computing and Mobile Phones:
Comparable sales gain was driven primarily by an increase in mobile and computing, partially offset by declines in tablets.
|
•
|
Entertainment:
Comparable sales gain was driven primarily by drones and gaming hardware.
|
•
|
Appliances:
Comparable sales gain was driven primarily by small and large appliances.
|
•
|
Services:
Comparable sales decline was driven primarily by technical support, partially offset by gains in installation.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 29, 2017
|
|
July 30, 2016
(1)
|
|
July 29, 2017
|
|
July 30, 2016
(1)
|
||||||||
Operating income
|
$
|
321
|
|
|
$
|
289
|
|
|
$
|
621
|
|
|
$
|
661
|
|
Net CRT/LCD settlements
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(161
|
)
|
||||
Other Canadian brand consolidation charges - SG&A
(3)
|
—
|
|
|
1
|
|
|
|
|
1
|
|
|||||
Restructuring charges
(4)
|
2
|
|
|
—
|
|
|
2
|
|
|
29
|
|
||||
Non-GAAP operating income
|
$
|
323
|
|
|
$
|
290
|
|
|
$
|
623
|
|
|
$
|
530
|
|
|
|
|
|
|
|
|
|
||||||||
Income tax expense
|
$
|
101
|
|
|
$
|
97
|
|
|
$
|
205
|
|
|
$
|
231
|
|
Effective tax rate
|
32.6
|
%
|
|
34.8
|
%
|
|
34.1
|
%
|
|
36.2
|
%
|
||||
Income tax impact of non-GAAP adjustments
(5)
|
2
|
|
|
—
|
|
|
2
|
|
|
(49
|
)
|
||||
Non-GAAP income tax expense
|
$
|
103
|
|
|
$
|
97
|
|
|
$
|
207
|
|
|
$
|
182
|
|
Non-GAAP effective tax rate
|
32.6
|
%
|
|
34.8
|
%
|
|
34.1
|
%
|
|
36.1
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Net earnings from continuing operations
|
$
|
209
|
|
|
$
|
182
|
|
|
$
|
397
|
|
|
$
|
408
|
|
Net CRT/LCD settlements
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(161
|
)
|
||||
Other Canadian brand consolidation charges - SG&A
(3)
|
—
|
|
|
1
|
|
|
|
|
1
|
|
|||||
Restructuring charges
(4)
|
2
|
|
|
—
|
|
|
2
|
|
|
29
|
|
||||
(Gain) loss on investments, net
(6)
|
5
|
|
|
—
|
|
|
5
|
|
|
(2
|
)
|
||||
Income tax impact of non-GAAP adjustments
(5)
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|
49
|
|
||||
Non-GAAP net earnings from continuing operations
|
$
|
214
|
|
|
$
|
183
|
|
|
$
|
402
|
|
|
$
|
324
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted EPS from continuing operations
|
$
|
0.67
|
|
|
$
|
0.56
|
|
|
$
|
1.27
|
|
|
$
|
1.26
|
|
Per share impact of net CRT/LCD settlements
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.50
|
)
|
||||
Per share impact of other Canadian brand consolidation charges - SG&A
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Per share impact of restructuring charges
(4)
|
0.01
|
|
|
—
|
|
|
0.01
|
|
|
0.09
|
|
||||
Per share impact of (gain) loss on investments, net
(6)
|
0.02
|
|
|
—
|
|
|
0.01
|
|
|
(0.01
|
)
|
||||
Per share income tax impact of non-GAAP adjustments
(5)
|
(0.01
|
)
|
|
0.01
|
|
|
(0.01
|
)
|
|
0.16
|
|
||||
Non-GAAP diluted EPS from continuing operations
|
$
|
0.69
|
|
|
$
|
0.57
|
|
|
$
|
1.28
|
|
|
$
|
1.00
|
|
(1)
|
Beginning in the first quarter of fiscal 2018, we no longer exclude non-restructuring property and equipment impairment charges from our non-GAAP financial measures. To ensure our financial results are comparable, we have recast the prior period balance to conform to this presentation. Refer to the
Overview
section within this MD&A for more information.
|
(2)
|
Represents CRT and LCD litigation settlements reached, net of related legal fees and costs. Settlements related to products purchased and sold in prior fiscal years. For the
six
months ended
July 30, 2016
, the entire balance related to the United States. Refer to Note 12,
Contingencies and Commitments
, within the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended
January 28, 2017
, for further information.
|
(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 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
July 29, 2017
, the entire balance related to Canada. For the
three
months ended
July 30, 2016
, a benefit of
$2 million
related to the United States and a charge of
$2 million
related to Canada. For the
six
months ended
July 29, 2017
, the entire balance related to Canada. For the
six
months ended
July 30, 2016
,
$25 million
related to the United States and
$4 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. As such, the income tax charge is calculated using the statutory tax rates of
38.0%
for the United States and
26.6%
for Canada, applied to the non-GAAP adjustments of each country.
|
(6)
|
Represents (Gain) loss on sale of investments and investment impairments included in Investment income and other within the Condensed Consolidated Statement of Earnings.
|
|
July 29, 2017
|
|
January 28, 2017
|
|
July 30, 2016
|
||||||
Cash and cash equivalents
|
$
|
1,365
|
|
|
$
|
2,240
|
|
|
$
|
1,861
|
|
Short-term investments
|
2,125
|
|
|
1,681
|
|
|
1,590
|
|
|||
Total cash, cash equivalents and short-term investments
|
$
|
3,490
|
|
|
$
|
3,921
|
|
|
$
|
3,451
|
|
|
Six Months Ended
|
||||||
|
July 29, 2017
|
|
July 30, 2016
(1)
|
||||
Total cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
692
|
|
|
$
|
1,297
|
|
Investing activities
|
(708
|
)
|
|
(491
|
)
|
||
Financing activities
|
(874
|
)
|
|
(942
|
)
|
||
Effect of exchange rate changes on cash
|
18
|
|
|
25
|
|
||
Decrease in cash, cash equivalents and restricted cash
|
$
|
(872
|
)
|
|
$
|
(111
|
)
|
(1)
|
Represents cash flows as of
July 30, 2016
, recast to present our retrospective adoption of accounting guidance related to the presentation of the cash flow statement. Refer to Note 1,
Basis of Presentation
, of the Notes to Condensed Consolidated Financial Statements
of this Quarterly Report on Form 10-Q
.
|
Rating Agency
|
|
Rating
|
|
Outlook
|
Standard & Poor's
|
|
BBB-
|
|
Positive
|
Moody's
|
|
Baa1
|
|
Stable
|
Fitch
|
|
BBB-
|
|
Stable
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 29, 2017
|
|
July 30, 2016
|
|
July 29, 2017
|
|
June 30, 2016
(1)
|
||||||||
Total cost of shares repurchased
|
$
|
397
|
|
|
$
|
221
|
|
|
$
|
781
|
|
|
$
|
322
|
|
Average price per share
|
$
|
55.07
|
|
|
$
|
30.65
|
|
|
$
|
50.38
|
|
|
$
|
30.62
|
|
Number of shares repurchased and retired
|
7.2
|
|
|
7.2
|
|
|
15.5
|
|
|
10.5
|
|
(1)
|
Includes the settlement of an accelerated share repurchase contract. Refer to Note 7,
Shareholders' Equity
, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended
January 28, 2017
, for further information on this contract.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 29, 2017
|
|
July 30, 2016
|
|
July 29, 2017
|
|
July 30, 2016
|
||||||||
Regular quarterly cash dividends per share
|
$
|
0.34
|
|
|
$
|
0.28
|
|
|
$
|
0.68
|
|
|
$
|
0.56
|
|
Special cash dividends per share
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
0.45
|
|
||||
Total cash dividends per share
|
$
|
0.34
|
|
|
$
|
0.28
|
|
|
$
|
0.68
|
|
|
$
|
1.01
|
|
|
|
|
|
|
|
|
|
||||||||
Cash dividends declared and paid
|
$
|
103
|
|
|
$
|
90
|
|
|
$
|
208
|
|
|
$
|
328
|
|
(1)
|
Special cash dividends are authorized by our Board and issued upon their discretion. Dividends paid in fiscal
2017
related to the net after-tax proceeds from certain legal settlements and asset disposals.
|
Non-GAAP debt to EBITDAR =
|
Non-GAAP debt
|
|
Non-GAAP EBITDAR
|
|
|
July 29, 2017
(1)
|
|
January 28, 2017
(1)
|
|
July 30, 2016
(1)
|
||||||
Debt (including current portion)
|
$
|
1,354
|
|
|
$
|
1,365
|
|
|
$
|
1,384
|
|
Capitalized operating lease obligations (5 times rental expense)
(2)
|
3,880
|
|
|
3,872
|
|
|
3,847
|
|
|||
Non-GAAP debt
|
$
|
5,234
|
|
|
$
|
5,237
|
|
|
$
|
5,231
|
|
|
|
|
|
|
|
||||||
Net earnings from continuing operations
|
$
|
1,196
|
|
|
$
|
1,207
|
|
|
$
|
1,014
|
|
Other income (expense) (including interest expense, net)
|
35
|
|
|
38
|
|
|
60
|
|
|||
Income tax expense
|
583
|
|
|
609
|
|
|
588
|
|
|||
Depreciation and amortization expense
|
656
|
|
|
654
|
|
|
658
|
|
|||
Rental expense
|
776
|
|
|
774
|
|
|
769
|
|
|||
Restructuring charges and other
(3)(4)
|
12
|
|
|
39
|
|
|
47
|
|
|||
Non-GAAP EBITDAR
|
$
|
3,258
|
|
|
$
|
3,321
|
|
|
$
|
3,136
|
|
|
|
|
|
|
|
||||||
Debt to net earnings ratio
|
1.1
|
|
|
1.1
|
|
|
1.4
|
|
|||
Non-GAAP debt to EBITDAR ratio
|
1.6
|
|
|
1.6
|
|
|
1.7
|
|
(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 non-GAAP EBITDAR represent activity for the 12-months ended as of each of the respective dates.
|
(2)
|
The multiple of five times annual rent expense in the calculation of our capitalized operating lease obligations is the multiple used for the retail sector by one of the nationally recognized credit rating agencies that rate our creditworthiness, and we consider it to be an appropriate multiple for our lease portfolio.
|
(3)
|
Includes the impact of restructuring charges. Refer to Note 5,
Restructuring Charges
, in the Notes to Condensed Consolidated Financial Statements for addition information regarding the nature of these charges.
|
(4)
|
Beginning in the first quarter of fiscal 2018, we no longer exclude non-restructuring property and equipment impairment charges from our non-GAAP financial measures. To ensure our financial results are comparable, we have recast the prior period balances to conform to this presentation. Refer to the
Overview
section within this Item 2. MD&A for more information.
|
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)
|
||||||
April 30, 2017 through May 27, 2017
|
|
2,300,507
|
|
|
$
|
52.18
|
|
|
2,300,507
|
|
|
$
|
4,534,000,000
|
|
May 28, 2017 through July 1, 2017
|
|
2,478,800
|
|
|
$
|
57.45
|
|
|
2,478,800
|
|
|
$
|
4,391,000,000
|
|
July 2, 2017 through July 29, 2017
|
|
2,424,906
|
|
|
$
|
55.39
|
|
|
2,424,906
|
|
|
$
|
4,257,000,000
|
|
Total Fiscal 2018 Second Quarter
|
|
7,204,213
|
|
|
$
|
55.07
|
|
|
7,204,213
|
|
|
|
(1)
|
Pursuant to a
$5.0 billion
share repurchase program that was authorized by our Board in February 2017. There is no expiration date governing the period over which we can repurchase shares under the February 2017 share repurchase program. For additional information see Note 10,
Repurchase of Common Stock
, Notes to Condensed Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q.
|
Item 6.
|
Exhibits
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
101
|
|
The following financial information from our Quarterly Report on Form 10-Q for the second quarter of fiscal 2018, filed with the SEC on September 5, 2017, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets at July 29, 2017, January 28, 2017, and July 30, 2016, (ii) the Condensed Consolidated Statements of Earnings for the three and six months ended July 29, 2017, and July 30, 2016, (iii) the Condensed Consolidated Statements of Comprehensive Income for the three and six months ended July 29, 2017, and July 30, 2016, (iv) the Condensed Consolidated Statements of Cash Flows for the six months ended July 29, 2017, and July 30, 2016, (v) the Condensed Consolidated Statements of Changes in Shareholders’ Equity for the six months ended July 29, 2017, and July 30, 2016, 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 5, 2017
|
By:
|
/s/ HUBERT JOLY
|
|
|
Hubert Joly
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
Date: September 5, 2017
|
By:
|
/s/ CORIE BARRY
|
|
|
Corie Barry
|
|
|
Chief Financial Officer
|
|
|
|
Date: September 5, 2017
|
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 an arbitrator 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 arbitrator 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 through arbitration. You further agree that the duration of the Restrictive Covenant shall be extended by the same amount of time that you are in breach of any Restrictive Covenant.
|
(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 wages or other compensation, fringe benefits or vacation pay) against any amounts you owe under this Section 3.
|
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 the rights of a shareholder with respect to the Shares unless Shares are forfeited or recovered under this Agreement or the Plan.
|
(b)
|
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, with the exception of the application of the Company’s Arbitration Policy. You agree that all decisions regarding and interpretations of this Agreement by the Committee are binding, conclusive, final and non-appealable.
|
(ii)
|
Taxes
. You are liable for any for any federal, state and other taxes incurred upon the lapse of a substantial risk of forfeiture (
e.g
., employment taxes) or upon delivery of Shares underlying the Restricted Stock Units (
e.g
., income taxes), and any subsequent disposition of any Shares (
e.g
., capital gain taxes). You authorize the Company, or its agents, to satisfy its obligations with regard to all withholding by withholding from such Shares a number of Shares having a Fair Market Value equal to the amount of all taxes required to be withheld by the Company. In lieu of the foregoing, prior to any such vesting date, you may elect such other method to satisfy such obligations acceptable to the Company.
|
(iii)
|
Consultation With Professional Tax Advisors
. You acknowledge that the grant, exercise, vesting or any payment with respect to the Award, and the sale or other taxable 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 consequences resulting from the Award and its grant, exercise, vesting or any payment with respect thereto, and the sale or other taxable disposition of the Shares acquired pursuant to the Plan, 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 taxes.
|
(c)
|
Section 409A.
Anything herein to the contrary notwithstanding, this Agreement shall be interpreted so as to comply with or satisfy an exemption from Section 409A of the Code and the regulations and guidance promulgated thereunder (collectively, “
Section 409A
”). The Committee may in good faith make the minimum modifications to this Agreement as it may deem appropriate to comply with Section 409A while to the maximum extent reasonably possible maintaining the original intent and economic benefit to you and the Company Group of the applicable provision.
|
(i)
|
To the extent required by Section 409A(a)(2)(B)(i), to the extent that you are a specified employee, Shares (or cash equivalent value of Shares) underlying Restricted Stock Units and Performance Share Awards that become payable to you upon your separation from service will be delayed and paid promptly after the earlier of the date that is six (6) months after the date of such separation from service or the date of your death after such separation from service. For purposes hereof, (x) any reference to your termination of service under this Agreement shall mean your separation from service, (y) the occurrence of your “separation from service” will be determined in accordance with the default provisions of Treasury Regulation Section 1.409A-1(h) and (z) whether you are a “specified employee” will be determined in accordance with the default provisions of Treasury Regulation Section 1.409A-1(i) with the “identification date” to be December 31 and the “effective date” to be the April 1 following the identification date (as such terms are used under such regulation). Notwithstanding anything in this Agreement to the contrary, your service shall not be deemed to have been terminated unless and until you have incurred a “separation from service” within the meaning of Section 409A.
|
(ii)
|
For purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii), your right to receive any installment payments under this Agreement shall be treated as a right to receive a series of separate payments and, accordingly, each installment payment under this Agreement shall at all times be considered a separate and distinct payment.
|
(d)
|
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 and Dispute Resolution.
Any disputes under this Agreement or the Plan must be resolved by arbitration subject to the Company’s Arbitration Policy. The substantive laws of Minnesota, without regard to the conflict of law provisions, shall apply to all questions concerning this Agreement; however, the Arbitration Policy, its enforceability, and its implementation are governed by the Federal Arbitration Act.
|
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, (b) any crime involving moral turpitude, dishonesty, breach of trust or unethical business conduct, or (c) any crime involving the business of the Company Group;
|
(ii)
|
in the performance of your duties for the Company Group or otherwise to the detriment of the Company Group, engage in: (a) dishonesty that is harmful to the Company Group, monetarily or otherwise, (b) willful or gross misconduct, (c) willful or gross neglect, (d) fraud, (e) misappropriation, (f) embezzlement, or (g) theft;
|
(iii)
|
disobey the directions of the Board, 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 data, know-how, research and development, trademark, technology, technical information, copyrighted material, and any other confidential or proprietary data and information which you encounter during your service, all of which are held, possessed and/or owned by the Company Group and all of which are used in the operations and business of the Company Group. Confidential Information does not include information which is or becomes generally known within the Company Group’s industry through no act or omission by you.
|
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 Company Group in lieu of, or prior to or pending, determination in any arbitration proceeding. You further agree that the duration of the Restrictive Covenant shall be extended by the same amount of time that you are in breach of any Restrictive Covenant.
|
(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 the rights of a shareholder with respect to the Shares unless Shares are forfeited or recovered under this Agreement or the Plan.
|
(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 subject to the vested Restricted Stock Units, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of your participation in the Plan.
|
(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
|
(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 application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Plan. The Appendix constitutes part of this Agreement.
|
(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
|
(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.
|
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, dishonesty, breach of trust or unethical business conduct, or (c) any crime involving the business of the Company Group;
|
(ii)
|
in the performance of your duties for the Company Group or otherwise to the detriment of the Company Group, engage in: (a) dishonesty that is harmful to the Company Group, monetarily or otherwise, (b) willful or gross misconduct, (c) willful or gross neglect, (d) fraud, (e) misappropriation, (f) embezzlement, or (g) theft;
|
(iii)
|
disobey the directions of the Board, 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 data, know-how, research and development, trademark, technology, technical information, copyrighted material, and any other confidential or proprietary data and information which you encounter during your service, all of which are held, possessed and/or
|
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 5, 2017
|
/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 5, 2017
|
/s/ CORIE BARRY
|
|
Corie Barry
|
|
Chief Financial Officer
|
Date: September 5, 2017
|
/s/ HUBERT JOLY
|
|
Hubert Joly
|
|
Chairman and Chief Executive Officer
|
Date: September 5, 2017
|
/s/ CORIE BARRY
|
|
Corie Barry
|
|
Chief Financial Officer
|