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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Minnesota
|
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41-0907483
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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7601 Penn Avenue South
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Richfield, Minnesota
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55423
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
x
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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Emerging growth company
¨
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Item 1.
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Financial Statements
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|
May 5, 2018
|
|
February 3, 2018
|
|
April 29, 2017
|
||||||
Assets
|
|
|
|
|
|
|
|
||||
Current assets
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
1,848
|
|
|
$
|
1,101
|
|
|
$
|
1,651
|
|
Short-term investments
|
785
|
|
|
2,032
|
|
|
1,948
|
|
|||
Receivables, net
|
860
|
|
|
1,049
|
|
|
1,011
|
|
|||
Merchandise inventories
|
4,964
|
|
|
5,209
|
|
|
4,637
|
|
|||
Other current assets
|
473
|
|
|
438
|
|
|
409
|
|
|||
Total current assets
|
8,930
|
|
|
9,829
|
|
|
9,656
|
|
|||
Property and equipment, net
|
2,385
|
|
|
2,421
|
|
|
2,287
|
|
|||
Goodwill
|
425
|
|
|
425
|
|
|
425
|
|
|||
Other assets
|
342
|
|
|
374
|
|
|
587
|
|
|||
Total assets
|
$
|
12,082
|
|
|
$
|
13,049
|
|
|
$
|
12,955
|
|
|
|
|
|
|
|
||||||
Liabilities and equity
|
|
|
|
|
|
||||||
Current liabilities
|
|
|
|
|
|
|
|
|
|||
Accounts payable
|
$
|
4,619
|
|
|
$
|
4,873
|
|
|
$
|
4,599
|
|
Unredeemed gift card liabilities
|
285
|
|
|
385
|
|
|
389
|
|
|||
Deferred revenue
|
371
|
|
|
453
|
|
|
371
|
|
|||
Accrued compensation and related expenses
|
296
|
|
|
561
|
|
|
274
|
|
|||
Accrued liabilities
|
780
|
|
|
864
|
|
|
699
|
|
|||
Accrued income taxes
|
154
|
|
|
137
|
|
|
93
|
|
|||
Current portion of long-term debt
|
550
|
|
|
544
|
|
|
45
|
|
|||
Total current liabilities
|
7,055
|
|
|
7,817
|
|
|
6,470
|
|
|||
Long-term liabilities
|
815
|
|
|
809
|
|
|
684
|
|
|||
Long-term debt
|
792
|
|
|
811
|
|
|
1,302
|
|
|||
Equity
|
|
|
|
|
|
|
|
|
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Preferred stock, $1.00 par value: Authorized — 400,000 shares; Issued and outstanding — none
|
—
|
|
|
—
|
|
|
—
|
|
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Common stock, $0.10 par value: Authorized — 1.0 billion shares; Issued and outstanding — 281,000,000, 283,000,000 and 306,000,000 shares, respectively
|
28
|
|
|
28
|
|
|
31
|
|
|||
Retained earnings
|
3,082
|
|
|
3,270
|
|
|
4,202
|
|
|||
Accumulated other comprehensive income
|
310
|
|
|
314
|
|
|
266
|
|
|||
Total equity
|
3,420
|
|
|
3,612
|
|
|
4,499
|
|
|||
Total liabilities and equity
|
$
|
12,082
|
|
|
$
|
13,049
|
|
|
$
|
12,955
|
|
|
Three Months Ended
|
||||||
|
May 5, 2018
|
|
April 29, 2017
|
||||
Revenue
|
$
|
9,109
|
|
|
$
|
8,528
|
|
Cost of goods sold
|
6,984
|
|
|
6,506
|
|
||
Gross profit
|
2,125
|
|
|
2,022
|
|
||
Selling, general and administrative expenses
|
1,830
|
|
|
1,722
|
|
||
Restructuring charges
|
30
|
|
|
—
|
|
||
Operating income
|
265
|
|
|
300
|
|
||
Other income (expense)
|
|
|
|
|
|
||
Investment income and other
|
11
|
|
|
11
|
|
||
Interest expense
|
(19
|
)
|
|
(19
|
)
|
||
Earnings before income tax expense
|
257
|
|
|
292
|
|
||
Income tax expense
|
49
|
|
|
104
|
|
||
Net earnings
|
$
|
208
|
|
|
$
|
188
|
|
|
|
|
|
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Basic earnings per share
|
$
|
0.74
|
|
|
$
|
0.61
|
|
Diluted earnings per share
|
$
|
0.72
|
|
|
$
|
0.60
|
|
|
|
|
|
||||
Dividends declared per common share
|
$
|
0.45
|
|
|
$
|
0.34
|
|
|
|
|
|
||||
Weighted-average common shares outstanding
|
|
|
|
|
|
||
Basic
|
282.6
|
|
|
309.2
|
|
||
Diluted
|
288.3
|
|
|
315.0
|
|
|
Three Months Ended
|
||||||
|
May 5, 2018
|
|
April 29, 2017
|
||||
Net earnings
|
$
|
208
|
|
|
$
|
188
|
|
Foreign currency translation adjustments
|
(4
|
)
|
|
(13
|
)
|
||
Comprehensive income
|
$
|
204
|
|
|
$
|
175
|
|
|
Three Months Ended
|
||||||
|
May 5, 2018
|
|
April 29, 2017
|
||||
Operating activities
|
|
|
|
||||
Net earnings
|
$
|
208
|
|
|
$
|
188
|
|
Adjustments to reconcile net earnings to total cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
176
|
|
|
161
|
|
||
Restructuring charges
|
30
|
|
|
—
|
|
||
Stock-based compensation
|
32
|
|
|
31
|
|
||
Deferred income taxes
|
9
|
|
|
12
|
|
||
Other, net
|
(2
|
)
|
|
(1
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables
|
189
|
|
|
333
|
|
||
Merchandise inventories
|
243
|
|
|
223
|
|
||
Other assets
|
(13
|
)
|
|
(25
|
)
|
||
Accounts payable
|
(214
|
)
|
|
(382
|
)
|
||
Other liabilities
|
(506
|
)
|
|
(364
|
)
|
||
Income taxes
|
52
|
|
|
67
|
|
||
Total cash provided by operating activities
|
204
|
|
|
243
|
|
||
|
|
|
|
||||
Investing activities
|
|
|
|
|
|
||
Additions to property and equipment
|
(181
|
)
|
|
(153
|
)
|
||
Purchases of investments
|
—
|
|
|
(1,134
|
)
|
||
Sales of investments
|
1,245
|
|
|
863
|
|
||
Other, net
|
9
|
|
|
1
|
|
||
Total cash provided by (used in) investing activities
|
1,073
|
|
|
(423
|
)
|
||
|
|
|
|
||||
Financing activities
|
|
|
|
|
|
||
Repurchase of common stock
|
(400
|
)
|
|
(373
|
)
|
||
Repayments of debt
|
(11
|
)
|
|
(10
|
)
|
||
Dividends paid
|
(128
|
)
|
|
(105
|
)
|
||
Issuance of common stock
|
24
|
|
|
75
|
|
||
Other, net
|
(1
|
)
|
|
—
|
|
||
Total cash used in financing activities
|
(516
|
)
|
|
(413
|
)
|
||
Effect of exchange rate changes on cash
|
(12
|
)
|
|
(6
|
)
|
||
Increase (decrease) in cash, cash equivalents and restricted cash
|
749
|
|
|
(599
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
1,300
|
|
|
2,433
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
2,049
|
|
|
$
|
1,834
|
|
|
Common
Shares
|
|
Common
Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
|
|||||||||||
Balances at February 3, 2018
|
283
|
|
|
$
|
28
|
|
|
$
|
—
|
|
|
$
|
3,270
|
|
|
$
|
314
|
|
|
$
|
3,612
|
|
Adoption of ASU 2014-09
|
—
|
|
|
—
|
|
|
—
|
|
|
73
|
|
|
—
|
|
|
73
|
|
|||||
Net earnings, three months ended May 5, 2018
|
—
|
|
|
—
|
|
|
—
|
|
|
208
|
|
|
—
|
|
|
208
|
|
|||||
Other comprehensive loss, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
(4
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
32
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|||||
Restricted stock vested and stock options exercised
|
3
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|||||
Issuance of common stock under employee stock purchase plan
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|||||
Common stock dividends, $0.45 per share
|
—
|
|
|
—
|
|
|
2
|
|
|
(128
|
)
|
|
—
|
|
|
(126
|
)
|
|||||
Repurchase of common stock
|
(5
|
)
|
|
—
|
|
|
(58
|
)
|
|
(341
|
)
|
|
—
|
|
|
(399
|
)
|
|||||
Balances at May 5, 2018
|
281
|
|
|
$
|
28
|
|
|
$
|
—
|
|
|
$
|
3,082
|
|
|
$
|
310
|
|
|
$
|
3,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balances at January 28, 2017
|
311
|
|
|
$
|
31
|
|
|
$
|
—
|
|
|
$
|
4,399
|
|
|
$
|
279
|
|
|
$
|
4,709
|
|
Adoption of ASU 2016-09
|
—
|
|
|
—
|
|
|
10
|
|
|
(12
|
)
|
|
—
|
|
|
(2
|
)
|
|||||
Net earnings, three months ended April 29, 2017
|
—
|
|
|
—
|
|
|
—
|
|
|
188
|
|
|
—
|
|
|
188
|
|
|||||
Other comprehensive loss, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
(13
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
31
|
|
|
—
|
|
|
—
|
|
|
31
|
|
|||||
Restricted stock vested and stock options exercised
|
3
|
|
|
—
|
|
|
72
|
|
|
—
|
|
|
—
|
|
|
72
|
|
|||||
Issuance of common stock under employee stock purchase plan
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||
Common stock dividends, $0.34 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(105
|
)
|
|
—
|
|
|
(105
|
)
|
|||||
Repurchase of common stock
|
(8
|
)
|
|
—
|
|
|
(116
|
)
|
|
(268
|
)
|
|
—
|
|
|
(384
|
)
|
|||||
Balances at April 29, 2017
|
306
|
|
|
$
|
31
|
|
|
$
|
—
|
|
|
$
|
4,202
|
|
|
$
|
266
|
|
|
$
|
4,499
|
|
1.
|
Basis of Presentation
|
•
|
ASU 2016-16,
Intra-Entity Transfers of Assets Other Than Inventory
|
•
|
ASU 2017-12,
Derivatives and Hedging
|
•
|
ASU 2018-02,
Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
|
|
February 3, 2018
As Reported
|
|
ASU 2014-09 Adjustment on February 4, 2018
|
|
February 4, 2018 Adjusted
|
||||||
Assets
|
|
|
|
|
|
||||||
Other assets
|
$
|
374
|
|
|
$
|
(19
|
)
|
|
$
|
355
|
|
Liabilities
|
|
|
|
|
|
||||||
Unredeemed gift card liabilities
|
385
|
|
|
(69
|
)
|
|
316
|
|
|||
Deferred revenue
|
453
|
|
|
(26
|
)
|
|
427
|
|
|||
Accrued liabilities
|
864
|
|
|
(3
|
)
|
|
861
|
|
|||
Accrued income taxes
|
137
|
|
|
6
|
|
|
143
|
|
|||
Equity
|
|
|
|
|
|
||||||
Retained earnings
|
3,270
|
|
|
73
|
|
|
3,343
|
|
|
May 5, 2018
|
||||||||||
Impact of Changes to Condensed Consolidated Balance Sheets
|
As Reported
|
|
Balances without Adoption of
ASU 2014-09
|
|
Effect of Change Higher/(Lower)
(1)
|
||||||
Assets
|
|
|
|
|
|
||||||
Other current assets
|
$
|
473
|
|
|
$
|
427
|
|
|
$
|
46
|
|
Other assets
|
304
|
|
|
323
|
|
|
(19
|
)
|
|||
Liabilities
|
|
|
|
|
|
||||||
Unredeemed gift card liabilities
|
285
|
|
|
355
|
|
|
(70
|
)
|
|||
Deferred revenue
|
371
|
|
|
395
|
|
|
(24
|
)
|
|||
Accrued liabilities
|
780
|
|
|
736
|
|
|
44
|
|
|||
Accrued income taxes
|
154
|
|
|
148
|
|
|
6
|
|
|||
Equity
|
|
|
|
|
|
||||||
Retained earnings
|
3,082
|
|
|
3,011
|
|
|
71
|
|
(1)
|
Effect of change includes the opening retained earnings adjustment as detailed within the table above.
|
|
Three months ended May 5, 2018
|
||||||||||
Impact of Changes to Condensed Consolidated Statements of Earnings
|
As Reported
|
|
Balances without Adoption of
ASU 2014-09
|
|
Effect of Change Higher/(Lower)
|
||||||
Revenue
|
$
|
9,109
|
|
|
$
|
9,100
|
|
|
$
|
9
|
|
Cost of goods sold
|
6,984
|
|
|
6,973
|
|
|
11
|
|
|||
Gross profit
|
2,125
|
|
|
2,127
|
|
|
(2
|
)
|
|||
Operating income
|
265
|
|
|
267
|
|
|
(2
|
)
|
|||
Income tax expense
|
49
|
|
|
50
|
|
|
(1
|
)
|
|||
Net earnings
|
208
|
|
|
209
|
|
|
(1
|
)
|
|||
|
|
|
|
|
|
||||||
Basic earnings per share
|
$
|
0.74
|
|
|
$
|
0.74
|
|
|
$
|
—
|
|
Diluted earnings per share
|
$
|
0.72
|
|
|
$
|
0.73
|
|
|
$
|
(0.01
|
)
|
|
May 5, 2018
|
|
February 3, 2018
|
|
April 29, 2017
|
||||||
Cash and cash equivalents
|
$
|
1,848
|
|
|
$
|
1,101
|
|
|
$
|
1,651
|
|
Restricted cash included in Other current assets
|
201
|
|
|
199
|
|
|
183
|
|
|||
Total cash, cash equivalents and restricted cash
|
$
|
2,049
|
|
|
$
|
1,300
|
|
|
$
|
1,834
|
|
2.
|
Revenue Recognition
|
|
May 5, 2018
|
|
February 4, 2018
|
||||
Receivables, net of an allowance for doubtful accounts of $26 and $24, respectively
|
$
|
582
|
|
|
$
|
674
|
|
Short-term contract liabilities included in:
|
|
|
|
||||
Unredeemed gift cards
|
285
|
|
|
316
|
|
||
Deferred revenue
|
371
|
|
|
408
|
|
||
Accrued liabilities
|
139
|
|
|
151
|
|
||
Long-term contract liabilities included in:
|
|
|
|
||||
Long-term liabilities
|
20
|
|
|
22
|
|
|
Allowance for Doubtful Accounts
|
||
Balances at February 4, 2018
|
$
|
24
|
|
Charged to expenses or other accounts
|
11
|
|
|
Other
(1)
|
(9
|
)
|
|
Balances at May 5, 2018
|
$
|
26
|
|
(1)
|
Includes bad debt write-offs and recoveries and the effect of foreign currency fluctuations.
|
|
Three Months Ended
|
||
|
May 5, 2018
|
||
Revenue recognized that was included in the contract liability balance(s) as of February 4, 2018
|
$
|
455
|
|
Revenue recognized from performance obligations satisfied in previous periods
|
—
|
|
|
Adjustments
(1)
|
(2
|
)
|
(1)
|
Includes changes in the measure of progress, changes in the estimate of the transaction price or contract modifications.
|
|
May 5, 2018
(1)
|
||
Remainder of fiscal 2019
|
$
|
20
|
|
Fiscal 2020
|
15
|
|
|
Fiscal 2021
|
6
|
|
|
Fiscal 2022
|
2
|
|
|
Fiscal 2023 and thereafter
|
1
|
|
(1)
|
We have elected to exclude unsatisfied performance obligations from contract liability balances with a duration of one year or less. The estimated transaction price disclosed above also does not include amounts of variable consideration attributable to contracts where the consideration is constrained at May 5, 2018. Further information about our forms of variable consideration are disclosed below.
|
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
|
||||||||||
|
|
May 5, 2018
|
|
February 3, 2018
|
|
April 29, 2017
|
|||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|||
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|||
Money market funds
|
Level 1
|
|
$
|
19
|
|
|
$
|
21
|
|
|
$
|
24
|
|
Commercial paper
|
Level 2
|
|
—
|
|
|
90
|
|
|
260
|
|
|||
Time deposits
|
Level 2
|
|
200
|
|
|
65
|
|
|
11
|
|
|||
Short-term investments
|
|
|
|
|
|
|
|
||||||
Commercial paper
|
Level 2
|
|
100
|
|
|
474
|
|
|
150
|
|
|||
Time deposits
|
Level 2
|
|
685
|
|
|
1,558
|
|
|
1,798
|
|
|||
Other current assets
|
|
|
|
|
|
|
|
|
|||||
Money market funds
|
Level 1
|
|
58
|
|
|
3
|
|
|
2
|
|
|||
Commercial paper
|
Level 2
|
|
—
|
|
|
60
|
|
|
60
|
|
|||
Foreign currency derivative instruments
|
Level 2
|
|
3
|
|
|
2
|
|
|
7
|
|
|||
Interest rate swap derivative instruments
|
Level 2
|
|
5
|
|
|
—
|
|
|
—
|
|
|||
Time deposits
|
Level 2
|
|
101
|
|
|
101
|
|
|
101
|
|
|||
Other assets
|
|
|
|
|
|
|
|
||||||
Marketable securities that fund deferred compensation
|
Level 1
|
|
99
|
|
|
99
|
|
|
97
|
|
|||
Interest rate swap derivative instruments
|
Level 2
|
|
—
|
|
|
—
|
|
|
4
|
|
|||
|
|
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|||
Accrued liabilities
|
|
|
|
|
|
|
|
|
|
|
|||
Foreign currency derivative instruments
|
Level 2
|
|
1
|
|
|
8
|
|
|
—
|
|
|||
Interest rate swap derivative instruments
|
Level 2
|
|
—
|
|
|
1
|
|
|
—
|
|
|||
Long-term liabilities
|
|
|
|
|
|
|
|
||||||
Interest rate swap derivative instruments
|
Level 2
|
|
15
|
|
|
4
|
|
|
1
|
|
|
Impairments
|
|
|
||||||||||||
|
Three Months Ended
|
|
Remaining Net Carrying Value
(1)
|
||||||||||||
|
May 5, 2018
|
|
April 29, 2017
|
|
May 5, 2018
|
|
April 29, 2017
|
||||||||
Property and equipment (non-restructuring)
|
$
|
2
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(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
May 5, 2018
, and
April 29, 2017
.
|
4.
|
Restructuring Charges
|
|
Three Months Ended
|
|
Cumulative Amount
|
||||
|
May 5, 2018
|
|
May 5, 2018
|
||||
Property and equipment impairments
|
$
|
—
|
|
|
$
|
1
|
|
Termination benefits
|
1
|
|
|
9
|
|
||
Facility closure and other costs
|
29
|
|
|
29
|
|
||
Total restructuring charges
|
$
|
30
|
|
|
$
|
39
|
|
|
Termination
Benefits
|
|
Facility
Closure and
Other Costs
|
|
Total
|
||||||
Balances at February 3, 2018
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
8
|
|
Charges
|
1
|
|
|
29
|
|
|
30
|
|
|||
Cash payments
|
—
|
|
|
(26
|
)
|
|
(26
|
)
|
|||
Balances at May 5, 2018
|
$
|
9
|
|
|
$
|
3
|
|
|
$
|
12
|
|
|
May 5, 2018
|
|
February 3, 2018
|
|
April 29, 2017
|
||||||
2018 Notes
|
$
|
500
|
|
|
$
|
500
|
|
|
$
|
500
|
|
2021 Notes
|
650
|
|
|
650
|
|
|
650
|
|
|||
Interest rate swap valuation adjustments
|
(10
|
)
|
|
(5
|
)
|
|
3
|
|
|||
Subtotal
|
1,140
|
|
|
1,145
|
|
|
1,153
|
|
|||
Debt discounts and issuance costs
|
(2
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|||
Financing lease obligations
|
184
|
|
|
191
|
|
|
171
|
|
|||
Capital lease obligations
|
20
|
|
|
22
|
|
|
27
|
|
|||
Total long-term debt
|
1,342
|
|
|
1,355
|
|
|
1,347
|
|
|||
Less: current portion
|
550
|
|
|
544
|
|
|
45
|
|
|||
Total long-term debt, less current portion
|
$
|
792
|
|
|
$
|
811
|
|
|
$
|
1,302
|
|
6.
|
Derivative Instruments
|
|
|
Assets
|
||||||||||
Contract Type
|
Balance Sheet Location
|
May 5, 2018
|
|
February 3, 2018
|
|
April 29, 2017
|
||||||
Derivatives designated as net investment hedges
|
Other current assets
|
$
|
3
|
|
|
$
|
2
|
|
|
$
|
6
|
|
Derivatives designated as interest rate swaps
|
Other current assets and Other assets
|
5
|
|
|
—
|
|
|
4
|
|
|||
No hedge designation (foreign exchange forward contracts)
|
Other current assets
|
—
|
|
|
—
|
|
|
1
|
|
|||
Total
|
|
$
|
8
|
|
|
$
|
2
|
|
|
$
|
11
|
|
|
|
Liabilities
|
||||||||||
Contract Type
|
Balance Sheet Location
|
May 5, 2018
|
|
February 3, 2018
|
|
April 29, 2017
|
||||||
Derivatives designated as net investment hedges
|
Accrued liabilities
|
$
|
1
|
|
|
$
|
7
|
|
|
$
|
—
|
|
Derivatives designated as interest rate swaps
|
Accrued liabilities and Long-term liabilities
|
15
|
|
|
5
|
|
|
1
|
|
|||
No hedge designation (foreign exchange forward contracts)
|
Accrued liabilities
|
—
|
|
|
1
|
|
|
—
|
|
|||
Total
|
|
$
|
16
|
|
|
$
|
13
|
|
|
$
|
1
|
|
|
Three Months Ended
|
|
Three Months Ended
|
||||||||||||
|
May 5, 2018
|
|
April 29, 2017
|
||||||||||||
Contract Type
|
Pre-tax Gain Recognized in OCI
|
|
Gain(Loss) Reclassified from Accumulated OCI to Earnings recognized in SG&A
|
|
Pre-tax Gain Recognized in OCI
|
|
Gain(Loss) Reclassified from Accumulated OCI to Earnings recognized in SG&A
|
||||||||
Derivatives designated as net investment hedges
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
|
|
Three Months Ended
|
||||||
|
|
|
May 5, 2018
|
|
April 29, 2017
|
||||
Contract Type
|
Location of Gain Recognized
|
|
Gain Recognized
|
|
Gain Recognized
|
||||
No hedge designation (foreign exchange contracts)
|
SG&A
|
|
$
|
1
|
|
|
$
|
1
|
|
|
|
|
Gain (Loss) Recognized
|
||||||
Contract Type
|
Location of Gain (Loss) Recognized
|
|
May 5, 2018
|
|
April 29, 2017
|
||||
Interest rate swap contracts
|
Interest Expense
|
|
$
|
(5
|
)
|
|
$
|
(10
|
)
|
Adjustments to carrying value of long-term debt
|
Interest Expense
|
|
5
|
|
|
10
|
|
||
Total
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Notional Amount
|
||||||||||
Contract Type
|
May 5, 2018
|
|
February 3, 2018
|
|
April 29, 2017
|
||||||
Derivatives designated as net investment hedges
|
$
|
135
|
|
|
$
|
462
|
|
|
$
|
206
|
|
Derivatives designated as interest rate swap contracts
|
1,150
|
|
|
1,150
|
|
|
825
|
|
|||
No hedge designation (foreign exchange forward contracts)
|
39
|
|
|
33
|
|
|
36
|
|
|||
Total
|
$
|
1,324
|
|
|
$
|
1,645
|
|
|
$
|
1,067
|
|
7.
|
Earnings per Share
|
|
Three Months Ended
|
||||||
|
May 5, 2018
|
|
April 29, 2017
|
||||
Numerator
|
|
|
|
|
|
||
Net earnings
|
$
|
208
|
|
|
$
|
188
|
|
|
|
|
|
||||
Denominator
|
|
|
|
||||
Weighted-average common shares outstanding
|
282.6
|
|
|
309.2
|
|
||
Dilutive effect of stock compensation plan awards
|
5.7
|
|
|
5.8
|
|
||
Weighted-average common shares outstanding, assuming dilution
|
288.3
|
|
|
315.0
|
|
||
|
|
|
|
||||
Basic earnings per share
|
$
|
0.74
|
|
|
$
|
0.61
|
|
Diluted earnings per share
|
$
|
0.72
|
|
|
$
|
0.60
|
|
8.
|
Comprehensive Income
|
|
Foreign Currency Translation
|
||
Balances at February 3, 2018
|
$
|
314
|
|
Foreign currency translation adjustments
|
(4
|
)
|
|
Balances at May 5, 2018
|
$
|
310
|
|
|
|
||
Balance at January 28, 2017
|
$
|
279
|
|
Foreign currency translation adjustments
|
(13
|
)
|
|
Balance at April 29, 2017
|
$
|
266
|
|
9.
|
Repurchase of Common Stock
|
|
Three Months Ended
|
||||||
|
May 5, 2018
|
|
April 29, 2017
|
||||
Total cost of shares repurchased
(1)
|
$
|
399
|
|
|
$
|
384
|
|
Average price per share
|
$
|
71.78
|
|
|
$
|
46.30
|
|
Number of shares repurchased
(1)
|
5.6
|
|
|
8.3
|
|
(1)
|
As of
May 5, 2018
,
$12 million
, or
0.2 million
shares, in trades remained unsettled. As of
April 29, 2017
,
$19 million
, or
0.3 million
shares, in trades remained unsettled. The liability for unsettled trades is included in Accrued liabilities on the Condensed Consolidated Balance Sheets.
|
10.
|
Segments
|
|
Three Months Ended
|
||||||
|
May 5, 2018
|
|
April 29, 2017
|
||||
Revenue by reportable segment
|
|
|
|
||||
Domestic
|
$
|
8,412
|
|
|
$
|
7,912
|
|
International
|
697
|
|
|
616
|
|
||
Total revenue
|
$
|
9,109
|
|
|
$
|
8,528
|
|
Revenue by product category
(1)
|
|
|
|
||||
Domestic
|
|
|
|
||||
Consumer Electronics
|
$
|
2,655
|
|
|
$
|
2,582
|
|
Computing and Mobile Phones
|
3,899
|
|
|
3,576
|
|
||
Entertainment
|
548
|
|
|
572
|
|
||
Appliances
|
883
|
|
|
777
|
|
||
Services
|
393
|
|
|
371
|
|
||
Other
|
34
|
|
|
34
|
|
||
Total domestic revenue
|
$
|
8,412
|
|
|
$
|
7,912
|
|
International
|
|
|
|
||||
Consumer Electronics
|
$
|
206
|
|
|
$
|
179
|
|
Computing and Mobile Phones
|
331
|
|
|
297
|
|
||
Entertainment
|
43
|
|
|
44
|
|
||
Appliances
|
61
|
|
|
41
|
|
||
Services
|
39
|
|
|
40
|
|
||
Other
|
17
|
|
|
15
|
|
||
Total international revenue
|
$
|
697
|
|
|
$
|
616
|
|
(1)
|
Refer to our Annual Report on Form 10-K for the fiscal year ended February 3, 2018, for additional information regarding the key components of each revenue category.
|
|
Three Months Ended
|
||||||
|
May 5, 2018
|
|
April 29, 2017
|
||||
Domestic
|
$
|
267
|
|
|
$
|
298
|
|
International
|
(2
|
)
|
|
2
|
|
||
Total operating income
|
265
|
|
|
300
|
|
||
Other income (expense)
|
|
|
|
||||
Investment income and other
|
11
|
|
|
11
|
|
||
Interest expense
|
(19
|
)
|
|
(19
|
)
|
||
Earnings before income tax expense
|
$
|
257
|
|
|
$
|
292
|
|
|
May 5, 2018
|
|
February 3, 2018
|
|
April 29, 2017
|
||||||
Domestic
|
$
|
10,955
|
|
|
$
|
11,553
|
|
|
$
|
11,691
|
|
International
|
1,127
|
|
|
1,496
|
|
|
1,264
|
|
|||
Total assets
|
$
|
12,082
|
|
|
$
|
13,049
|
|
|
$
|
12,955
|
|
11.
|
Income Taxes
|
12.
|
Contingencies
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Overview
|
•
|
Business Strategy Update
|
•
|
Results of Operations
|
•
|
Liquidity and Capital Resources
|
•
|
Off-Balance-Sheet Arrangements and Contractual Obligations
|
•
|
Significant Accounting Policies and Estimates
|
•
|
New Accounting Pronouncements
|
•
|
Safe Harbor Statement Under the Private Securities Litigation Reform Act
|
|
Three Months Ended
|
||||||
|
May 5, 2018
|
|
April 29, 2017
|
||||
Revenue
|
$
|
9,109
|
|
|
$
|
8,528
|
|
Revenue % growth
|
6.8
|
%
|
|
1.0
|
%
|
||
Comparable sales % gain
|
7.1
|
%
|
|
1.6
|
%
|
||
Gross profit
|
$
|
2,125
|
|
|
$
|
2,022
|
|
Gross profit as a % of revenue
(1)
|
23.3
|
%
|
|
23.7
|
%
|
||
SG&A
|
$
|
1,830
|
|
|
$
|
1,722
|
|
SG&A as a % of revenue
(1)
|
20.1
|
%
|
|
20.2
|
%
|
||
Restructuring charges
|
$
|
30
|
|
|
$
|
—
|
|
Operating income
|
$
|
265
|
|
|
$
|
300
|
|
Operating income as a % of revenue
|
2.9
|
%
|
|
3.5
|
%
|
||
Net earnings
|
$
|
208
|
|
|
$
|
188
|
|
Diluted earnings per share
|
$
|
0.72
|
|
|
$
|
0.60
|
|
(1)
|
Because retailers vary in how they record costs of operating their supply chain between cost of goods sold and SG&A, our gross profit rate and SG&A rate may not be comparable to other retailers’ corresponding rates. For additional information regarding costs classified in cost of goods sold and SG&A, refer to Note 1,
Summary of Significant Accounting Policies
, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended
February 3, 2018
.
|
|
Three Months Ended
|
|
|
May 5, 2018
|
|
Comparable sales impact
|
6.7
|
%
|
Foreign currency exchange rate fluctuation impact
|
0.4
|
%
|
Non-comparable sales impact
(1)
|
(0.3
|
)%
|
Total revenue increase
|
6.8
|
%
|
(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-share revenue, credit card revenue, gift card breakage and sales of merchandise to wholesalers and dealers, as applicable.
|
|
Three Months Ended
|
||||||
|
May 5, 2018
|
|
April 29, 2017
|
||||
Revenue
|
$
|
8,412
|
|
|
$
|
7,912
|
|
Revenue % growth
|
6.3
|
%
|
|
1.1
|
%
|
||
Comparable sales % gain
(1)
|
7.1
|
%
|
|
1.4
|
%
|
||
Gross profit
|
$
|
1,962
|
|
|
$
|
1,871
|
|
Gross profit as a % of revenue
|
23.3
|
%
|
|
23.6
|
%
|
||
SG&A
|
$
|
1,665
|
|
|
$
|
1,573
|
|
SG&A as a % of revenue
|
19.8
|
%
|
|
19.9
|
%
|
||
Restructuring charges
|
$
|
30
|
|
|
$
|
—
|
|
Operating income
|
$
|
267
|
|
|
$
|
298
|
|
Operating income as a % of revenue
|
3.2
|
%
|
|
3.8
|
%
|
||
|
|
|
|
||||
Selected Online Revenue Data
|
|
|
|
||||
Total online revenue
|
$
|
1,143
|
|
|
$
|
1,018
|
|
Online revenue as a % of total segment revenue
|
13.6
|
%
|
|
12.9
|
%
|
||
Comparable online sales % gain
(1)
|
12.0
|
%
|
|
22.5
|
%
|
(1)
|
Comparable online sales is included in the comparable sales calculation.
|
|
Three Months Ended
|
|
|
May 5, 2018
|
|
Comparable sales impact
|
6.7
|
%
|
Non-comparable sales impact
(1)
|
(0.4
|
)%
|
Total revenue increase
|
6.3
|
%
|
(1)
|
Non-comparable sales reflects the impact of net store opening and closing activity, as well as the impact of revenue streams not included within our comparable sales calculation, such as profit-share revenue, credit card revenue, gift card breakage and sales of merchandise to wholesalers and dealers, as applicable.
|
|
Fiscal 2019
|
|
Fiscal 2018
|
||||||||||||||||||||
|
Total Stores at Beginning of First Quarter
|
|
Stores Opened
|
|
Stores Closed
|
|
Total Stores at End of First Quarter
|
|
Total Stores at Beginning of First Quarter
|
|
Stores Opened
|
|
Stores Closed
|
|
Total Stores at End of First Quarter
|
||||||||
Best Buy
|
1,008
|
|
|
—
|
|
|
(1
|
)
|
|
1,007
|
|
|
1,026
|
|
|
—
|
|
|
(2
|
)
|
|
1,024
|
|
Best Buy Mobile stand-alone
|
257
|
|
|
—
|
|
|
(152
|
)
|
|
105
|
|
|
309
|
|
|
—
|
|
|
(11
|
)
|
|
298
|
|
Pacific Sales
|
28
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|
28
|
|
|
—
|
|
|
—
|
|
|
28
|
|
Total Domestic segment stores
|
1,293
|
|
|
—
|
|
|
(153
|
)
|
|
1,140
|
|
|
1,363
|
|
|
—
|
|
|
(13
|
)
|
|
1,350
|
|
|
Revenue Mix
|
|
Comparable Sales
|
||||||||
|
Three Months Ended
|
|
Three Months Ended
|
||||||||
|
May 5, 2018
|
|
April 29, 2017
|
|
May 5, 2018
|
|
April 29, 2017
|
||||
Consumer Electronics
|
32
|
%
|
|
33
|
%
|
|
2.9
|
%
|
|
0.7
|
%
|
Computing and Mobile Phones
|
46
|
%
|
|
45
|
%
|
|
10.2
|
%
|
|
(0.3
|
)%
|
Entertainment
|
7
|
%
|
|
7
|
%
|
|
(0.8
|
)%
|
|
11.3
|
%
|
Appliances
|
10
|
%
|
|
10
|
%
|
|
13.0
|
%
|
|
4.6
|
%
|
Services
|
5
|
%
|
|
5
|
%
|
|
7.3
|
%
|
|
4.2
|
%
|
Total
|
100
|
%
|
|
100
|
%
|
|
7.1
|
%
|
|
1.4
|
%
|
•
|
Consumer Electronics:
The 2.9% comparable sales gain was driven primarily by smart home and portable audio, partially offset by declines in digital imaging.
|
•
|
Computing and Mobile Phones:
The 10.2% comparable sales gain was driven primarily by mobile phones, computing and tablets.
|
•
|
Entertainment:
The 0.8% comparable sales decline was driven primarily by movies and music, partially offset by gains in gaming.
|
•
|
Appliances:
The 13.0% comparable sales gain was driven by major appliances and small appliances.
|
•
|
Services:
The 7.3% comparable sales gain was driven primarily by higher installation revenue and growth in our warranty business.
|
|
Three Months Ended
|
||||||
|
May 5, 2018
|
|
April 29, 2017
|
||||
Revenue
|
$
|
697
|
|
|
$
|
616
|
|
Revenue % growth
|
13.1
|
%
|
|
0.3
|
%
|
||
Comparable sales % gain
|
6.4
|
%
|
|
4.0
|
%
|
||
Gross profit
|
$
|
163
|
|
|
$
|
151
|
|
Gross profit as a % of revenue
|
23.4
|
%
|
|
24.5
|
%
|
||
SG&A
|
$
|
165
|
|
|
$
|
149
|
|
SG&A as a % of revenue
|
23.7
|
%
|
|
24.2
|
%
|
||
Operating income (loss)
|
$
|
(2
|
)
|
|
$
|
2
|
|
Operating income (loss) as a % of revenue
|
(0.3
|
)%
|
|
0.3
|
%
|
|
Three Months Ended
|
|
|
May 5, 2018
|
|
Comparable sales impact
|
6.3
|
%
|
Foreign currency exchange rate fluctuation impact
|
5.0
|
%
|
Non-comparable sales impact
(1)
|
1.8
|
%
|
Total revenue increase
|
13.1
|
%
|
(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-share revenue, credit card revenue, gift card breakage and sales of merchandise to wholesalers and dealers, as applicable.
|
|
Fiscal 2019
|
|
Fiscal 2018
|
||||||||||||||||||||
|
Total Stores at Beginning of First Quarter
|
|
Stores Opened
|
|
Stores Closed
|
|
Total Stores at End of First Quarter
|
|
Total Stores at Beginning of First Quarter
|
|
Stores Opened
|
|
Stores Closed
|
|
Total Stores at End of First Quarter
|
||||||||
Canada
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Best Buy
|
134
|
|
|
—
|
|
|
—
|
|
|
134
|
|
|
134
|
|
|
—
|
|
|
—
|
|
|
134
|
|
Best Buy Mobile
|
51
|
|
|
—
|
|
|
(2
|
)
|
|
49
|
|
|
53
|
|
|
—
|
|
|
—
|
|
|
53
|
|
Mexico
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Best Buy
|
25
|
|
|
1
|
|
|
—
|
|
|
26
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
Best Buy Express
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
Total International segment stores
|
216
|
|
|
1
|
|
|
(2
|
)
|
|
215
|
|
|
212
|
|
|
—
|
|
|
—
|
|
|
212
|
|
|
Revenue Mix
|
|
Comparable Sales
|
||||||||
|
Three Months Ended
|
|
Three Months Ended
|
||||||||
|
May 5, 2018
|
|
April 29, 2017
|
|
May 5, 2018
|
|
April 29, 2017
|
||||
Consumer Electronics
|
30
|
%
|
|
29
|
%
|
|
9.4
|
%
|
|
3.0
|
%
|
Computing and Mobile Phones
|
47
|
%
|
|
48
|
%
|
|
4.4
|
%
|
|
(1.5
|
)%
|
Entertainment
|
6
|
%
|
|
7
|
%
|
|
(8.3
|
)%
|
|
14.8
|
%
|
Appliances
|
9
|
%
|
|
7
|
%
|
|
37.7
|
%
|
|
37.9
|
%
|
Services
|
6
|
%
|
|
7
|
%
|
|
(6.1
|
)%
|
|
11.1
|
%
|
Other
|
2
|
%
|
|
2
|
%
|
|
(1.9
|
)%
|
|
n/a
|
|
Total
|
100
|
%
|
|
100
|
%
|
|
6.4
|
%
|
|
4.0
|
%
|
•
|
Consumer Electronics:
The 9.4% comparable sales gain was driven primarily by smart home, home theater and portable audio, partially offset by declines in digital imaging and health and fitness.
|
•
|
Computing and Mobile Phones:
The 4.4% comparable sales gain was driven primarily by mobile phones, computing and wearables, partially offset by declines in tablets.
|
•
|
Entertainment:
The 8.3% comparable sales decline was driven primarily by gaming and movies, partially offset by gains in drones.
|
•
|
Appliances:
The 37.7% comparable sales gain was driven by major appliances and small appliances.
|
•
|
Services:
The 6.1% comparable sales decline was driven primarily by technical support, partially offset by gains in repair and installation.
|
•
|
Other:
The 1.9% comparable sales decline was driven primarily by other product offerings, including declines in sporting goods, partially offset by gains in baby products.
|
|
Three Months Ended
|
||||||
|
May 5, 2018
|
|
April 29, 2017
|
||||
Operating income
|
$
|
265
|
|
|
$
|
300
|
|
Tax reform related item - employee bonus
(1)
|
7
|
|
|
—
|
|
||
Restructuring charges
(2)
|
30
|
|
|
—
|
|
||
Non-GAAP operating income
|
$
|
302
|
|
|
$
|
300
|
|
|
|
|
|
||||
Effective tax rate
|
19.2
|
%
|
|
35.6
|
%
|
||
Tax reform related item - employee bonus
(1)
|
0.1
|
%
|
|
—
|
%
|
||
Restructuring charges
(2)
|
0.7
|
%
|
|
—
|
%
|
||
Non-GAAP effective tax rate
|
20.0
|
%
|
|
35.6
|
%
|
||
|
|
|
|
||||
Diluted EPS
|
$
|
0.72
|
|
|
$
|
0.60
|
|
Tax reform related item - employee bonus, net of tax
(1)(3)
|
0.02
|
|
|
—
|
|
||
Restructuring charges, net of tax
(2)(3)
|
0.08
|
|
|
—
|
|
||
Non-GAAP diluted EPS
|
$
|
0.82
|
|
|
$
|
0.60
|
|
(1)
|
Represents final adjustments for amounts paid and associated taxes related to a one-time bonus for certain employees announced in response to future tax savings created by the Tax Act enacted into law in the fourth quarter of fiscal 2018.
|
(2)
|
Refer to Note 4,
Restructuring Charges
, in the Notes to Condensed Consolidated Financial Statements for additional information regarding the nature of these charges. For the
three
months ended
May 5, 2018
, the entire balance related to the United States.
|
(3)
|
The income tax impact included in the non-GAAP adjustments relate primarily to the United States. As such, the income tax charge is calculated using the tax rate for the United States (24.5% for the period ended May 5, 2018, and 38.0% for the period ended April 29, 2017).
|
|
May 5, 2018
|
|
February 3, 2018
|
|
April 29, 2017
|
||||||
Cash and cash equivalents
|
$
|
1,848
|
|
|
$
|
1,101
|
|
|
$
|
1,651
|
|
Short-term investments
|
785
|
|
|
2,032
|
|
|
1,948
|
|
|||
Total cash, cash equivalents and short-term investments
|
$
|
2,633
|
|
|
$
|
3,133
|
|
|
$
|
3,599
|
|
|
Three Months Ended
|
||||||
|
May 5, 2018
|
|
April 29, 2017
|
||||
Total cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
204
|
|
|
$
|
243
|
|
Investing activities
|
1,073
|
|
|
(423
|
)
|
||
Financing activities
|
(516
|
)
|
|
(413
|
)
|
||
Effect of exchange rate changes on cash
|
(12
|
)
|
|
(6
|
)
|
||
Increase (decrease) in cash, cash equivalents and restricted cash
|
$
|
749
|
|
|
$
|
(599
|
)
|
Rating Agency
|
|
Rating
|
|
Outlook
|
Standard & Poor's
|
|
BBB
|
|
Stable
|
Moody's
|
|
Baa1
|
|
Stable
|
Fitch
|
|
BBB-
|
|
Positive
|
|
Three Months Ended
|
||||||
|
May 5, 2018
|
|
April 29, 2017
|
||||
Total cost of shares repurchased
|
$
|
399
|
|
|
$
|
384
|
|
Average price per share
|
$
|
71.78
|
|
|
$
|
46.30
|
|
Number of shares repurchased
|
5.6
|
|
|
8.3
|
|
|
Three Months Ended
|
||||||
|
May 5, 2018
|
|
April 29, 2017
|
||||
Regular quarterly cash dividends per share
|
$
|
0.45
|
|
|
$
|
0.34
|
|
Cash dividends declared and paid
|
$
|
128
|
|
|
$
|
105
|
|
Non-GAAP debt to EBITDAR =
|
Non-GAAP debt
|
|
Non-GAAP EBITDAR
|
|
|
May 5, 2018
(1)
|
|
February 3, 2018
(1)
|
|
April 29, 2017
(1)
|
||||||
Debt (including current portion)
|
$
|
1,342
|
|
|
$
|
1,355
|
|
|
$
|
1,347
|
|
Capitalized operating lease obligations (5 times rental expense)
(2)
|
3,908
|
|
|
3,914
|
|
|
3,879
|
|
|||
Non-GAAP debt
|
$
|
5,250
|
|
|
$
|
5,269
|
|
|
$
|
5,226
|
|
|
|
|
|
|
|
||||||
Net earnings from continuing operations
|
$
|
1,019
|
|
|
$
|
999
|
|
|
$
|
1,169
|
|
Other income (including interest expense, net)
|
26
|
|
|
26
|
|
|
34
|
|
|||
Income tax expense
|
763
|
|
|
818
|
|
|
579
|
|
|||
Depreciation and amortization expense
|
698
|
|
|
683
|
|
|
653
|
|
|||
Rental expense
|
782
|
|
|
782
|
|
|
776
|
|
|||
Restructuring charges
(3)
|
40
|
|
|
10
|
|
|
10
|
|
|||
Non-GAAP EBITDAR
|
$
|
3,328
|
|
|
$
|
3,318
|
|
|
$
|
3,221
|
|
|
|
|
|
|
|
||||||
Debt to net earnings ratio
|
1.3
|
|
|
1.4
|
|
|
1.2
|
|
|||
Non-GAAP debt to EBITDAR ratio
|
1.6
|
|
|
1.6
|
|
|
1.6
|
|
(1)
|
Debt is reflected as of the balance sheet date for each of the respective fiscal periods, while net earnings from continuing operations 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)
|
Refer to Note 4,
Restructuring Charges
, in the Notes to Condensed Consolidated Financial Statements for additional information regarding the nature of these charges.
|
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)
|
||||||
February 4, 2018 through March 3, 2018
|
|
1,578,600
|
|
|
$
|
71.88
|
|
|
1,578,600
|
|
|
$
|
2,915,000,000
|
|
March 4, 2018 through April 7, 2018
|
|
2,357,692
|
|
|
$
|
70.38
|
|
|
2,357,692
|
|
|
$
|
2,749,000,000
|
|
April 8, 2018 through May 5, 2018
|
|
1,627,392
|
|
|
$
|
73.72
|
|
|
1,627,392
|
|
|
$
|
2,629,000,000
|
|
Total
|
|
5,563,684
|
|
|
$
|
71.78
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5,563,684
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(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 9,
Repurchase of Common Stock
, in the Notes to Condensed Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q.
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Item 6.
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Exhibits
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101
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The following financial information from our Quarterly Report on Form 10-Q for the first quarter of fiscal 2019, filed with the SEC on June 8, 2018, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets at May 5, 2018, February 3, 2018, and April 29, 2017, (ii) the Condensed Consolidated Statements of Earnings for the three months ended May 5, 2018, and April 29, 2017, (iii) the Condensed Consolidated Statements of Comprehensive Income for the three months ended May 5, 2018, and April 29, 2017, (iv) the Condensed Consolidated Statements of Cash Flows for the three months ended May 5, 2018, and April 29, 2017, (v) the Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three months ended May 5, 2018, and April 29, 2017, 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: June 8, 2018
|
By:
|
/s/ HUBERT JOLY
|
|
|
Hubert Joly
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
Date: June 8, 2018
|
By:
|
/s/ CORIE BARRY
|
|
|
Corie Barry
|
|
|
Chief Financial Officer
|
|
|
|
Date: June 8, 2018
|
By:
|
/s/ MATHEW R. WATSON
|
|
|
Mathew R. Watson
|
|
|
Senior Vice President, Finance – Controller and Chief Accounting Officer
|
1.
|
Grant of Award
. In consideration of your employment with or service to a member of the Company Group, 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. Amended and Restated 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.
|
Options
. This section applies to you if your Award includes an Option. An “
Option
” is a right to purchase a number of shares of common stock of the Company (“
Shares
”) at the price per share of Common Stock stated in the Award Notification.
|
(a)
|
Term and Vesting
.
The Option shall expire and no longer be exercisable on the tenth anniversary the Award Date or such earlier date as provided herein (such date, the “
Expiration Date
”). Except as otherwise set forth herein, the Option may be exercised, in whole or in part, at any time prior to the Expiration Date, in accordance with the schedule stated in the Award Notification. In no case may the Option be exercised after the Expiration Date.
|
(b)
|
Method of Exercise
.
The Option may be exercised by written notice to the Company (through the Plan administrator or other means specified by the Company) stating the number of Shares to be purchased. Such notice must be accompanied by payment in full of the exercise price for all Shares to be purchased by (i) cash or check, (ii) delivery of unencumbered Shares previously acquired by you having a Fair Market Value on the date of exercise that is equal to the exercise price, (iii) withholding of Shares that would otherwise be issued upon such exercise having a Fair Market Value on the date of exercise equal to the aggregate exercise price for the Shares for which the Option is being exercised or (iv) a cashless (broker-assisted) exercise that complies with all applicable laws.
|
3.
|
Restricted Shares
. This section applies to you if your Award includes Restricted Shares. A “
Restricted
Share
” is a Share issued to you on the Award Date that is subject to the restrictions set forth in this Agreement.
|
(a)
|
Restrictions
. Until the Restricted Shares vest, they 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 Shares, shall be void and unenforceable against the Company.
|
(b)
|
Vesting.
Except as otherwise set forth herein, so long as you remained employed by a member of the Company Group, the Restricted Shares shall vest in accordance with the schedule stated in the Award Notification.
|
(c)
|
Performance Condition
.
Notwithstanding the vesting schedule stated in the Award Notification, your Restricted Shares shall not vest unless the Company achieves positive Adjusted Net Earnings in any fiscal year during the term of the Award. “
Adjusted Net Earnings
” means net earnings determined in accordance with GAAP as publicly reported by the Company for a fiscal year, adjusted to eliminate the following: (1) the cumulative effect of changes in
|
(d)
|
Issuance of Restricted Shares.
Unless otherwise determined by the Committee, the Company shall issue the Restricted Shares in the Participant’s name in book-entry form with legends or notations indicating the restrictions in this Agreement.
|
4.
|
Performance Share Award
. This section applies to you if your Award includes a Performance Share Award. A “
Performance Share Award
” is a commitment by the Company to issue a certain number of Shares to you provided you meet certain employment criteria and that the Company achieves certain financial performance levels. A Performance Share Award does not represent immediate ownership of Shares.
|
(a)
|
Determination of Number of Shares under Performance Share Award
. The
number of Shares issuable under (i) the revenue component of your Performance Share Award (the “
Revenue
Performance Share Number
”) will be equal to a percentage of the target number of Shares stated in your Award Notification for the revenue component (“
Revenue Target
”) and (ii) the TSR component of your Performance Share Award (the “
TSR Performance Share Number
”) will be equal to a percentage of the target number of Shares stated in your Award Notification for the TSR component (“
TSR Target
”), in each case as determined below.
|
(b)
|
Revenue Performance Share Number
.
|
(i)
|
Within 120 days after the end of the Performance Period, the Committee will calculate the CAGR of Enterprise Revenue from fiscal year 2018 to fiscal year 2021 (“
Enterprise Revenue CAGR
”). For example, if fiscal year 2018 Enterprise Revenue was $41.4 billion and fiscal year 2021 Enterprise Revenue was $43.3 billion, Enterprise Revenue CAGR would be 1.50%.
|
(ii)
|
Your Revenue Performance Share Number will be equal to the percentage of the Revenue
Target that is listed in the column below with the heading “Number of Shares Earned” opposite the band in the column with the heading “Performance” in which Enterprise Revenue CAGR falls. If Enterprise Revenue CAGR is between Threshold Enterprise Revenue CAGR and Target Enterprise Revenue CAGR or between Target Enterprise Revenue CAGR and Maximum Enterprise Revenue CAGR, your Revenue Performance Share Number will be equal to a percentage interpolated on a linear basis for performance between such amounts. For example, if Enterprise Revenue CAGR is 1.75%, then your Revenue Performance Share Number would be 125% of your Revenue Target. The Revenue Performance Share Number will be rounded to the nearest whole number.
|
(c)
|
TSR Performance Share Number
.
|
(i)
|
Within 120 days after the end of the Performance Period, the Committee will (A) calculate the TSR for Best Buy and for each company included in the S&P 500 Index at the time of any calculation hereunder, (B) rank each such company by TSR (lowest to highest), and (C) determine the percentile rank of Best Buy’s TSR in such ranking by dividing Best Buy’s numerical position in such TSR ranking by the total number of companies included in the list, rounding to the nearest hundredth (“
Relative TSR
”). For example, if Best Buy were ranked 300 out of 500, its Relative TSR would be 60%.
|
(ii)
|
Your TSR Performance Share Number will be equal to the percentage of the TSR
Target that is listed in the column below with the heading “Number of Shares Earned” opposite the band in the column with the heading
|
(d)
|
Certain Definitions.
|
(i)
|
“
Beginning Price
” means, with respect to any one company, the average closing price of one share of common stock during the first fiscal quarter of the Performance Period.
|
(ii)
|
“
CAGR
” means compound annual growth rate.
|
(iii)
|
“
Ending Price
” means, with respect to any one company, the average closing price of one share of common stock during the first fiscal quarter following completion of the Performance Period.
|
(iv)
|
“Enterprise Revenue”
means revenue of the Company from continuing operations as reported in the Company's Annual Report on Form 10-K for the respective 52-week fiscal year adjusted to eliminate the impact of currency exchange rate fluctuations;
provided
,
however
, that the Committee may adjust Enterprise Revenue down
to eliminate the following: (1) the cumulative effect of changes in GAAP (only to the extent such changes would reduce Enterprise Revenue); (2) revenue from discontinued operations; and (3) any other unusual or nonrecurring gains which are separately identified and quantified, including acquisition related revenue.
|
(v)
|
“Performance Period”
means the performance period stated in the Award Notification.
|
(vi)
|
“Performance Share Number”
means the sum of the Revenue Performance Share Number plus the TSR Performance Share Number.
|
(vii)
|
“TSR”
means, with respect to any one company, the price appreciation of one share of common stock as measured from the Beginning Price to the Ending Price, assuming all dividends and other distributions made on such share are reinvested, expressed as a percentage.
|
(e)
|
Change of Control
. Notwithstanding anything in this Agreement to the contrary, in the event of a Change of Control prior to the end of the Performance Period, the Committee will determine (i) Enterprise Revenue CAGR using the last completed fiscal year instead of fiscal year 2020 and (ii) Relative TSR using the average closing price of one share of common stock during the last completed fiscal quarter in order to determine the Ending Price, and the Revenue and TSR Performance Share Numbers will be equal to the greater of (i) the numbers determined pursuant to Section 4(b)(ii) and Section 4(c)(ii) above, respectively, and (ii) the respective Revenue or TSR Target.
|
(f)
|
Performance Share Number Not Guaranteed
. If Relative TSR is less than 30% or Enterprise Revenue CAGR is less than 1.0%, the respective portion of your Performance Share Number will be 0 and there will be no Shares issued under that portion of your Performance Share Award. The Committee shall have sole discretion to determine Relative TSR and Enterprise Revenue.
|
(g)
|
Issuance of Shares.
Any Shares issuable to you under your Performance Share Award will be issued within 60 days after the Committee’s determination of Relative TSR and Enterprise Revenue CAGR; provided however, that the Company’s obligation to issue such shares is subject to Section 5 of this Agreement.
|
5.
|
Effect of Termination of Employment
. Your employment with the Company Group may be terminated by your employer at any time for any reason (with or without advance notice). This section provides the effect on your Award of different types of termination of employment.
|
(a)
|
Qualified
Retirement
.
In the event of your Qualified Retirement:
|
(i)
|
Options
. If your Award includes an Option, the Option will continue to vest in accordance with the vesting schedule set forth above. You will have until the later of (A) three years from the date of your Qualified Retirement and (B) the last scheduled vesting date to exercise the entire Option; provided, however, that in no event shall the Option be exercisable after the Expiration Date. Any portion of the Option unexercised at the end of this period will be forfeited.
|
(ii)
|
Restricted Shares
. If your Award includes Restricted Shares, such Restricted Shares will continue to vest in accordance with the vesting schedule set forth above, subject to the Company’s achievement of the performance condition described in Section 3(c).
|
(iii)
|
Performance Shares
. If your Award includes Performance Shares and in the event of your Qualified Retirement prior to the end of the Performance Period, you may be entitled to a prorated Performance Share Award. If Relative TSR is greater than Threshold TSR (as determined after the end of the Performance Period), you will be entitled to a prorated TSR Performance Share Number. If Enterprise Revenue CAGR is greater than Threshold Enterprise Revenue CAGR (as determined after the end of the Performance Period), you will be entitled to a prorated Revenue Performance Share Number. For each component, your Performance Share Award will be determined by multiplying the Performance Share Number calculated as if you were employed by a member of the Company Group on the last day of the Performance Period by a fraction, the numerator of which is the number of days during the Performance Period you were so employed, and the denominator of which is the number of days in the Performance Period.
|
(b)
|
Death or Disability
. In the event of your death or employment termination due to Disability:
|
(i)
|
Options
.
If your Award includes an Option, any then unvested portion of the Option will vest and become exercisable as of the date of death or, in the case of Disability, as of the date of employment termination. In the event of your death, the representative of your estate or your heirs will have until the earlier of (A) one year from the date of your death and (B) the Expiration Date of the Option, to exercise the Option. In the event you become Disabled while employed with the Company Group and must therefore terminate your employment, you will have until the earlier of (X) one year from the date of your employment termination and (Y) the Expiration Date of the Option, to exercise the Option.
|
(ii)
|
Restricted Shares
. If your Award includes Restricted Shares, any then unvested Restricted Shares will vest as of the date of death or, in the case of Disability, employment termination.
|
(iii)
|
Performance Share Award
. If your Award includes a Performance Share Award and in the event of your death or employment termination due to Disability prior to the end of the Performance Period, you or the representative of your estate or your heirs, as applicable, may be entitled to a prorated Performance Share Award. If Relative TSR is greater than Threshold TSR (as determined as of the last completed fiscal quarter prior to the date of termination of employment to determine the Ending Price), you or the representative of your estate or your heirs, as applicable, will be entitled to a prorated TSR Performance Share Number. If Enterprise Revenue CAGR is greater than Threshold Enterprise Revenue CAGR (using the last completed fiscal year instead of fiscal year 2020 for purposes of determining Enterprise Revenue CAGR), you will be entitled to a prorated Revenue Performance Share Number. For each component, your Performance Share Award will be determined by multiplying the Performance Share Number calculated as of the date of termination of employment multiplied by a fraction, the numerator of which is the number of days during the Performance Period you were employed, and the denominator of which is the number of days in the Performance Period.
|
(c)
|
Involuntary
Termination Without Cause
. If your employment is Involuntarily Terminated Without Cause:
|
(i)
|
Options
.
If your Award includes an Option, you will have 60 days from the date of termination of your employment to exercise the portion of the Option vested as of your termination date, and any portion of the Option then unvested will be forfeited;
provided
,
however
, that if your employment is Involuntarily Terminated Without Cause within 12 months following a Change of Control, any then unvested portion of the Option will
|
(ii)
|
Restricted Shares
. If your Award includes Restricted Shares, you will forfeit any then unvested Restricted Shares.
|
(iii)
|
Performance Share Award
. If your Award includes a Performance Share Award and your employment is Involuntarily Terminated Without Cause prior to the end of the Performance Period, you may be entitled to a prorated Performance Share Award. If Relative TSR is greater than Threshold TSR (as determined after the end of the Performance Period), you will be entitled to a prorated TSR Performance Share Number. If Enterprise Revenue CAGR is greater than Threshold Enterprise Revenue CAGR (as determined after the end of the Performance Period), you will be entitled to a prorated Revenue Performance Share Number. For each component, your Performance Share Award is determined by multiplying the Performance Share Number calculated as if you were employed by a member of the Company Group on the last day of the Performance Period multiplied by a fraction, the numerator of which is the number of days during the Performance Period you were employed, and the denominator of which is the number of days in the Performance Period.
|
(d)
|
Voluntary Termination
. If you voluntarily terminate your employment with the Company Group for any reason:
|
(i)
|
Options
.
If your Award includes an Option, you will have 60 days from the date of termination of your employment to exercise the Option, to the extent the Option had become vested as of your termination date. Any then unvested portion of the Option will be forfeited. In no event, however, may the Option be exercised after its Expiration Date.
|
(ii)
|
Restricted Shares
. If your Award includes Restricted Shares, you will forfeit any then unvested Restricted Shares.
|
(iii)
|
Performance Share Award
. If your Award includes a Performance Share Award, and you voluntarily terminate your employment prior to the end of the Performance Period, you will forfeit your entire Performance Share Award.
|
(e)
|
Termination for Cause
. If your employment is terminated by any member of the Company Group for any reason at a time when any member of the Company Group is entitled to terminate your employment for Cause:
|
(i)
|
Options
. If your Award includes an Option, any then unvested portion of the Option will be forfeited, and the Option may not be exercised after termination of your employment.
|
(ii)
|
Restricted Shares
. If your Award includes Restricted Shares, any then unvested Restricted Shares will be forfeited.
|
(iii)
|
Performance Share Award
.
If your Award includes a Performance Share Award and your employment is terminated by any member of the Company Group for any reason at a time when any member of the Company Group is entitled to terminate your employment for Cause prior to the end of the Performance Period, you will forfeit your entire Performance Share Award.
|
6.
|
Restrictive Covenants and Remedies
. By accepting the Award, you specifically agree to the restrictive covenants contained in this Section 6 (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. Sections 6(b) and 6(c) apply to you only if you are an officer of the Company. Further, if you are an attorney, the Restrictive Covenants apply to you only to the extent they are consistent with the rules of professional conduct applicable to you (for example, Minnesota Rule of Professional Conduct 5.6).
|
(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 employment with the Company Group and thereafter, to maintain the confidentiality of the Company Group’s Confidential Information and to use such Confidential Information for the exclusive benefit of the Company Group. You will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made in confidence to a federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law. You shall not be held criminally or civilly liable
|
(b)
|
Competitive Activity
. During your employment with the Company Group and for one year following the later of (i) termination of your employment for any reason whatsoever or (ii) the last scheduled vesting date for your Award, you shall not compete, directly or indirectly, through an Affiliate or otherwise, in any manner or capacity (including, without limitation, through any form of ownership or as a principal, agent, partner, officer, director, employee, advisor or consultant) with the Company Group, for your benefit or for the benefit of any other Person other than the Company Group anywhere in the world. In the event that any portion of this Section 6(b) shall be determined by an arbitrator to be unenforceable because it is unreasonably restrictive in any respect, it shall be interpreted to extend over the maximum period of time for which it reasonably may be enforced and to the maximum extent for which it reasonably may be enforced in all other respects, and enforced as so interpreted, all as determined by such 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. Ownership of less than 1% of the outstanding capital stock of any corporation listed on a national securities exchange will not constitute a breach of this Section 6(b).
|
(c)
|
Non-Solicitation
. During your employment and for one year following the later of (i) termination of your employment for any reason whatsoever or (ii) the last scheduled award vesting date, you shall not:
|
(a)
|
induce or attempt to induce any employee of the Company Group to leave the employ of Company Group, or in any way interfere adversely with the relationship between any such employee and Company Group;
|
(b)
|
induce or attempt to induce any employee of Company Group to work for, render services to, provide advice to, or supply Confidential Information of Company Group to any third Person;
|
(c)
|
employ, or otherwise pay for services rendered by, any employee of Company Group in any business enterprise with which you may be associated, connected or affiliated;
|
(d)
|
induce or attempt to induce any customer, supplier, licensee, licensor or other business relation of Company Group to cease doing business with Company Group, or in any way interfere with the then existing business relationship between any such customer, supplier, licensee, licensor or other business relation and Company Group; or
|
(e)
|
assist, solicit, or encourage any other Person, directly or indirectly, in carrying out any activity set forth above that would be prohibited by any of the provisions of this Agreement if such activity were carried out by you. In particular, you will not, directly or indirectly, induce any employee of Company Group to carry out any such activity
.
|
(d)
|
Partial Invalidity
. If any portion of this Section 6 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.
|
(e)
|
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.
|
(f)
|
Claw Back & Recovery
. You agree your Award, the Shares underlying your Award, as well as the value of any and all Shares no longer under your control, are subject to forfeiture and recovery pursuant to the Company’s Clawback Policy, as it may be amended from time to time (the “
Clawback Policy
”), located at https://hr.bestbuy.com/, and 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. You acknowledge you have had an opportunity to review the Clawback Policy. Forfeiture and recovery under the Clawback Policy may include:
|
(i)
|
the immediate forfeiture of any of the then unexercised portion of any Option included in your Award, any unvested Restricted Shares included in your Award, and any Performance Share Award included in your Award;
|
(ii)
|
a requirement that you immediately return to the Company any Shares issued upon exercise of any Option included in your Award, and any Shares in your Award that were previously Restricted Shares and any Shares issued under any Performance Share Award that, in each case, are still under your control; and
|
(iii)
|
a requirement that you 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 exercise date of any such Option, the vesting date of any such formerly Restricted Shares, and the date of issuance of any Shares issued under any such Performance Share Award, as applicable).
|
(g)
|
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 6.
|
7.
|
General Terms and Conditions.
|
(a)
|
Rights as a Stockholder
.
|
(i)
|
Options
. You will have no rights as a stockholder with respect to any Shares issuable upon exercise of an Option, nor have any rights to dividends or other rights as a shareholder with respect to any such Shares, until you have actually received such Shares following the exercise of the Option in accordance with the terms of this Agreement and the Plan.
|
(ii)
|
Restricted Shares
. Upon the issuance of Restricted Shares, you shall be entitled to exercise the rights of a stockholder. Notwithstanding the foregoing, you will not have the right to vote any Restricted Shares during the time period such Restricted Shares are subject to the restrictions in Section 3(a) (the “
Restricted Period
”), and you will not have any right to any dividends paid on Restricted Shares during the Restricted Period.
|
(iii)
|
Performance Share Awards
. You will have no rights as a stockholder with respect to any Shares issuable under a Performance Share Award until you have actually received such Shares in accordance with the terms of this Agreement and the Plan.
|
(iv)
|
Dividend Equivalents
. If your Award includes Restricted Shares or a Performance Share Award, upon vesting of such Restricted Shares or upon issuance of Shares underlying such Performance Share Award, as the case may be, in accordance with the terms of this Agreement, you will be entitled to the Total Dividend Equivalent Amount with respect to such Restricted Shares or Performance Share Award. The Total Dividend Equivalent Amount will be converted to Shares and issued to you upon vesting of Restricted Shares, or issuance of Shares underlying a Performance Share Award, as applicable;
provided
,
however
, that the Committee may pay you the Total Dividend Equivalent Amount in cash, as determined in its sole discretion. Any such conversion shall be based on the closing price of one Share on the applicable dividend payment date. In the event any such conversion results in a fraction of a Share, the number of such Shares shall be rounded up to the nearest whole number. The Company’s obligation to issue such Shares or pay such amounts are subject to the same terms and conditions as apply to your Restricted Shares and any Performance Share Award.
|
(A)
|
“
Dividend Equivalent Amount
” means the amount of any dividend paid on one Share that has a record date during the Dividend Equivalent Period multiplied by (1) in the case of Restricted Shares, the number of Restricted Shares held by you as of such record date and, (2) in the case of a Performance Share Award, the Performance Share Number.
|
(B)
|
“
Dividend Equivalent Period
” means the period beginning on the grant date and ending (i) in the case of Restricted Shares, on the vesting date of such Restricted Shares and, (ii) in the case of a Performance Share Award, on the date of issuance of any Shares underlying a Performance Share Award.
|
(C)
|
“
Total
Dividend Equivalent Amount
” means the sum of all Dividend Equivalent Amounts with respect the Restricted Shares granted under this Agreement or the Performance Share Award granted under this Agreement, as applicable.
|
(b)
|
Transferability
.
|
(i)
|
Options
. Options 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 of the Option contrary to the provisions of this Agreement or the Plan, or the levy of any execution, attachment or similar process upon the Option, shall be void and unenforceable against the Company.
|
(ii)
|
Restricted Shares.
Restricted Shares are subject to the restrictions set forth in Section 3(a) of this Agreement.
|
(iii)
|
Performance Share Awards
. Performance Share Awards 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 of a Performance Share Award contrary to the provisions of this Agreement or the Plan, or the levy of any execution, attachment or similar process upon a Performance Share Award, shall be void and unenforceable against the Company.
|
(c)
|
No Right to Continued Employment
. This Agreement does not guarantee your continued employment nor alter the right of any member of the Company Group to terminate your employment at any time.
|
(d)
|
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 exercise, vesting or settlement of any Award, and any subsequent disposition of any Shares.
|
(A)
|
Options
. Any Options included in your Award are Non-Qualified Stock Options not eligible for treatment as qualified or incentive stock options for federal income tax purposes. Prior to exercising any Option, you will pay or make adequate arrangements satisfactory to the Company to satisfy all applicable taxes. If applicable, you authorize the Company, or its agents, to satisfy its obligations with regard to all taxes by withholding Shares of the Company common stock to be issued at exercise of the Option or otherwise selling Shares of the Company on your behalf equal to the amount of all taxes required to be withheld by the Company, pursuant to the policies and processes of the Company’s stock plan administrator and broker.
|
(B)
|
Restricted Shares.
Upon vesting of any Restricted Shares, you authorize the Company, or its agents, to satisfy the obligations with regard to all taxes by selling Shares of the Company on your behalf, or otherwise 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, pursuant to the policies and processes of the Company’s stock plan administrator and broker.
|
(C)
|
Performance Share Award.
Upon issuance of your Performance Share Award, you authorize the Company, or its agents, to satisfy the obligations with regard to all taxes by selling Shares of the Company on your behalf, or otherwise 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, pursuant to the policies and processes of the Company’s stock plan administrator and broker.
|
(iii)
|
Section 83(b) Election
. If your Award includes Restricted Shares, you acknowledge that you may file an election pursuant to Section 83(b) of the Internal Revenue Code to be taxed currently on the fair market value of any Restricted Shares of Restricted Stock, provided that such election must be filed with the Internal Revenue Service no later than 30 days after the grant of such Restricted Shares. You agree to seek the advice of your own tax advisors as to the advisability of making such a Section 83(b) election, the potential consequences of making
|
(iv)
|
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.
|
(a)
|
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.
|
(b)
|
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 to the extent not prohibited by the applicable law of the State in which you primarily work and reside; however, the Arbitration Policy, its enforceability, and its implementation are governed by the Federal Arbitration Act.
|
1.
|
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)
|
"
Beneficial Owner
" will have the meaning defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended, or any successor provision.
|
(b)
|
“
Board
” means the Board of Directors of Best Buy Co., Inc.
|
(c)
|
“
Cause
” for termination of your employment 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)
|
fail to devote substantially all of your business time and effort to the Company Group;
|
(vi)
|
are adjudicated in any civil suit, or acknowledge in writing in any agreement or stipulation, to have committed any theft, embezzlement, fraud, or other act of dishonesty involving any other Person;
|
(vii)
|
are determined, in the sole judgment of the Board or any individual or individuals the Board authorizes to act on its or their behalf, to have engaged in a pattern of poor performance;
|
(viii)
|
are determined, in the sole judgment of the Board or any individual or individuals the Board authorizes to act on its or their behalf, to have willfully engaged in conduct that is harmful to the Company Group, monetarily or otherwise;
|
(ix)
|
breach any provision of this Agreement or any other agreement between you and any member of the Company Group; or
|
(x)
|
engage in any activity intended to benefit any entity at the expense of the Company Group or intended to benefit any competitor of the Company Group.
|
(d)
|
“
Change of Control
” means:
|
(i)
|
the consummation of any transaction in which any Person or Group, other than a member or members of the Company Group or any trustee or other fiduciary holding securities under an employee benefit plan or plans of a member of the Company Group, becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 50% or more of the voting power of the Company's securities other than any such transaction in which the security holders of the Company immediately prior to such transaction Beneficially Own, immediately following such transaction, securities representing 50% or more of the voting power of the Company’s securities in substantially the same proportions as their ownership immediately prior to such transaction;
|
(ii)
|
individuals who at the Award Date constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company's shareholders was approved or recommended by a vote of at least 2/3 of the directors then still in office who either were directors at the Award Date or whose appointment, election or nomination for election was previously so approved or recommended, cease for any reason to constitute a majority thereof;
|
(iii)
|
there is consummated a merger or consolidation of the Company with any other entity, other than (a) a merger or consolidation in which the Beneficial Owners of securities of the Company outstanding immediately prior thereto representing 50% or more of the voting power of the Company’s securities Beneficially Own, in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of a member of the Company Group (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), at least 50% of the combined voting power of the voting securities of the Company or such surviving entity or parent thereof outstanding immediately after such merger or consolidation in substantially the same proportions as their Beneficial Ownership immediately prior to such transaction, or (b) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company's then outstanding securities;
|
(iv)
|
the consummation of any transaction or series of related transactions in which all or substantially all the Company's assets are sold or otherwise transferred, other than any sale or transfer to a Person or Group, at least 50% of the combined voting power of the voting securities of which are Beneficially Owned by shareholders of the Company in substantially the same proportions as such shareholders’ Beneficial Ownership of voting securities of the Company; or
|
(v)
|
approval by the shareholders of a definitive agreement or plan to liquidate or dissolve the Company.
|
(e)
|
“
Company Group
” means, collectively, Best Buy Co., Inc. and its subsidiaries.
|
(f)
|
“
Committee
” means the Compensation and Human Resources Committee of the Board of Directors of Best Buy Co., Inc.
|
(g)
|
“
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 other 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 employment, 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.
|
(h)
|
“
Disability
” means your disability that has caused you to either (i) have qualified for long term disability payments under the Company's long term disability plan; or (ii) to have been unable to perform the essential functions of your position (with or without reasonable accommodation) with any Company Group member for at least 6 consecutive months.
|
(i)
|
“
GAAP
” means generally accepted accounting principles in the United States.
|
(j)
|
“
Group
” shall have the meaning as such term has under Section 13d-3 of the Securities Exchange Act of 1934, as amended, or any successor provision.
|
(k)
|
“
Involuntarily Terminated Without Cause
” means (i) your employment is terminated by your employer at a time when your employer is not entitled to terminate your employment for Cause or (ii) in the event the entity that employs you is a direct or indirect a subsidiary or other Affiliate of the Company (the “
Employing
Entity
”), any transaction in which securities representing more than 50% of the voting power of the Employing Entity becoming Beneficially Owned by any Person or Persons other than the Company or one of its subsidiaries, whether via a transfer of such securities to such Person or Persons or via merger, consolidation or otherwise.
|
(l)
|
"
Qualified Retirement
" means any termination of your employment with the Company Group that occurs on or after your 60th birthday, at a time when no member of the Company Group is entitled to discharge you for Cause, so long as you have served the Company Group continuously for at least the five-year period immediately preceding that termination.
|
1.
|
Grant of Award
. In consideration of your employment with or service to a member of the Company Group, 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. Amended and Restated 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.
|
Options
. This section applies to you if your Award includes an Option. An “
Option
” is a right to purchase a number of shares of common stock of the Company (“
Shares
”) at the price per share of Common Stock stated in the Award Notification.
|
(a)
|
Term and Vesting
.
The Option shall expire and no longer be exercisable on the tenth anniversary the Award Date or such earlier date as provided herein (such date, the “
Expiration Date
”). Except as otherwise set forth herein, the Option may be exercised, in whole or in part, at any time prior to the Expiration Date, in accordance with the schedule stated in the Award Notification. In no case may the Option be exercised after the Expiration Date.
|
(b)
|
Method of Exercise
.
The Option may be exercised by written notice to the Company (through the Plan administrator or other means specified by the Company) stating the number of Shares to be purchased. Such notice must be accompanied by payment in full of the exercise price for all Shares to be purchased by (i) cash or check, (ii) delivery of unencumbered Shares previously acquired by you having a Fair Market Value on the date of exercise that is equal to the exercise price, (iii) withholding of Shares that would otherwise be issued upon such exercise having a Fair Market Value on the date of exercise equal to the aggregate exercise price for the Shares for which the Option is being exercised or (iv) a cashless (broker-assisted) exercise that complies with all applicable laws.
|
3.
|
Restricted Stock Units
. This section applies to you if your Award includes Restricted Stock Units. A “
Restricted
Stock Unit
” is a commitment by the Company to issue a certain number of Shares to you provided you meet certain employment criteria and that the Company achieves certain financial performance levels.
|
(a)
|
Restrictions
. Until your Restricted Stock Units become vested as provided in the Award Notification, they are subject to the restrictions described in this Agreement and the Plan (the “
Restrictions
”) during the period (the “
Restricted Period
”) beginning on the Award Date and ending on the date of vesting. 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.
|
(b)
|
Vesting.
Except as otherwise set forth herein, so long as you remained employed by a member of the Company Group, the Restricted Stock Units shall vest in accordance with the schedule stated in the Award Notification.
|
(c)
|
Performance Condition
.
Notwithstanding the vesting schedule stated in the Award Notification, your Restricted Stock Units shall not vest unless the Company achieves positive Adjusted Net Earnings in any fiscal year during the term of the Award. “
Adjusted Net Earnings
” means net earnings determined in accordance with GAAP as publicly reported by the Company for a fiscal year, adjusted to eliminate the following: (1) the cumulative effect of changes in GAAP; (2) gains and losses from discontinued operations; (3) extraordinary gains or losses; and (4) any other unusual or nonrecurring gains or losses which are separately identified and quantified, including merger related charges.
|
(d)
|
Issuance of Shares Underlying Restricted Stock Units.
Unless otherwise determined by the Committee, the Company shall issue the Shares underlying the Restricted Stock Units within 60 days following vesting of such Restricted Stock Units.
|
4.
|
Performance Share Award
. This section applies to you if your Award includes a Performance Share Award. A “
Performance Share Award
” is a commitment by the Company to issue a certain number of Shares to you provided you meet certain employment criteria and that the Company achieves certain financial performance levels. A Performance Share Award does not represent immediate ownership of Shares.
|
(a)
|
Determination of Number of Shares under Performance Share Award
. The
number of Shares issuable under (i) the revenue component of your Performance Share Award (the “
Revenue
Performance Share Number
”) will be equal to a percentage of the target number of Shares stated in your Award Notification for the revenue component (“
Revenue Target
”) and (ii) the TSR component of your Performance Share Award (the “
TSR Performance Share Number
”) will be equal to a percentage of the target number of Shares stated in your Award Notification for the TSR component (“
TSR Target
”), in each case as determined below.
|
(b)
|
Revenue Performance Share Number
.
|
(i)
|
Within 120 days after the end of the Performance Period, the Committee will calculate the CAGR of Enterprise Revenue from fiscal year 2018 to fiscal year 2021 (“
Enterprise Revenue CAGR
”). For example, if fiscal year 2018 Enterprise Revenue was $41.4 billion and fiscal year 2021 Enterprise Revenue was $43.3 billion, Enterprise Revenue CAGR would be 1.50%.
|
(ii)
|
Your Revenue Performance Share Number will be equal to the percentage of the Revenue
Target that is listed in the column below with the heading “Number of Shares Earned” opposite the band in the column with the heading “Performance” in which Enterprise Revenue CAGR falls. If Enterprise Revenue CAGR is between Threshold Enterprise Revenue CAGR and Target Enterprise Revenue CAGR or between Target Enterprise Revenue CAGR and Maximum Enterprise Revenue CAGR, your Revenue Performance Share Number will be equal to a percentage interpolated on a linear basis for performance between such amounts. For example, if Enterprise Revenue CAGR is 1.75%, then your Revenue Performance Share Number would be 125% of your Revenue Target. The Revenue Performance Share Number will be rounded to the nearest whole number.
|
(c)
|
TSR Performance Share Number
.
|
(i)
|
Within 120 days after the end of the Performance Period, the Committee will (A) calculate the TSR for Best Buy and for each company included in the S&P 500 Index at the time of any calculation hereunder, (B) rank each such company by TSR (lowest to highest), and (C) determine the percentile rank of Best Buy’s TSR in such ranking by dividing Best Buy’s numerical position in such TSR ranking by the total number of companies
|
(ii)
|
Your TSR Performance Share Number will be equal to the percentage of the TSR
Target that is listed in the column below with the heading “Number of Shares Earned” opposite the band in the column with the heading “Performance” in which Relative TSR falls. If Relative TSR is between Threshold TSR and Target TSR or between Target TSR and Maximum TSR, your TSR Performance Share Number will be equal to a percentage interpolated on a linear basis for performance between such amounts. For example, if Best Buy's Relative TSR is 60%, then your TSR Performance Share Number would be 125% of your TSR Target. Your TSR Performance Share Number will be rounded to the nearest whole number.
|
(d)
|
Certain Definitions.
|
(i)
|
“
Beginning Price
” means, with respect to any one company, the average closing price of one share of common stock during the first fiscal quarter of the Performance Period.
|
(ii)
|
“
CAGR
” means compound annual growth rate.
|
(iii)
|
“
Ending Price
” means, with respect to any one company, the average closing price of one share of common stock during the first fiscal quarter following completion of the Performance Period.
|
(iv)
|
“Enterprise Revenue”
means revenue of the Company from continuing operations as reported in the Company's Annual Report on Form 10-K for the respective 52-week fiscal year adjusted to eliminate the impact of currency exchange rate fluctuations;
provided
,
however
, that the Committee may adjust Enterprise Revenue down
to eliminate the following: (1) the cumulative effect of changes in GAAP (only to the extent such changes would reduce Enterprise Revenue); (2) revenue from discontinued operations; and (3) any other unusual or nonrecurring gains which are separately identified and quantified, including acquisition related revenue.
|
(v)
|
“Performance Period”
means the performance period stated in the Award Notification.
|
(vi)
|
“Performance Share Number”
means the sum of the Revenue Performance Share Number plus the TSR Performance Share Number.
|
(vii)
|
“TSR”
means, with respect to any one company, the price appreciation of one share of common stock as measured from the Beginning Price to the Ending Price, assuming all dividends and other distributions made on such share are reinvested, expressed as a percentage.
|
(e)
|
Change of Control
. Notwithstanding anything in this Agreement to the contrary, in the event of a Change of Control prior to the end of the Performance Period, the Committee will determine (i) Enterprise Revenue CAGR using the last completed fiscal year instead of fiscal year 2020 and (ii) Relative TSR using the average closing price of one share of common stock during the last completed fiscal quarter in order to determine the Ending Price, and the Revenue and TSR Performance Share Numbers will be equal to the greater of (i) the numbers determined pursuant to Section 4(b)(ii) and Section 4(c)(ii) above, respectively, and (ii) the respective Revenue or TSR Target.
|
(f)
|
Performance Share Number Not Guaranteed
. If Relative TSR is less than 30% or Enterprise Revenue CAGR is less than 1.0%, the respective portion of your Performance Share Number will be 0 and there will be no Shares issued under that portion of your Performance Share Award. The Committee shall have sole discretion to determine Relative TSR and Enterprise Revenue.
|
(g)
|
Issuance of Shares.
Any Shares issuable to you under your Performance Share Award will be issued within 60 days after the Committee’s determination of Relative TSR and Enterprise Revenue CAGR; provided however, that the Company’s obligation to issue such shares is subject to Section 5 of this Agreement.
|
5.
|
Effect of Termination of Employment
. Your employment with the Company Group may be terminated by your employer at any time for any reason (with or without advance notice). This section provides the effect on your Award of different types of termination of employment.
|
(a)
|
Qualified
Retirement
.
In the event of your Qualified Retirement:
|
(i)
|
Options
. If your Award includes an Option, the Option will continue to vest in accordance with the vesting schedule set forth above. You will have until the later of (A) three years from the date of your Qualified Retirement and (B) the last scheduled vesting date to exercise the entire Option; provided, however, that in no event shall the Option be exercisable after the Expiration Date. Any portion of the Option unexercised at the end of this period will be forfeited.
|
(ii)
|
Performance Shares
. If your Award includes Performance Shares and in the event of your Qualified Retirement prior to the end of the Performance Period, you may be entitled to a prorated Performance Share Award. If Relative TSR is greater than Threshold TSR (as determined after the end of the Performance Period), you will be entitled to a prorated TSR Performance Share Number. If Enterprise Revenue CAGR is greater than Threshold Enterprise Revenue CAGR (as determined after the end of the Performance Period), you will be entitled to a prorated Revenue Performance Share Number. Your Performance Share Award will be determined by multiplying the Performance Share Number calculated as if you were employed by a member of the Company Group on the last day of the Performance Period by a fraction, the numerator of which is the number of days during the Performance Period you were so employed, and the denominator of which is the number of days in the Performance Period.
|
(b)
|
Death or Disability
. In the event of your death or employment termination due to Disability:
|
(i)
|
Options
.
If your Award includes an Option, any then unvested portion of the Option will vest and become exercisable as of the date of death or, in the case of Disability, as of the date of employment termination. In the event of your death, the representative of your estate or your heirs will have until the earlier of (A) one year from the date of your death and (B) the Expiration Date of the Option, to exercise the Option. In the event you become Disabled while employed with the Company Group and must therefore terminate your employment, you will have until the earlier of (X) one year from the date of your employment termination and (Y) the Expiration Date of the Option, to exercise the Option.
|
(ii)
|
Restricted Stock Units
. If your Award includes Restricted Stock Units, the Restrictions will lapse immediately and Restricted Stock Units that are unvested as of the date of death or, in the case of Disability, employment termination will become vested immediately (notwithstanding the vesting schedule set forth in the Award Notification). Once vested, the Restricted Stock Units will be settled as provided in Section 3(d) above (or the earliest such later date as is required to satisfy Section 409A of the Code, as described in Section 7 below).
|
(iii)
|
Performance Share Award
. If your Award includes a Performance Share Award and in the event of your death or employment termination due to Disability prior to the end of the Performance Period, you or the representative of your estate or your heirs, as applicable, may be entitled to a prorated Performance Share Award. If Relative TSR is greater than Threshold TSR (as determined as of the last completed fiscal quarter prior to the date of termination of employment to determine the Ending Price), you or the representative of your estate or your heirs, as applicable, will be entitled to a prorated TSR Performance Share Number. If Enterprise Revenue CAGR is greater than Threshold Enterprise Revenue CAGR (using the last completed fiscal year instead of fiscal year 2020 for purposes of determining Enterprise Revenue CAGR), you will be entitled to a prorated Revenue Performance Share Number. For each component, your Performance Share Award will be
|
(c)
|
Involuntary
Termination Without Cause
. If your employment is Involuntarily Terminated Without Cause:
|
(i)
|
Options
.
If your Award includes an Option, you will have 60 days from the date of termination of your employment to exercise the portion of the Option vested as of your termination date, and any portion of the Option then unvested will be forfeited;
provided
,
however
, that if your employment is Involuntarily Terminated Without Cause within 12 months following a Change of Control, any then unvested portion of the Option will vest and become exercisable during the period ending 60 days from the date of termination of your employment. In no event, however, may the Option be exercised after its Expiration Date.
|
(ii)
|
Restricted Stock Units
. If your Award includes Restricted Stock Units, you will forfeit any then unvested Restricted Stock Units.
|
(iii)
|
Performance Share Award
. If your Award includes a Performance Share Award and your employment is Involuntarily Terminated Without Cause prior to the end of the Performance Period, you may be entitled to a prorated Performance Share Award. If Relative TSR is greater than Threshold TSR (as determined after the end of the Performance Period), you will be entitled to a prorated TSR Performance Share Number. If Enterprise Revenue CAGR is greater than Threshold Enterprise Revenue CAGR (as determined after the end of the Performance Period), you will be entitled to a prorated Revenue Performance Share Number. For each component, your Performance Share Award is determined by multiplying the Performance Share Number calculated as if you were employed by a member of the Company Group on the last day of the Performance Period multiplied by a fraction, the numerator of which is the number of days during the Performance Period you were employed, and the denominator of which is the number of days in the Performance Period.
|
(d)
|
Voluntary Termination
. If you voluntarily terminate your employment with the Company Group for any reason:
|
(i)
|
Options
.
If your Award includes an Option, you will have 60 days from the date of termination of your employment to exercise the Option, to the extent the Option had become vested as of your termination date. Any then unvested portion of the Option will be forfeited. In no event, however, may the Option be exercised after its Expiration Date.
|
(ii)
|
Restricted Stock Units
. If your Award includes Restricted Stock Units, you will forfeit any then unvested Restricted Stock Units.
|
(iii)
|
Performance Share Award
. If your Award includes a Performance Share Award, and you voluntarily terminate your employment prior to the end of the Performance Period, you will forfeit your entire Performance Share Award.
|
(e)
|
Termination for Cause
. If your employment is terminated by any member of the Company Group for any reason at a time when any member of the Company Group is entitled to terminate your employment for Cause:
|
(i)
|
Options
. If your Award includes an Option, any then unvested portion of the Option will be forfeited, and the Option may not be exercised after termination of your employment.
|
(ii)
|
Restricted Stock Units
. If your Award includes Restricted Stock Units, any then unvested Restricted Stock Units will be forfeited.
|
(iii)
|
Performance Share Award
.
If your Award includes a Performance Share Award and your employment is terminated by any member of the Company Group for any reason at a time when any member of the Company Group is entitled to terminate your employment for Cause prior to the end of the Performance Period, you will forfeit your entire Performance Share Award.
|
6.
|
Restrictive Covenants and Remedies
. By accepting the Award, you specifically agree to the restrictive covenants contained in this Section 6 (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. Sections 6(b) and 6(c) apply to you only if you are an officer of the Company. Further, if you are an attorney, the Restrictive Covenants
|
(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 employment with the Company Group and thereafter, to maintain the confidentiality of the Company Group’s Confidential Information and to use such Confidential Information for the exclusive benefit of the Company Group. You will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made in confidence to a federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law. You shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order.
|
(b)
|
Competitive Activity
. During your employment with the Company Group and for one year following the later of (i) termination of your employment for any reason whatsoever or (ii) the last scheduled vesting date for your Award, you shall not compete, directly or indirectly, through an Affiliate or otherwise, in any manner or capacity (including, without limitation, through any form of ownership or as a principal, agent, partner, officer, director, employee, advisor or consultant) with the Company Group, for your benefit or for the benefit of any other Person other than the Company Group anywhere in the world. In the event that any portion of this Section 6(b) shall be determined by an arbitrator to be unenforceable because it is unreasonably restrictive in any respect, it shall be interpreted to extend over the maximum period of time for which it reasonably may be enforced and to the maximum extent for which it reasonably may be enforced in all other respects, and enforced as so interpreted, all as determined by such 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. Ownership of less than 1% of the outstanding capital stock of any corporation listed on a national securities exchange will not constitute a breach of this Section 6(b).
|
(c)
|
Non-Solicitation
. During your employment and for one year following the later of (i) termination of your employment for any reason whatsoever or (ii) the last scheduled award vesting date, you shall not:
|
(a)
|
induce or attempt to induce any employee of the Company Group to leave the employ of Company Group, or in any way interfere adversely with the relationship between any such employee and Company Group;
|
(b)
|
induce or attempt to induce any employee of Company Group to work for, render services to, provide advice to, or supply Confidential Information of Company Group to any third Person;
|
(c)
|
employ, or otherwise pay for services rendered by, any employee of Company Group in any business enterprise with which you may be associated, connected or affiliated;
|
(d)
|
induce or attempt to induce any customer, supplier, licensee, licensor or other business relation of Company Group to cease doing business with Company Group, or in any way interfere with the then existing business relationship between any such customer, supplier, licensee, licensor or other business relation and Company Group; or
|
(e)
|
assist, solicit, or encourage any other Person, directly or indirectly, in carrying out any activity set forth above that would be prohibited by any of the provisions of this Agreement if such activity were carried out by you. In particular, you will not, directly or indirectly, induce any employee of Company Group to carry out any such activity
.
|
(d)
|
Partial Invalidity
. If any portion of this Section 6 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.
|
(e)
|
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
|
(f)
|
Claw Back & Recovery
. You agree your Award, the Shares underlying your Award, as well as the value of any and all Shares no longer under your control, are subject to forfeiture and recovery pursuant to the Company’s Clawback Policy, as it may be amended from time to time (the “
Clawback Policy
”), located at https://hr.bestbuy.com/, and 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. You acknowledge you have had an opportunity to review the Clawback Policy. Forfeiture and recovery under the Clawback Policy may include:
|
(i)
|
the immediate forfeiture of any of the then unexercised portion of any Option included in your Award, any unvested Restricted Shares included in your Award, and any Performance Share Award included in your Award;
|
(ii)
|
a requirement that you immediately return to the Company any Shares issued upon exercise of any Option included in your Award, and any Shares in your Award that were previously Restricted Shares and any Shares issued under any Performance Share Award that, in each case, are still under your control; and
|
(iii)
|
a requirement that you 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 exercise date of any such Option, the vesting date of any such formerly Restricted Shares, and the date of issuance of any Shares issued under any such Performance Share Award, as applicable).
|
(g)
|
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 6.
|
7.
|
General Terms and Conditions.
|
(a)
|
Rights as a Stockholder
.
|
(i)
|
Options
. You will have no rights as a stockholder with respect to any Shares issuable upon exercise of an Option, nor have any rights to dividends or other rights as a shareholder with respect to any such Shares, until you have actually received such Shares following the exercise of the Option in accordance with the terms of this Agreement and the Plan.
|
(ii)
|
Restricted Stock Units
. 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 at vesting of the Restricted Stock Units, 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.
|
(iii)
|
Performance Share Awards
. You will have no rights as a shareholder with respect to any Shares issuable under a Performance Share Award until you have actually received such Shares in accordance with the terms of this Agreement and the Plan.
|
(iv)
|
Dividend Equivalents
. If your Award includes Restricted Shares or a Performance Share Award, upon vesting of such Restricted Shares or upon issuance of Shares underlying such Performance Share Award, as the case may be, in accordance with the terms of this Agreement, you will be entitled to the Total Dividend Equivalent Amount with respect to such Restricted Shares or Performance Share Award. The Total Dividend Equivalent Amount will be converted to Shares and issued to you upon vesting of Restricted Shares, or issuance of Shares underlying a Performance Share Award, as applicable;
provided
,
however
, that the Committee may pay you the Total Dividend Equivalent Amount in cash, as determined in its sole discretion. Any such conversion shall be based on the closing price of one Share on the applicable dividend payment date. In the event any such conversion results in a fraction of a Share, the number of such Shares shall be rounded up to the nearest whole number. The Company’s obligation to issue such Shares or pay such amounts are subject to the same terms and conditions as apply to your Restricted Shares and any Performance Share Award.
|
(A)
|
“
Dividend Equivalent Amount
” means the amount of any dividend paid on one Share that has a record date during the Dividend Equivalent Period multiplied by (1) in the case of Restricted Shares, the number of Restricted Shares held by you as of such record date and, (2) in the case of a Performance Share Award, the Performance Share Number.
|
(B)
|
“
Dividend Equivalent Period
” means the period beginning on the grant date and ending (i) in the case of Restricted Shares, on the vesting date of such Restricted Shares and, (ii) in the case of a Performance Share Award, on the date of issuance of any Shares underlying a Performance Share Award.
|
(C)
|
“
Total
Dividend Equivalent Amount
” means the sum of all Dividend Equivalent Amounts with respect the Restricted Shares granted under this Agreement or the Performance Share Award granted under this Agreement, as applicable.
|
(b)
|
Transferability
.
|
(i)
|
Options
. Options 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 of the Option contrary to the provisions of this Agreement or the Plan, or the levy of any execution, attachment or similar process upon the Option, shall be void and unenforceable against the Company.
|
(ii)
|
Restricted Stock Units.
Restricted Stock Units are subject to the restrictions set forth in Section 3(a) of this Agreement.
|
(iii)
|
Performance Share Awards
. Performance Share Awards 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 of a Performance Share Award contrary to the provisions of this Agreement or the Plan, or the levy of any execution, attachment or similar process upon a Performance Share Award, shall be void and unenforceable against the Company.
|
(c)
|
No Right to Continued Employment
. This Agreement does not guarantee your continued employment nor alter the right of any member of the Company Group to terminate your employment at any time.
|
(d)
|
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).
|
(i)
|
Options
. Any Options included in your Award are Non-Qualified Stock Options not eligible for treatment as qualified or incentive stock options for federal income tax purposes. Prior to exercising any Option, you will pay or make adequate arrangements satisfactory to the Company to satisfy all applicable taxes. If applicable, you authorize the Company, or its agents, to satisfy its obligations with regard to all taxes by withholding Shares of the Company common stock to be issued at exercise of the Option or otherwise selling Shares of the Company on your behalf equal to the amount of all taxes required to be withheld by the Company, pursuant to the policies and processes of the Company’s stock plan administrator and broker.
|
(ii)
|
Restricted Stock Units.
Upon issuance of any Shares underlying your Restricted Stock Units, you authorize the Company, or its agents, to satisfy the obligations with regard to all taxes by selling Shares of the Company on your behalf, or otherwise withholding from such Shares a number of Shares having a
|
(iii)
|
Performance Share Award.
Upon issuance of your Performance Share Award, you authorize the Company, or its agents, to satisfy the obligations with regard to all taxes by selling Shares of the Company on your behalf, or otherwise 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, pursuant to the policies and processes of the Company’s stock plan administrator and broker.
|
(iv)
|
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.
|
(1)
|
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 employment under this Agreement shall mean your separation from service, (y) the occurrence of your “separation from service” will be determined in accordance with the default provisions of Treasury Regulation Section 1.409A-1(h) and (z) whether you are a “specified employee” will be determined in accordance with the default provisions of Treasury Regulation Section 1.409A-1(i) with the “identification date” to be December 31 and the “effective date” to be the April 1 following the identification date (as such terms are used under such regulation). Notwithstanding anything in this Agreement to the contrary, your employment shall not be deemed to have been terminated unless and until you have incurred a “separation from service” within the meaning of Section 409A.
|
(2)
|
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.
|
(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.
|
(a)
|
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.
|
(b)
|
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 to the extent not prohibited by the applicable law of the State in which you primarily work and reside; however, the Arbitration Policy, its enforceability, and its implementation are governed by the Federal Arbitration Act.
|
8.
|
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)
|
"
Beneficial Owner
" will have the meaning defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended, or any successor provision.
|
(b)
|
“
Board
” means the Board of Directors of Best Buy Co., Inc.
|
(c)
|
“
Cause
” for termination of your employment 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)
|
fail to devote substantially all of your business time and effort to the Company Group;
|
(vi)
|
are adjudicated in any civil suit, or acknowledge in writing in any agreement or stipulation, to have committed any theft, embezzlement, fraud, or other act of dishonesty involving any other Person;
|
(vii)
|
are determined, in the sole judgment of the Board or any individual or individuals the Board authorizes to act on its or their behalf, to have engaged in a pattern of poor performance;
|
(viii)
|
are determined, in the sole judgment of the Board or any individual or individuals the Board authorizes to act on its or their behalf, to have willfully engaged in conduct that is harmful to the Company Group, monetarily or otherwise;
|
(ix)
|
breach any provision of this Agreement or any other agreement between you and any member of the Company Group; or
|
(x)
|
engage in any activity intended to benefit any entity at the expense of the Company Group or intended to benefit any competitor of the Company Group.
|
(d)
|
“
Change of Control
” means:
|
(i)
|
the consummation of any transaction in which any Person or Group, other than a member or members of the Company Group or any trustee or other fiduciary holding securities under an employee benefit plan or plans of a member of the Company Group, becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 50% or more of the voting power of the Company's securities other than any such transaction in which the security holders of the Company immediately prior to such transaction Beneficially Own, immediately following such transaction, securities representing 50% or more of the voting power of the
|
(ii)
|
individuals who at the Award Date constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company's shareholders was approved or recommended by a vote of at least 2/3 of the directors then still in office who either were directors at the Award Date or whose appointment, election or nomination for election was previously so approved or recommended, cease for any reason to constitute a majority thereof;
|
(iii)
|
there is consummated a merger or consolidation of the Company with any other entity, other than (a) a merger or consolidation in which the Beneficial Owners of securities of the Company outstanding immediately prior thereto representing 50% or more of the voting power of the Company’s securities Beneficially Own, in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of a member of the Company Group (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), at least 50% of the combined voting power of the voting securities of the Company or such surviving entity or parent thereof outstanding immediately after such merger or consolidation in substantially the same proportions as their Beneficial Ownership immediately prior to such transaction, or (b) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company's then outstanding securities;
|
(iv)
|
the consummation of any transaction or series of related transactions in which all or substantially all the Company's assets are sold or otherwise transferred, other than any sale or transfer to a Person or Group, at least 50% of the combined voting power of the voting securities of which are Beneficially Owned by shareholders of the Company in substantially the same proportions as such shareholders’ Beneficial Ownership of voting securities of the Company; or
|
(v)
|
approval by the shareholders of a definitive agreement or plan to liquidate or dissolve the Company.
|
(e)
|
“
Company Group
” means, collectively, Best Buy Co., Inc. and its subsidiaries.
|
(f)
|
“
Committee
” means the Compensation and Human Resources Committee of the Board of Directors of Best Buy Co., Inc.
|
(g)
|
“
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 other 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 employment, 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.
|
(h)
|
“
Disability
” means your disability that has caused you to either (i) have qualified for long term disability payments under the Company's long term disability plan; or (ii) to have been unable to perform the essential functions of your position (with or without reasonable accommodation) with any Company Group member for at least 6 consecutive months.
|
(i)
|
“
GAAP
” means generally accepted accounting principles in the United States.
|
(j)
|
“
Group
” shall have the meaning as such term has under Section 13d-3 of the Securities Exchange Act of 1934, as amended, or any successor provision.
|
(k)
|
“
Involuntarily Terminated Without Cause
” means (i) your employment is terminated by your employer at a time when your employer is not entitled to terminate your employment for Cause or (ii) in the event the entity that employs you is a direct or indirect a subsidiary or other Affiliate of the Company (the “
Employing
Entity
”), any transaction in which securities representing more than 50% of the voting power of the Employing Entity becoming Beneficially Owned by any Person or Persons other than the Company or one of its subsidiaries, whether via a transfer of such securities to such Person or Persons or via merger, consolidation or otherwise.
|
(l)
|
"
Qualified Retirement
" means any termination of your employment with the Company Group that occurs on or after your 60th birthday, at a time when no member of the Company Group is entitled to discharge you for Cause, so long as you have served the Company Group continuously for at least the five-year period immediately preceding that termination.
|
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: June 8, 2018
|
/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: June 8, 2018
|
/s/ CORIE BARRY
|
|
Corie Barry
|
|
Chief Financial Officer
|
Date: June 8, 2018
|
/s/ HUBERT JOLY
|
|
Hubert Joly
|
|
Chairman and Chief Executive Officer
|
Date: June 8, 2018
|
/s/ CORIE BARRY
|
|
Corie Barry
|
|
Chief Financial Officer
|