BEST BUY CO INC, 10-Q filed on 9/30/2011
Quarterly Report
Document and Entity Information Document
6 Months Ended
Aug. 27, 2011
Sep. 27, 2011
Document and Entity Information [Abstract}
 
 
Entity Registrant Name
BEST BUY CO INC 
 
Current Fiscal Year End Date
--03-03 
 
Document Fiscal Year Focus
2012 
 
Amendment Flag
FALSE 
 
Entity Current Reporting Status
Yes 
 
Entity Common Stock, Shares Outstanding
 
362,295,405 
Document Fiscal Period Focus
Q2 
 
Document Type
10-Q 
 
Entity Central Index Key
0000764478 
 
Document Period End Date
Aug. 27, 2011 
 
Entity Filer Category
Large Accelerated Filer 
 
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Millions
Aug. 27, 2011
Feb. 26, 2011
Aug. 28, 2010
CURRENT ASSETS
 
 
 
Cash and cash equivalents
$ 2,040 
$ 1,103 
$ 843 
Short-term investments
80 
22 
Receivables
1,945 
2,348 
1,720 
Merchandise inventories
6,403 
5,897 
6,346 
Other current assets
1,033 
1,103 
1,048 
Total current assets
11,501 
10,473 
9,959 
PROPERTY AND EQUIPMENT, NET
3,761 
3,823 
3,915 
GOODWILL
2,486 
2,454 
2,365 
TRADENAMES, NET
134 
133 
147 
CUSTOMER RELATIONSHIPS, NET
179 
203 
227 
EQUITY AND OTHER INVESTMENTS
284 
328 
293 
OTHER ASSETS
484 
435 
456 
TOTAL ASSETS
18,829 
17,849 
17,362 
CURRENT LIABILITIES
 
 
 
Accounts payable
5,830 
4,894 
5,573 
Unredeemed gift card liabilities
410 
474 
400 
Accrued compensation and related expenses
489 
570 
467 
Accrued liabilities
1,580 
1,471 
1,589 
Accrued income taxes
256 
27 
Short-term debt
392 
557 
383 
Current portion of long-term debt
444 1
441 1
32 1
Total current liabilities
9,147 
8,663 
8,471 
LONG-TERM LIABILITIES
1,176 
1,183 
1,181 
LONG-TERM DEBT
1,696 
711 
1,088 
Best Buy Co., Inc. Shareholders’ Equity
 
 
 
Preferred stock, $1.00 par value: Authorized - 400,000 shares; Issued and outstanding - none
Common stock, $0.10 par value: Authorized - 1.0 billion shares; Issued and outstanding - 365,556,000, 392,590,000 and 402,961,000 shares, respectively
37 
39 
40 
Additional paid-in capital
18 
Retained earnings
5,839 
6,372 
6,000 
Accumulated other comprehensive income (loss)
211 
173 
(25)
Total Best Buy Co., Inc. shareholders' equity
6,087 
6,602 
6,015 
Noncontrolling interests
723 
690 
607 
Total equity
6,810 
7,292 
6,622 
TOTAL LIABILITIES AND EQUITY
$ 18,829 
$ 17,849 
$ 17,362 
CONDENSED CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) (USD $)
Aug. 27, 2011
Feb. 26, 2011
Aug. 28, 2010
Preferred stock, par value (in dollars per share)
$ 1 
$ 1 
$ 1 
Preferred stock, Authorized shares
400,000 
400,000 
400,000 
Preferred stock, Issued shares
Preferred stock, outstanding shares
Common stock, par value (in dollars per share)
$ 0.10 
$ 0.10 
$ 0.10 
Common stock, Authorized shares
1,000,000,000 
1,000,000,000 
1,000,000,000 
Common stock, Issued shares
365,556,000 
392,590,000 
402,961,000 
Common stock, outstanding shares
365,556,000 
392,590,000 
402,961,000 
CONSOLIDATED STATEMENTS OF EARNINGS (USD $)
In Millions, except Per Share data
3 Months Ended
Aug. 27, 2011
3 Months Ended
Aug. 28, 2010
6 Months Ended
Aug. 27, 2011
6 Months Ended
Aug. 28, 2010
Revenue
$ 11,347 
$ 11,339 
$ 22,287 
$ 22,126 
Cost of goods sold
8,475 
8,421 
16,647 
16,415 
Gross profit
2,872 
2,918 
5,640 
5,711 
Selling, general and administrative expenses
2,583 
2,507 
5,067 
4,987 
Restructuring charges
Operating income
287 
411 
569 
724 
Other income (expense)
 
 
 
 
Investment income and other
13 
18 
25 
Interest expense
(34)
(21)
(65)
(44)
Earnings before income tax expense and equity in loss of affiliates
259 
403 
522 
705 
Income tax expense
99 
146 
198 
267 
Equity in loss of affiliates
(1)
Net earnings (loss) including noncontrolling interests
160 
257 
323 
438 
Net loss (earnings) attributable to noncontrolling interests
17 
(3)
(10)
(29)
Net earnings (loss) attributable to Best Buy Co., Inc.
$ 177 
$ 254 
$ 313 
$ 409 
Earnings per share attributable to Best Buy Co., Inc.
 
 
 
 
Basic (in dollars per share)
$ 0.48 
$ 0.61 
$ 0.82 
$ 0.98 
Diluted (in dollars per share)
$ 0.47 
$ 0.60 
$ 0.81 
$ 0.96 
Dividends declared per common share (in dollars per share)
$ 0.15 
$ 0.14 
$ 0.30 
$ 0.28 
Weighted-average common shares outstanding (in millions)
 
 
 
 
Basic (in shares)
371.9 
413.5 
379.8 
416.9 
Diluted (in shares)
381.4 
423.6 
389.5 
427.7 
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (USD $)
In Millions
Total
Total Best Buy Co., Inc.
Common Stock
Additional Paid-In Capital
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Noncontrolling Interests
Beginning balances at Feb. 27, 2010
$ 6,964 
$ 6,320 
$ 42 
$ 441 
$ 5,797 
$ 40 
$ 644 
Beginning balances (in shares) at Feb. 27, 2010
 
 
419 
 
 
 
 
Increase (Decrease) in Shareholders' Equity
 
 
 
 
 
 
 
Net earnings, six months ended
438 
409 
409 
29 
Other comprehensive income (loss), net of tax
 
 
 
 
 
 
 
Foreign currency translation adjustments
(153)
(83)
(83)
(70)
Unrealized gains on available-for-sale investments
14 
14 
14 
Cash flow hedging instruments - unrealized gains (losses)
Total comprehensive income (loss)
307 
344 
 
 
 
 
(37)
Stock-based compensation
58 
58 
58 
Stock options exercised (in shares)
 
 
 
 
 
 
Stock options exercised
90 
90 
90 
Issuance of common stock under employee stock purchase plan (in shares)
 
 
 
 
 
 
Issuance of common stock under employee stock purchase plan
23 
23 
23 
Tax benefit (deficit) from stock options exercised, restricted stock vesting and employee stock purchase plan
Common stock dividends, $0.30 per share during the period ended August 27, 2011 and $0.28 per share during the period ended August 28, 2010, respectively
(118)
(118)
(118)
Repurchase of common stock (in shares)
 
 
(20)
 
 
 
 
Repurchase of common stock
(705)
(705)
(2)
(615)
(88)
Ending balances at Aug. 28, 2010
6,622 
6,015 
40 
6,000 
(25)
607 
Ending balances (in shares) at Aug. 28, 2010
 
 
403 
 
 
 
 
Beginning balances at Feb. 26, 2011
7,292 
6,602 
39 
18 
6,372 
173 
690 
Beginning balances (in shares) at Feb. 26, 2011
 
 
393 
 
 
 
 
Increase (Decrease) in Shareholders' Equity
 
 
 
 
 
 
 
Net earnings, six months ended
323 
313 
313 
10 
Other comprehensive income (loss), net of tax
 
 
 
 
 
 
 
Foreign currency translation adjustments
82 
57 
57 
25 
Unrealized gains on available-for-sale investments
(21)
(21)
(21)
Cash flow hedging instruments - unrealized gains (losses)
Total comprehensive income (loss)
388 
351 
 
 
 
 
37 
Dividend distribution
(4)
(4)
Stock-based compensation
63 
63 
63 
Stock options exercised (in shares)
 
 
 
 
 
 
Stock options exercised
26 
26 
26 
Issuance of common stock under employee stock purchase plan (in shares)
 
 
 
 
 
 
Issuance of common stock under employee stock purchase plan
23 
23 
23 
Tax benefit (deficit) from stock options exercised, restricted stock vesting and employee stock purchase plan
(3)
(3)
(3)
Common stock dividends, $0.30 per share during the period ended August 27, 2011 and $0.28 per share during the period ended August 28, 2010, respectively
(112)
(112)
(112)
Repurchase of common stock (in shares)
 
 
(29)
 
 
 
 
Repurchase of common stock
(863)
(863)
(2)
(127)
(734)
Ending balances at Aug. 27, 2011
$ 6,810 
$ 6,087 
$ 37 
$ 0 
$ 5,839 
$ 211 
$ 723 
Ending balances (in shares) at Aug. 27, 2011
 
 
366 
 
 
 
 
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (PARENTHETICAL)
3 Months Ended
Aug. 27, 2011
3 Months Ended
Aug. 28, 2010
6 Months Ended
Aug. 27, 2011
6 Months Ended
Aug. 28, 2010
Statement of Stockholders' Equity [Abstract]
 
 
 
 
Dividends declared per common share (in dollars per share)
$ 0.15 
$ 0.14 
$ 0.30 
$ 0.28 
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Millions
6 Months Ended
Aug. 27, 2011
6 Months Ended
Aug. 28, 2010
OPERATING ACTIVITIES
 
 
Net earnings including noncontrolling interests
$ 323 
$ 438 
Adjustments to reconcile net earnings including noncontrolling interests to total cash provided by operating activities
 
 
Depreciation
445 
438 
Amortization of definite-lived intangible assets
30 
43 
Stock-based compensation
63 
58 
Deferred income taxes
62 
50 
Excess tax benefits from stock-based compensation
(10)
Other, net
12 
Changes in operating assets and liabilities
 
 
Receivables
464 
197 
Merchandise inventories
(474)
(909)
Other assets
36 
75 
Accounts payable
936 
361 
Other liabilities
(96)
(225)
Income taxes
(264)
(437)
Total cash provided by (used in) operating activities
1,537 
84 
INVESTING ACTIVITIES
 
 
Additions to property and equipment
(411)
(342)
Purchases of investments
(106)
(241)
Sales of investments
66 
379 
Proceeds from sale of business, net of cash transferred
21 
Change in restricted assets
(45)
12 
Settlement of net investment hedges
12 
Other, net
(1)
Total cash provided by (used in) investing activities
(496)
(160)
FINANCING ACTIVITIES
 
 
Repurchase of common stock
(846)
(667)
Borrowings of debt
1,996 
955 
Repayments of debt
(1,187)
(1,207)
Dividends paid
(115)
(118)
Issuance of common stock under employee stock purchase plan and for the exercise of stock options
49 
113 
Excess tax benefits from stock-based compensation
10 
Other, net
(2)
Total cash provided by (used in) financing activities
(105)
(905)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
(2)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
937 
(983)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
1,103 
1,826 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$ 2,040 
$ 843 
Basis of Presentation
Basis of Presentation
Basis of Presentation
 
Unless the context otherwise requires, the use of the terms “Best Buy,” “we,” “us” and “our” in these Notes to Condensed Consolidated Financial Statements refers to Best Buy Co., Inc. and its consolidated subsidiaries.
 
In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments necessary for a fair presentation as prescribed by accounting principles generally accepted in the United States (“GAAP”). All adjustments were comprised of normal recurring adjustments, except as noted in these Notes to Condensed Consolidated Financial Statements.
 
Historically, we have realized more of our revenue and earnings in the fiscal fourth quarter, which includes the majority of the holiday shopping season in the U.S., Europe and Canada, than in any other fiscal quarter. Due to the seasonal nature of our business, interim results are not necessarily indicative of results for the entire fiscal year. The interim financial statements and the related notes in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended February 26, 2011.
 
In order to align our fiscal reporting periods and comply with statutory filing requirements in certain foreign jurisdictions, we consolidate the financial results of our Europe, China, Mexico and Turkey operations on a two-month lag. There were no significant intervening events which would have materially affected our consolidated financial statements had they been recorded during the three months ended August 27, 2011. In February 2011, we announced plans to exit the Turkey market; however, the stores remained open and continued operations until closed in the second quarter of fiscal 2012.
 
In preparing the accompanying condensed consolidated financial statements, we evaluated the period from August 28, 2011, through the date the financial statements were issued for material subsequent events requiring recognition or disclosure. No such events were identified for this period.
 
New Accounting Standards
 
Comprehensive Income — In June 2011, the Financial Accounting Standards Board (“FASB”) issued new guidance on the presentation of comprehensive income. Specifically, the new guidance allows an entity to present components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. While the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance. This new guidance is effective for fiscal years and interim periods beginning after December 15, 2011. We do not believe our adoption of the new guidance in the first quarter of fiscal 2013 will have an impact on our consolidated financial position, results of operations or cash flows.
 
Fair Value Measurement — In April 2011, the FASB issued new guidance to achieve common fair value measurement and disclosure requirements between GAAP and International Financial Reporting Standards. This new guidance amends current fair value measurement and disclosure guidance to include increased transparency around valuation inputs and investment categorization. This new guidance is effective for fiscal years and interim periods beginning after December 15, 2011. We do not believe our adoption of the new guidance in the first quarter of fiscal 2013 will have an impact on our consolidated financial position, results of operations or cash flows.


Investments
Investments
Investments
 
Investments were comprised of the following:


 
 
August 27,

2011
 
February 26,

2011
 
August 28,

2010
Short-term investments
 


 
 


 
 


Money market fund
$


 
$
2


 
$
2


U.S. Treasury bills
80


 
20


 


Total short-term investments
$
80


 
$
22


 
$
2


 
 
 
 
 
 
Equity and other investments
 


 
 


 
 


Debt securities (auction rate securities)
$
88


 
$
110


 
$
134


Marketable equity securities
122


 
146


 
97


Other investments
74


 
72


 
62


Total equity and other investments
$
284


 
$
328


 
$
293




 
Debt Securities
 
Our debt securities are comprised of auction rate securities (“ARS”). ARS were intended to behave like short-term debt instruments because their interest rates reset periodically through an auction process, most commonly at intervals of seven, 28 and 35 days. The auction process had historically provided a means by which we could rollover the investment or sell these securities at par in order to provide us with liquidity as needed. As a result, we classify our investments in ARS as available-for-sale and carry them at fair value.
 
In February 2008, auctions began to fail due to insufficient buyers, as the amount of securities submitted for sale in auctions exceeded the aggregate amount of the bids. For each failed auction, the interest rate on the security moves to a maximum rate specified for each security, and generally resets at a level higher than specified short-term interest rate benchmarks. To date, we have collected all interest due on our ARS and expect to continue to do so in the future. Due to persistent failed auctions, and the uncertainty of when these investments could be liquidated at par, we have classified all of our investments in ARS as non-current assets within equity and other investments in our condensed consolidated balance sheet at August 27, 2011.
 
We sold $8 of ARS at par during the second quarter of fiscal 2012. However, at August 27, 2011, our entire remaining ARS portfolio, consisting of 19 investments in ARS having an aggregate value at par of $93, was subject to failed auctions.
 
Our ARS portfolio consisted of the following, at fair value:
 
Description
 
Nature of collateral or guarantee
 
August 27,

2011
 
February 26,

2011
 
August 28,

2010
Student loan bonds
 
Student loans guaranteed 95% to 100% by the U.S. government
 
$
86


 
$
108


 
$
116


Municipal revenue bonds
 
100% insured by AA/Aa-rated bond insurers at August 27, 2011
 
2


 
2


 
18


Total fair value plus accrued interest(1)
 
 
 
$
88


 
$
110


 
$
134


 
(1) 
The par value and weighted-average interest rates (taxable equivalent) of our ARS were $93, $115 and $144, and 0.40%, 0.80% and 0.91%, respectively, at August 27, 2011, February 26, 2011, and August 28, 2010, respectively.
 
At August 27, 2011, our ARS portfolio was 88% AAA/Aaa-rated, 3% AA/Aa-rated and 9% A/A-rated.
 
The investment principal associated with failed auctions will not be accessible until successful auctions occur, a buyer is found outside of the auction process, the issuers establish a different form of financing to replace these securities, or final payments are due according to the contractual maturities of the debt issuances, which range from five to 30 years. We do not intend to sell our remaining ARS until we can recover the full principal amount through one of the means described above. In addition, we do not believe it is more likely than not that we would be required to sell our remaining ARS until we can recover the full principal amount based on our other sources of liquidity.


We evaluated our entire ARS portfolio of $93 (par value) for impairment at August 27, 2011, based primarily on the methodology described in Note 3, Fair Value Measurements. As a result of this review, we determined that the fair value of our ARS portfolio at August 27, 2011, was $88. Accordingly, a $5 pre-tax unrealized loss is recognized in accumulated other comprehensive income. This unrealized loss reflects a temporary impairment on all of our investments in ARS. The estimated fair value of our ARS portfolio could change significantly based on future market conditions. We will continue to assess the fair value of our ARS portfolio for substantive changes in relevant market conditions, changes in our financial condition or other changes that may alter our estimates described above.
 
We may be required to record an additional unrealized holding loss or an impairment charge to earnings if we determine that our ARS portfolio has incurred a further decline in fair value that is temporary or other-than-temporary, respectively. Factors that we consider when assessing our ARS portfolio for other-than-temporary impairment include the duration and severity of the impairment, the reason for the decline in value, the potential recovery period, the nature of the collateral or guarantees in place and our intent and ability to hold an investment.
 
We had $(3), $(3) and $(6) of unrealized loss, net of tax, recorded in accumulated other comprehensive income at August 27, 2011, February 26, 2011, and August 28, 2010 respectively, related to our investments in debt securities.
 
Marketable Equity Securities
 
We invest in marketable equity securities and classify them as available-for-sale. Investments in marketable equity securities are classified as non-current assets within equity and other investments in our condensed consolidated balance sheets and are reported at fair value based on quoted market prices.
 
Our investments in marketable equity securities were as follows:
 
 
August 27,

2011
 
February 26,

2011
 
August 28,

2010
Common stock of TalkTalk Telecom Group PLC
$
69


 
$
62


 
$
51


Common stock of Carphone Warehouse Group plc
53


 
84


 
44


Other


 


 
2


Total
$
122


 
$
146


 
$
97




 
We purchased shares of The Carphone Warehouse Group PLC (“CPW”) common stock in fiscal 2008, representing nearly 3% of CPW’s then outstanding shares. In March 2010, CPW demerged into two new holding companies: TalkTalk Telecom Group PLC (“TalkTalk”), which is the holding company for the fixed line voice and broadband telecommunications business of the former CPW, and Carphone Warehouse Group plc (“Carphone Warehouse”), which includes the former CPW’s 50% ownership interest in Best Buy Europe Distributions Limited (“Best Buy Europe”). Accordingly, our investment in CPW was exchanged for equivalent levels of investment in TalkTalk and Carphone Warehouse. A $63 pre-tax unrealized gain is recorded in accumulated other comprehensive income related to these investments at August 27, 2011.
 
We review all investments for other-than-temporary impairment at least quarterly or as indicators of impairment exist. Indicators of impairment include the duration and severity of the decline in fair value as well as the intent and ability to hold the investment to allow for a recovery in the market value of the investment. In addition, we consider qualitative factors that include, but are not limited to: (i) the financial condition and business plans of the investee including its future earnings potential, (ii) the investee’s credit rating, and (iii) the current and expected market and industry conditions in which the investee operates. If a decline in the fair value of an investment is deemed by management to be other-than-temporary, the cost basis of the investment is written down to fair value, and the amount of the write-down is included in net earnings.
 
All unrealized holding gains or losses related to our investments in marketable equity securities are reflected net of tax in accumulated other comprehensive income in shareholders’ equity. The total unrealized gain, net of tax, included in accumulated other comprehensive income was $54, $75 and $35 at August 27, 2011, February 26, 2011, and August 28, 2010, respectively.
 
Other Investments
 
The aggregate carrying values of investments accounted for using either the cost method or the equity method, at August 27, 2011, February 26, 2011, and August 28, 2010, were $74, $72 and $62, respectively.
Fair Value Measurements
Fair Value Measurements
Fair Value Measurements
 
Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. To measure fair value, we use a three-tier valuation hierarchy based upon observable and non-observable inputs:
 
Level 1 — Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date.
 
Level 2 — Significant other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including:
 
Quoted prices for similar assets or liabilities in active markets;
Quoted prices for identical or similar assets in non-active markets;
Inputs other than quoted prices that are observable for the asset or liability; and
Inputs that are derived principally from or corroborated by other observable market data.
 
Level 3 — Significant unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.
 
Assets and Liabilities that are Measured at Fair Value on a Recurring Basis
 
The fair value hierarchy requires the use of observable market data when available. In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability. The following tables set forth by level within the fair value hierarchy, our financial assets and liabilities that were accounted for at fair value on a recurring basis at August 27, 2011, February 26, 2011, and August 28, 2010, according to the valuation techniques we used to determine their fair values.
 
 
 
 
Fair Value Measurements
Using Inputs Considered as
 
Fair Value at

August 27, 2011
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
ASSETS
 


 
 


 
 


 
 


Cash and cash equivalents
 


 
 


 
 


 
 


Money market funds
$
560


 
$
560


 
$


 
$


Commercial paper
15


 


 
15


 


Short-term investments
 


 
 


 
 


 
 


U.S. Treasury bills
80


 
80


 


 


Other current assets
 


 
 


 
 


 
 


Money market funds (restricted cash)
157


 
157


 


 


U.S. Treasury bills (restricted cash)
30


 
30


 


 


Foreign currency derivative instruments
6


 


 
6


 


Equity and other investments
 


 
 


 
 


 
 


Auction rate securities
88


 


 


 
88


Marketable equity securities
122


 
122


 


 


Other assets
 


 
 


 
 


 
 


Marketable equity securities that fund deferred compensation
83


 
83


 


 


Foreign currency derivative instruments
1


 


 
1


 


 
 
 
 
 
 
 
 
LIABILITIES
 


 
 


 
 


 
 


Long-term liabilities
 


 
 


 
 


 
 


Deferred compensation
65


 
65


 


 


 
 
 
Fair Value Measurements
Using Inputs Considered as
 
Fair Value at

February 26, 2011
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
ASSETS
 


 
 


 
 


 
 


Cash and cash equivalents
 


 
 


 
 


 
 


Money market funds
$
70


 
$
70


 
$


 
$


Short-term investments
 


 
 


 
 


 
 


Money market fund
2


 


 
2


 


U.S. Treasury bills
20


 
20


 


 


Other current assets
 


 
 


 
 


 
 


Money market funds (restricted cash)
63


 
63


 


 


U.S. Treasury bills (restricted cash)
105


 
105


 


 


Foreign currency derivative instruments
2


 


 
2


 


Equity and other investments
 


 
 


 
 


 
 


Auction rate securities
110


 


 


 
110


Marketable equity securities
146


 
146


 


 


Other assets
 


 
 


 
 


 
 


Marketable equity securities that fund deferred compensation
83


 
83


 


 


 
 
 
 
 
 
 
 
LIABILITIES
 


 
 


 
 


 
 


Accrued liabilities
 


 
 


 
 


 
 


Foreign currency derivative instruments
1


 


 
1


 


Long-term liabilities
 


 
 


 
 


 
 


Deferred compensation
64


 
64


 


 


Foreign currency derivative instruments
2


 


 
2


 


 
 
 
 
Fair Value Measurements
Using Inputs Considered as
 
Fair Value at

August 28, 2010
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
ASSETS
 


 
 


 
 


 
 


Cash and cash equivalents
 


 
 


 
 


 
 


Money market funds
$
1


 
$
1


 
$


 
$


Short-term investments
 


 
 


 
 


 
 


Money market fund
2


 


 
2


 


Other current assets
 


 
 


 
 


 
 


Money market funds (restricted cash)
49


 
49


 


 


U.S. Treasury bills (restricted cash)
100


 
100


 


 


Foreign currency derivative instruments
6


 


 
6


 


Equity and other investments
 


 
 


 
 


 
 


Auction rate securities
134


 


 


 
134


Marketable equity securities
97


 
97


 


 


Other assets
 


 
 


 
 


 
 


Marketable equity securities that fund deferred compensation
77


 
77


 


 


Foreign currency derivative instruments
6


 


 
6


 


 
 
 
 
 
 
 
 
LIABILITIES
 


 
 


 
 


 
 


Long-term liabilities
 


 
 


 
 


 
 


Deferred compensation
64


 
64


 


 






The following tables provide a reconciliation between the beginning and ending balances of items measured at fair value on a recurring basis in the tables above that used significant unobservable inputs (Level 3) for the three and six months ended August 27, 2011, and August 28, 2010.
 
 
Debt securities-
Auction rate securities only
 
Student loan
bonds
 
Municipal
revenue bonds
 
Total
Balances at May 28, 2011
$
97


 
$
2


 
$
99


Changes in unrealized losses included in other comprehensive income
(3
)
 


 
(3
)
Sales
(8
)
 


 
(8
)
Balances at August 27, 2011
$
86


 
$
2


 
$
88


 
 
Debt securities-
Auction rate securities only
 
Student loan
bonds
 
Municipal
revenue bonds
 
Total
Balances at February 26, 2011
$
108


 
$
2


 
$
110


Changes in unrealized losses included in other comprehensive income


 


 


Sales
(22
)
 


 
(22
)
Balances at August 27, 2011
$
86


 
$
2


 
$
88


 


 
Debt securities-
Auction rate securities only
 
Student loan
bonds
 
Municipal
revenue bonds
 
Total
Balances at May 29, 2010
$
214


 
$
19


 
$
233


Changes in unrealized losses included in other comprehensive income


 


 


Sales
(98
)
 
(1
)
 
(99
)
Balances at August 28, 2010
$
116


 
$
18


 
$
134


 
 
Debt securities-
Auction rate securities only
 
Student loan
bonds
 
Municipal
revenue bonds
 
Total
Balances at February 27, 2010
$
261


 
$
19


 
$
280


Changes in unrealized losses included in other comprehensive income
(5
)
 


 
(5
)
Sales
(139
)
 
(1
)
 
(140
)
Interest received
(1
)
 


 
(1
)
Balances at August 28, 2010
$
116


 
$
18


 
$
134






The following methods and assumptions were used to estimate the fair value of each class of financial instrument:
 
Money Market Funds.  Our money market fund investments that are traded in an active market were measured at fair value using quoted market prices and, therefore, were classified as Level 1. Our money market fund investments not traded on a regular basis or in an active market, and for which we have been unable to obtain pricing information on an ongoing basis, were measured using inputs other than quoted market prices that are observable for the investments and, therefore, were classified as Level 2.
 
U.S. Treasury Bills.  Our U.S. Treasury notes were classified as Level 1 as they trade with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis.
 
Commercial Paper.  Our investments in commercial paper were measured using inputs based upon quoted prices for similar instruments in active markets and, therefore, were classified as Level 2.
 
Foreign Currency Derivative Instruments.  Comprised primarily of foreign currency forward contracts and foreign currency swap contracts, our foreign currency derivative instruments were measured at fair value using readily observable market inputs, such as quotations on forward foreign exchange points and foreign interest rates. Our foreign currency derivative instruments were classified as Level 2 as these instruments are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market.
 
Auction Rate Securities.  Our investments in ARS were classified as Level 3 as quoted prices were unavailable due to events described in Note 2, Investments. Due to limited market information, we utilized a discounted cash flow (“DCF”) model to derive an estimate of fair value. The assumptions we used in preparing the DCF model included estimates with respect to the amount and timing of future interest and principal payments, forward projections of the interest rate benchmarks, the probability of full repayment of the principal considering the credit quality and guarantees in place, and the rate of return required by investors to own such securities given the current liquidity risk associated with ARS.
 
Marketable Equity Securities.  Our marketable equity securities were measured at fair value using quoted market prices. They were classified as Level 1 as they trade in an active market for which closing stock prices are readily available.
 
Deferred Compensation.  Our deferred compensation liabilities and the assets that fund our deferred compensation consist of investments in mutual funds. These investments were classified as Level 1 as the shares of these mutual funds trade with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis.


Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis
 
Assets and liabilities that are measured at fair value on a nonrecurring basis relate primarily to our tangible fixed assets, goodwill and other intangible assets, which are remeasured when the derived fair value is below carrying value on our condensed consolidated balance sheets. For these assets, we do not periodically adjust carrying value to fair value except in the event of impairment. When we determine that impairment has occurred, the carrying value of the asset is reduced to fair value and the difference is recorded within operating income in our consolidated statements of earnings. During the six months ended August 27, 2011, and August 28, 2010, we had no significant remeasurements of such assets or liabilities to fair value.
 
Fair Value of Financial Instruments
 
Our financial instruments, other than those presented in the disclosures above, include cash, receivables, other investments, accounts payable, accrued liabilities and short- and long-term debt. The fair values of cash, receivables, accounts payable, accrued liabilities and short-term debt approximated carrying values because of the short-term nature of these instruments. Fair values for other investments held at cost are not readily available, but we estimate that the carrying values for these investments approximate fair value. See Note 6, Debt, for information about the fair value of our long-term debt.


Goodwill and Intangible Assets
Goodwill and Intangible Assets
Goodwill and Intangible Assets
 
The changes in the carrying values of goodwill and indefinite-lived tradenames by segment were as follows in the six months ended August 27, 2011, and August 28, 2010:
 
 
Goodwill
 
Indefinite-lived Tradenames
 
Domestic
 
International
 
Total
 
Domestic
 
International
 
Total
Balances at February 26, 2011
$
422


 
$
2,032


 
$
2,454


 
$
21


 
$
84


 
$
105


Changes in foreign currency exchange rates


 
32


 
32


 


 
1


 
1


Other(1)


 


 


 


 
28


 
28


Balances at August 27, 2011
$
422


 
$
2,064


 
$
2,486


 
$
21


 
$
113


 
$
134


 
(1)         
Represents the transfer of certain definite-lived tradenames (at their net book value) to indefinite-lived tradenames following our decision to no longer phase out certain tradenames. We believe these tradenames will continue to contribute to our future cash flows indefinitely.
 
 
Goodwill
 
Indefinite-lived Tradenames
 
Domestic
 
International
 
Total
 
Domestic
 
International
 
Total
Balances at February 27, 2010
$
434


 
$
2,018


 
$
2,452


 
$
32


 
$
80


 
$
112


Sale of business(1)
(12
)
 


 
(12
)
 
(1
)
 


 
(1
)
Changes in foreign currency exchange rates


 
(75
)
 
(75
)
 


 


 


Balances at August 28, 2010
$
422


 
$
1,943


 
$
2,365


 
$
31


 
$
80


 
$
111


 
(1)            
As a result of the sale of our Speakeasy business in the second quarter of fiscal 2011, we wrote off the carrying value of the related goodwill and indefinite-lived tradenames as of the date of sale.


The following table provides the gross carrying amount of goodwill and cumulative goodwill impairment losses:
 
 
August 27, 2011
 
February 26, 2011
 
August 28, 2010
 
Gross
Carrying
Amount
 
Cumulative
Impairment
 
Gross
Carrying
Amount
 
Cumulative
Impairment
 
Gross
Carrying
Amount
 
Cumulative
Impairment
Goodwill
$
2,551


 
$
(65
)
 
$
2,519


 
$
(65
)
 
$
2,430


 
$
(65
)


 
The following table provides the gross carrying values and related accumulated amortization of definite-lived intangible assets:
 
 
August 27, 2011
 
February 26, 2011
 
August 28, 2010
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Gross
Carrying
Amount
 
Accumulated
Amortization
Tradenames
$


 
$


 
$
73


 
$
(45
)
 
$
71


 
$
(35
)
Customer relationships
393


 
(214
)
 
383


 
(180
)
 
372


 
(145
)
Total
$
393


 
$
(214
)
 
$
456


 
$
(225
)
 
$
443


 
$
(180
)




Total amortization expense for the three months ended August 27, 2011, and August 28, 2010, was $15 and $21, respectively, and was $30 and $43 for the six months then ended, respectively. The estimated future amortization expense for identifiable intangible assets is as follows:
 
Fiscal Year
 
Remainder of fiscal 2012
$
18


2013
36


2014
36


2015
36


2016
36


Thereafter
17


Restructuring Charges
Restructuring Charges
Restructuring Charges
 
In the fourth quarter of fiscal 2011, we implemented a series of actions to restructure operations in our domestic and international businesses. The fiscal 2011 restructuring included plans to exit the Turkey market, restructure the Best Buy branded stores in China and improve efficiencies in our Domestic segment’s operations. As part of the international restructuring, we also recognized the impairment of certain information technology assets supporting the restructured activities in our International segment. We view these restructuring activities as necessary to meet our long-term growth goals by investing in businesses that have the potential to meet our internal rate of return expectations. We believe these actions will improve the financial performance of our International segment and increase efficiency, enhance customer service and reduce costs in our Domestic segment’s operations.


We incurred $4 of charges related to the fiscal 2011 restructuring in the first six months of fiscal 2012. Of the total charges, $1 related to our Domestic segment and consisted primarily of facility closure costs, partially offset by reductions in expected termination benefits. The remaining $3 related to our International segment, primarily due to the completion of our exit from the Turkey market. We do not expect to incur further material restructuring charges related to our fiscal 2011 restructuring activities in either our Domestic or International segments in the remainder of fiscal 2012. We expect to substantially complete these restructuring activities in fiscal 2012.
 
All charges incurred in the first six months of fiscal 2012 related to our fiscal 2011 restructuring are included in the restructuring charges line item in our consolidated statements of earnings. The composition of the restructuring charges we incurred in the six months ended August 27, 2011, as well as the cumulative amount incurred through August 27, 2011, for our fiscal 2011 restructuring activities for both the Domestic and International segments, were as follows:
 
 
Domestic
 
International
 
Total
 
Six Months

Ended

August 27, 2011
 
Cumulative

Amount

through

August 27, 2011
 
Six Months

Ended

August 27, 2011
 
Cumulative

Amount

through

August 27, 2011
 
Six Months

Ended

August 27, 2011
 
Cumulative

Amount

through

August 27, 2011
Inventory write-downs
$


 
$
10


 
$


 
$
14


 
$


 
$
24


Property and equipment impairments


 
15


 


 
132


 


 
147


Termination benefits
(3
)
 
13


 
6


 
18


 
3


 
31


Intangible asset impairments


 
10


 


 


 


 
10


Facility closure and other costs, net
4


 
4


 
(3
)
 
10


 
1


 
14


Total
$
1


 
$
52


 
$
3


 
$
174


 
$
4


 
$
226




 
The following table summarizes our restructuring accrual activity during the six months ended August 27, 2011, related to termination benefits and facility closure and other costs:
 
 
Termination
Benefits
 
Facility
Closure and
Other Costs(1)
 
Total
Balance at February 26, 2011
$
28


 
$
13


 
$
41


Charges
6


 
2


 
8


Cash payments
(25
)
 
(11
)
 
(36
)
Adjustments
(3
)
 
8


 
5


Changes in foreign currency exchange rates


 
1


 
1


Balance at August 27, 2011
$
6


 
$
13


 
$
19


 
(1) 
Included within the facility closure and other costs adjustments is $10 from the first quarter of fiscal 2011, representing an adjustment to exclude non-cash charges or benefits, which had no impact on our consolidated statements of earnings in the first six months of fiscal 2012.
Debt
Debt
Debt
 
Short-Term Debt
 
Short-term debt consisted of the following:
 
 
August 27,

2011
 
February 26,

2011
 
August 28,

2010
JPMorgan revolving credit facility
$


 
$


 
$


Europe receivables financing facility(1)
386


 
455


 
350


Europe revolving credit facility


 
98


 


Canada revolving demand facility


 


 


China revolving demand facilities
6


 
4


 
33


Total short-term debt
$
392


 
$
557


 
$
383


 
(1)        
This facility is secured by certain network carrier receivables of Best Buy Europe, which are included within receivables in our condensed consolidated balance sheets.  The total amount available for borrowing under this facility is based on a percentage of the available acceptable receivables, as defined in the agreement for the facility, and was £277 (or $445) at August 27, 2011.


Europe Revolving Credit Facility


In July 2011, Best Buy Europe entered into a new £400 ($642 based on the exchange rate in effect as of the end of the second quarter of fiscal 2012) unsecured revolving credit facility agreement (the “New RCF”) with ING Bank N.V., London Branch, as agent, and a syndicate of banks to finance its working capital needs. The New RCF expires on July 27, 2015.


Interest rates under the New RCF are variable, based on the London Interbank Offering Rate (“LIBOR”) plus an applicable margin based on Best Buy Europe’s fixed charges coverage ratio. The New RCF includes a commitment fee of 40% of the applicable margin on unused available capacity, as well as a utilization fee ranging from 0.0% to 0.5% of the aggregate amount outstanding based on the percentage of the aggregate amount outstanding to the total New RCF. The New RCF also required an initial arrangement fee of 0.75%.


The New RCF is guaranteed by certain subsidiaries of Best Buy Europe and does not provide for any recourse to Best Buy Co., Inc. The New RCF contains customary affirmative and negative covenants. Among other things, these covenants restrict or prohibit Best Buy Europe’s ability to incur certain types or amounts of indebtedness, make material changes in the nature of its business, dispose of material assets, make guarantees, or engage in a change in control transaction. The New RCF also contains covenants that require Best Buy Europe to comply with a maximum annual leverage ratio and a maximum fixed charges coverage ratio.


The New RCF replaced the existing £350 receivables financing facility (the “ERF”) between a subsidiary of Best Buy Europe and a syndicate of banks, including Barclays Bank PLC acting as administrative agent. The ERF was originally scheduled to expire in July 2012. The New RCF also replaced Best Buy Europe’s existing £125 revolving credit facility (the “RCF”) with one of Best Buy Co., Inc.’s subsidiaries and Carphone Warehouse as lenders. The RCF was originally scheduled to expire in March 2013. The ERF and the RCF were still reflected in our condensed consolidated financial statements at the end of the second quarter of fiscal 2012, as we consolidate the financial results of our Europe operations on a two-month lag.
  
Long-Term Debt
 
Long-term debt consisted of the following:
 
 
August 27,

2011
 
February 26,

2011
 
August 28,

2010
2021 Notes
$
648


 
$


 
$


2013 Notes
500


 
500


 
500


2016 Notes
349


 


 


Convertible debentures
402


 
402


 
402


Financing lease obligations
167


 
170


 
175


Capital lease obligations
72


 
79


 
41


Other debt
2


 
1


 
2


Total long-term debt
2,140


 
1,152


 
1,120


Less: current portion(1)
(444
)
 
(441
)
 
(32
)
Total long-term debt, less current portion
$
1,696


 
$
711


 
$
1,088


 
(1)           
Since holders of our convertible debentures may require us to purchase all or a portion of the debentures on January 15, 2012, we classified the $402 for such debentures in the current portion of long-term debt at August 27, 2011, and February 26, 2011.
 
The fair value of long-term debt approximated $2,169, $1,210 and $1,194 at August 27, 2011, February 26, 2011, and August 28, 2010, respectively, based primarily on the ask prices quoted from external sources, compared with carrying values of $2,140, $1,152 and $1,120, respectively.
 
2016 and 2021 Notes
 
In March 2011, we issued $350 principal amount of notes due March 15, 2016 (the “2016 Notes”) and $650 principal amount of notes due March 15, 2021 (the “2021 Notes”, and together with the 2016 Notes, the “Notes”). The 2016 Notes bear interest at a fixed rate of 3.75% per year, while the 2021 Notes bear interest at a fixed rate of 5.50% per year. Interest on the Notes is payable semi-annually on March 15 and September 15 of each year, beginning September 15, 2011. The Notes were issued at a slight discount to par, which when coupled with underwriting discounts of $6, resulted in net proceeds from the sale of the Notes of $990.
 
We may redeem some or all of the Notes at any time at a redemption price equal to the greater of (i) 100% of the principal amount of the Notes redeemed and (ii) the sum of the present values of each remaining scheduled payment of principal and interest on the Notes redeemed discounted to the redemption date on a semiannual basis, plus accrued and unpaid interest on the principal amount of the Notes to the redemption date as described in the indenture (including the supplemental indenture) relating to the Notes. Furthermore, if a change of control triggering event occurs, we will be required to offer to purchase the remaining unredeemed Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest to the purchase date.


The Notes are unsecured and unsubordinated obligations and rank equally with all of our other unsecured and unsubordinated debt. The Notes contain covenants that, among other things, limit our ability to incur debt secured by liens or to enter into sale and lease-back transactions.


See Note 6, Debt, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended February 26, 2011, for additional information regarding the terms of our debt facilities, debt instruments and other obligations.
Derivative Instruments
Derivative Instruments
Derivative Instruments
 
We manage our economic and transaction exposure to certain market-based risks through the use of foreign currency derivative instruments. Our objective in holding derivatives is to reduce the volatility of net earnings and cash flows associated with changes in foreign currency exchange rates. We do not hold or issue derivative financial instruments for trading or speculative purposes.
 
We record all foreign currency derivative instruments on our condensed consolidated balance sheets at fair value and evaluate hedge effectiveness prospectively and retrospectively when electing to apply hedge accounting treatment. We formally document all hedging relationships at inception for all derivative hedges and the underlying hedged items, as well as the risk management objectives and strategies for undertaking the hedge transactions. In addition, we have derivatives which are not designated as hedging instruments. We have no derivatives that have credit risk-related contingent features, and we mitigate our credit risk by engaging with major financial institutions as our counterparties.
 
Cash Flow Hedges
 
We enter into foreign exchange forward contracts to hedge against the effect of exchange rate fluctuations on certain revenue streams denominated in non-functional currencies. The contracts have terms of up to two years. We report the effective portion of the gain or loss on a cash flow hedge as a component of other comprehensive income, and it is subsequently reclassified into net earnings in the period in which the hedged transaction affects net earnings or the forecast transaction is no longer probable of occurring. We report the ineffective portion, if any, of the gain or loss in net earnings.
 
Derivatives Not Designated as Hedging Instruments
 
Derivatives not designated as hedging instruments include foreign exchange forward contracts used to manage the impact of fluctuations in foreign currency exchange rates relative to recognized receivable and payable balances denominated in non-functional currencies and on certain forecast inventory purchases denominated in non-functional currencies. The contracts have terms of up to six months. These derivative instruments are not designated in hedging relationships and, therefore, we record gains and losses on these contracts directly in net earnings.
 
Summary of Derivative Balances
 
The following table presents the gross fair values for derivative instruments and the corresponding classification at August 27, 2011, February 26, 2011, and August 28, 2010:
 
 
 
August 27, 2011
 
February 26, 2011
 
August 28, 2010
Contract Type
 
Assets
 
Liabilities
 
Assets
 
Liabilities
 
Assets
 
Liabilities
Cash flow hedges (foreign exchange forward contracts)
 
$
6


 
$


 
$
1


 
$
(2
)
 
$
13


 
$
(4
)
No hedge designation (foreign exchange forward contracts)
 
1


 


 
2


 
(2
)
 
3


 


Total
 
$
7


 
$


 
$
3


 
$
(4
)
 
$
16


 
$
(4
)




The following tables present the effects of derivative instruments on other comprehensive income (“OCI”) and on our consolidated statements of earnings for the three and six months ended August 27, 2011 and August 28, 2010:
 
 
 
Three Months Ended
 
Six Months Ended
 
 
August 27, 2011
 
August 27, 2011
Contract Type
 
Pre-tax
Gain
Recognized in
OCI(1)
 
Gain
Reclassified
from
Accumulated
OCI to Earnings
(Effective
Portion)(2)
 
Pre-tax
Gain
Recognized in
OCI(1)
 
Gain
Reclassified
from
Accumulated
OCI to Earnings
(Effective
Portion)(2)
Cash flow hedges (foreign exchange forward contracts)
 
$
5


 
$
5


 
$
13


 
$
7


 
 
 
Three Months Ended
 
Six Months Ended
 
 
August 28, 2010
 
August 28, 2010
Contract Type
 
Pre-tax
Gain
Recognized in
OCI(1)
 
Gain
Reclassified
from
Accumulated
OCI to Earnings
(Effective
Portion)(2)
 
Pre-tax
Gain
Recognized in
OCI(1)
 
Gain
Reclassified
from
Accumulated
OCI to Earnings
(Effective
Portion)(2)
Cash flow hedges (foreign exchange forward contracts)
 
$
10


 
$


 
$
10


 
$
1


Net investment hedges (foreign exchange swap contracts)
 


 


 
8


 


Total
 
$
10


 
$


 
$
18


 
$
1




(1)          
Reflects the amount recognized in OCI prior to the reclassification of 50% to noncontrolling interests for the cash flow and net investment hedges, respectively.
 
(2)         
Gain reclassified from accumulated OCI is included within selling, general and administrative expenses (“SG&A”) in our consolidated statements of earnings.
 
The following table presents the effects of derivatives not designated as hedging instruments on our consolidated statements of earnings for the three and six months ended August 27, 2011 and August 28, 2010:
 
 
 
(Loss) Gain Recognized within SG&A
 
 
Three Months Ended
 
Six Months Ended
 
Three Months Ended
 
Six Months Ended
Contract Type
 
August 27, 2011
 
August 27, 2011
 
August 28, 2010
 
August 28, 2010
No hedge designation (foreign exchange forward contracts)
 
$
(3
)
 
$
(9
)
 
$
7


 
$
12




 
The following table presents the notional amounts of our foreign currency exchange contracts at August 27, 2011, February 26, 2011, and August 28, 2010:
 
 
 
Notional Amount
Contract Type
 
August 27,

2011
 
February 26,

2011
 
August 28,

2010
Derivatives designated as cash flow hedging instruments
 
$
268


 
$
264


 
$
311


Derivatives not designated as hedging instruments
 
286


 
493


 
255


Total
 
$
554


 
$
757


 
$
566


Earnings per Share
Earnings per Share
Earnings per Share
 
We compute our basic earnings per share based on the weighted-average number of common shares outstanding and our diluted earnings per share based on the weighted-average number of common shares outstanding adjusted by the number of additional shares that would have been outstanding had potentially dilutive common shares been issued. Potentially dilutive shares of common stock include stock options, nonvested share awards and shares issuable under our employee stock purchase plan, as well as common shares that would have resulted from the assumed conversion of our convertible debentures. Since the potentially dilutive shares related to the convertible debentures are included in the computation, the related interest expense, net of tax, is added back to net earnings, as the interest would not have been paid if the convertible debentures had been converted to common stock. Nonvested market-based share awards and nonvested performance-based share awards are included in the average diluted shares outstanding each period if established market or performance criteria have been met at the end of the respective periods.


The following table presents a reconciliation of the numerators and denominators of basic and diluted earnings per share attributable to Best Buy Co., Inc. (shares in millions):
 
 
Three Months Ended
 
Six Months Ended
 
August 27,

2011
 
August 28,

2010
 
August 27,

2011
 
August 28,

2010
Numerator
 


 
 


 
 
 
 
Net earnings attributable to Best Buy Co., Inc., basic
$
177


 
$
254


 
$
313


 
$
409


Adjustment for assumed dilution:




 




 




 




Interest on convertible debentures, net of tax
2


 
1


 
3


 
2


Net earnings attributable to Best Buy Co., Inc., diluted
$
179


 
$
255


 
$
316


 
$
411


 




 




 




 




Denominator
 
 
 
 
 
 
 
Weighted-average common shares outstanding
371.9


 
413.5


 
379.8


 
416.9


Effect of potentially dilutive securities:




 




 




 




Shares from assumed conversion of convertible debentures
8.8


 
8.8


 
8.8


 
8.8


Stock options and other
0.7


 
1.3


 
0.9


 
2.0


Weighted-average common shares outstanding, assuming dilution
381.4


 
423.6


 
389.5


 
427.7


 
 
 
 
 
 
 
 
Earnings per share attributable to Best Buy Co., Inc.
 
 
 
 
 
 
 
Basic
$
0.48


 
$
0.61


 
$
0.82


 
$
0.98


Diluted
$
0.47


 
$
0.60


 
$
0.81


 
$
0.96




 
The computation of weighted-average common shares outstanding, assuming dilution, excluded options to purchase 30.5 million and 23.2 million shares of our common stock for the three months ended August 27, 2011, and August 28, 2010, respectively, and options to purchase 30.5 million and 19.0 million shares of our common stock for the six months ended August 27, 2011, and August 28, 2010, respectively. These amounts were excluded as the options’ exercise prices were greater than the average market price of our common stock for the periods presented and, therefore, the effect would be anti-dilutive (i.e., including such options would result in higher earnings per share).
Comprehensive Income
Comprehensive Income
Comprehensive Income
 
The components of accumulated other comprehensive income (loss), net of tax, attributable to Best Buy Co., Inc. were as follows:
 
 
August 27,

2011
 
February 26,

2011
 
August 28,

2010
Foreign currency translation
$
159


 
$
102


 
$
(58
)
Unrealized gains on available-for-sale investments
51


 
72


 
29


Unrealized gains (losses) on derivative instruments (cash flow hedges)
1


 
(1
)
 
4


Total
$
211


 
$
173


 
$
(25
)
Repurchase of Common Stock
Repurchase of Common Stock
Repurchase of Common Stock
 
In June 2011, our Board of Directors authorized a new $5,000 share repurchase program. The June 2011 program terminated and replaced our prior $5,500 share repurchase program authorized in June 2007. There is no expiration date governing the period over which we can repurchase shares under the June 2011 share repurchase program.
 
The following table shows the amount and cost of shares we repurchased and retired for the three and six months ended August 27, 2011, and August 28, 2010, under the June 2011 program and the June 2007 program.


 
Three Months Ended
 
Six Months Ended
 
August 27,

2011
 
August 28,

2010
 
August 27,

2011
 
August 28,

2010
June 2011 Program
 
 
 
 
 
 
 
Number of shares repurchased
9.1


 


 
9.1


 


Cost of shares repurchased
$
252


 
$


 
$
252


 
$


 
 
 
 
 
 
 
 
June 2007 Program
 
 
 
 
 
 
 
Number of shares repurchased
3.6


 
17.3


 
20.1


 
19.8


Cost of shares repurchased
$
106


 
$
594


 
$
611


 
$
705






At August 27, 2011, $4,748 remained available for additional purchases under the June 2011 share repurchase program. Repurchased shares have been retired and constitute authorized but unissued shares.
Segments
Segments
Segments
 
Our chief operating decision maker ("CODM") is our Chief Executive Officer. Our operations are organized into two operating segments: Domestic and International. These operating segments are the primary areas that our CODM reviews when assessing performance and allocating resources. We do not aggregate our operating segments, so our operating segments also represent our reportable segments. The Domestic reportable segment is comprised of all operations within the U.S. and its territories. The International reportable segment is comprised of all operations outside the U.S. and its territories. Our CODM relies on internal management reporting that analyzes segment results to the operating income level. The accounting policies of the segments are the same as those described in 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 26, 2011.
 
Revenue by reportable segment was as follows:
 
 
Three Months Ended
 
Six Months Ended
 
August 27,

2011
 
August 28,

2010
 
August 27,

2011
 
August 28,

2010
Domestic
$
8,311


 
$
8,436


 
$
16,170


 
$
16,359


International
3,036


 
2,903


 
6,117


 
5,767


Total
$
11,347


 
$
11,339


 
$
22,287


 
$
22,126


 
Operating income (loss) by reportable segment and the reconciliation to earnings before income tax expense and equity in loss of affiliates were as follows:
 
 
Three Months Ended
 
Six Months Ended
 
August 27,

2011
 
August 28,

2010
 
August 27,

2011
 
August 28,

2010
Domestic
$
303


 
$
407


 
$
537


 
$
705


International
(16
)
 
4


 
32


 
19


Total operating income
287


 
411


 
569


 
724


Other income (expense)
 
 
 
 
 
 
 
Investment income and other
6


 
13


 
18


 
25


Interest expense
(34
)
 
(21
)
 
(65
)
 
(44
)
Earnings before income tax expense and equity in loss of affiliates
$
259


 
$
403


 
$
522


 
$
705


 
Assets by reportable segment were as follows:
 
 
August 27,

2011
 
February 26,

2011
 
August 28,

2010
Domestic
$
10,360


 
$
9,610


 
$
9,818


International
8,469


 
8,239


 
7,544


Total
$
18,829


 
$
17,849


 
$
17,362






Contingencies
Contingencies
Contingencies
 
Employment Discrimination Action
 
In December 2005, a purported class action lawsuit captioned, Jasmen Holloway, et al. v. Best Buy Co., Inc., was filed against us in the U.S. District Court for the Northern District of California (the “Court”). This federal court action alleges that we discriminate against women and minority individuals on the basis of gender, race, color and/or national origin in our stores with respect to our employment policies and practices. The action seeks an end to alleged discriminatory policies and practices, an award of back and front pay, punitive damages and injunctive relief, including rightful place relief for all class members. In June 2011, the plaintiffs filed a motion for preliminary approval of the parties’ negotiated settlement including conditional certification of settlement classes and seeking a schedule for final approval. The proposed class action settlement terms include, in exchange for a release and dismissal of the action, certain changes to our personnel policies and procedures; payment to the nine named plaintiffs of $0.3 in the aggregate; and payment in an amount to be determined by the Court, not to exceed $10, of a portion of the plaintiffs’ attorneys’ fees and costs. In August 2011, the Court preliminarily approved the proposed class action settlement and consent decree; provisionally certified the settlement class; approved and directed distribution of notice of the settlement; and scheduled November 9, 2011 as the date for a Fairness Hearing, pursuant to which the Court will determine whether to grant final approval. We established an accrual based on the proposed settlement terms. It is not reasonably possible that we will incur losses materially in excess of the recorded amount.


Securities Actions
 
In February 2011, a purported class action lawsuit captioned, IBEW Local 98 Pension Fund, individually and on behalf of all others similarly situated v. Best Buy Co., Inc., et al., was filed against us and certain of our executive officers in the U.S. District Court for the District of Minnesota. This federal court action alleges, among other things, that we and the officers named in the complaint violated Sections 10(b) and 20A of the Exchange Act and Rule 10b-5 under the Exchange Act in connection with press releases and other statements relating to our fiscal 2011 earnings guidance that had been made available to the public. Additionally, in March 2011, a similar purported class action was filed by a single shareholder, Rene LeBlanc, against us and certain of our executive officers in the same court. In July 2011, after an unopposed motion by IBEW Local 98 Pension Fund and Rene LeBlanc to consolidate their respective lawsuits was granted, a consolidated complaint captioned, IBEW Local 98 Pension Fund v. Best Buy Co., Inc., et al., was filed and served. In September 2011, we filed a motion to dismiss the consolidated complaint.


In June 2011, a purported shareholder derivative action captioned, Salvatore M. Talluto, Derivatively and on Behalf of Best Buy Co., Inc. v. Richard M. Schulze, et al., as Defendants and Best Buy Co., Inc. as Nominal Defendant, was filed against both present and former members of our Board of Directors serving during the relevant periods in fiscal 2011 and us as a nominal defendant in the U.S. District Court for the State of Minnesota. The lawsuit alleges that the director defendants breached their fiduciary duty, among other claims, including violation of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in failing to correct public misrepresentations and material misstatements and/or omissions regarding our fiscal 2011 earnings projections and, for certain directors, selling stock while in possession of material adverse non-public information. Additionally, in July 2011, a similar purported class action was filed by a single shareholder, Daniel Himmel, against us and certain of our executive officers in the same court. In August 2011, the parties filed a stipulation for consolidation of the respective lawsuits of Salvatore M. Talluto and Daniel Himmel into a new action, and upon consolidation, intend to move the court to stay the new action until after a final resolution of the motion to dismiss in the consolidated IBEW Local 98 Pension Fund v. Best Buy Co., Inc., et al. case.
 
The plaintiffs in the above securities actions seek damages, including interest, equitable relief and reimbursement of the costs and expenses they incurred in the lawsuits. We believe the allegations in the above securities actions are without merit, and we intend to defend these actions vigorously. Based on our assessment of the facts underlying the claims in the above securities actions, their respective procedural litigation history, and the degree to which we intend to defend our company in these matters, the amount or range of reasonably possible losses, if any, cannot be estimated.
 
Other Legal Proceedings
 
We are involved in various other legal proceedings arising in the normal course of conducting business. For such legal proceedings, we have accrued an amount that reflects the aggregate liability deemed probable and estimable, but this amount is not material to our consolidated financial position, results of operations or cash flows. Because of the preliminary nature of many of these proceedings, the difficulty in ascertaining the applicable facts relating to many of these proceedings, the variable treatment of claims made in many of these proceedings and the difficulty of predicting the settlement value of many of these proceedings, we are not able to estimate an amount or range of any reasonably possible additional losses. However, based upon our historical experience, the resolution of these proceedings is not expected to have a material effect on our consolidated financial position, results of operations or cash flows.
Condensed Consolidating Financial Information
Condensed Consolidating Financial Information
Condensed Consolidating Financial Information
 
The rules of the U.S. Securities and Exchange Commission require that condensed consolidating financial information be provided for a subsidiary that has guaranteed the debt of a registrant issued in a public offering, where the guarantee is full and unconditional and where the voting interest of the subsidiary is 100%-owned by the registrant. Our convertible debentures, which had an aggregate principal balance and carrying amount of $402 at August 27, 2011, are jointly and severally guaranteed by our 100%-owned indirect subsidiary Best Buy Stores, L.P. (“Guarantor Subsidiary”). Investments in subsidiaries of Best Buy Stores, L.P., which have not guaranteed the convertible debentures (“Non-Guarantor Subsidiaries”), are required to be presented under the equity method, even though all such subsidiaries meet the requirements to be consolidated under GAAP.
 
Set forth below are condensed consolidating financial statements presenting the financial position, results of operations, and cash flows of (i) Best Buy Co., Inc., (ii) the Guarantor Subsidiary, (iii) the Non-Guarantor Subsidiaries, and (iv) the eliminations necessary to arrive at consolidated information for our company. The balance sheet eliminations relate primarily to the elimination of intercompany profit in inventory held by the Guarantor Subsidiary and consolidating entries to eliminate intercompany receivables, payables and subsidiary investment accounts. The statement of earnings eliminations relate primarily to the sale of inventory from a Non-Guarantor Subsidiary to the Guarantor Subsidiary.
 
We file a consolidated U.S. federal income tax return. Income taxes are allocated in accordance with our tax allocation agreement. U.S. affiliates receive no tax benefit for taxable losses, but are allocated taxes at the required effective income tax rate if they have taxable income.
 
The following tables present condensed consolidating balance sheets as of August 27, 2011, February 26, 2011, and August 28, 2010, condensed consolidating statements of earnings for the three and six months ended August 27, 2011, and August 28, 2010, and condensed consolidating statements of cash flows for the six months ended August 27, 2011, and August 28, 2010, and should be read in conjunction with the condensed consolidated financial statements herein.


Condensed Consolidating Balance Sheets
At August 27, 2011
(Unaudited)
 
Best Buy
Co., Inc.
 
Guarantor
Subsidiary
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 


 
 


 
 


 
 


 
 


Current Assets
 


 
 


 
 


 
 


 
 


Cash and cash equivalents
$
943


 
$
52


 
$
1,045


 
$


 
$
2,040


Short-term investments
80


 


 


 


 
80


Receivables
1


 
522


 
1,422


 


 
1,945


Merchandise inventories


 
4,329


 
2,125


 
(51
)
 
6,403


Other current assets
157


 
57


 
831


 
(12
)
 
1,033


Intercompany receivable


 


 
9,843


 
(9,843
)
 


Intercompany note receivable
895


 


 
106


 
(1,001
)
 


Total current assets
2,076


 
4,960


 
15,372


 
(10,907
)
 
11,501


 
 
 
 
 
 
 
 
 
 
Property and Equipment, Net
200


 
1,742


 
1,819


 


 
3,761


Goodwill


 
6


 
2,480


 


 
2,486


Tradenames, Net


 


 
134


 


 
134


Customer Relationships, Net


 


 
179


 


 
179


Equity and Other Investments
143


 


 
141


 


 
284


Other Assets
226


 
35


 
223


 


 
484


Investments in Subsidiaries
14,487


 
241


 
2,556


 
(17,284
)
 


 
 
 
 
 
 
 
 
 
 
Total Assets
$
17,132


 
$
6,984


 
$
22,904


 
$
(28,191
)
 
$
18,829


 
 
 
 
 
 
 
 
 
 
Liabilities and Shareholders’ Equity
 


 
 


 
 


 
 


 
 


Current Liabilities
 


 
 


 
 


 
 


 
 


Accounts payable
$
341


 
$
62


 
$
5,427


 
$


 
$
5,830


Unredeemed gift card liabilities


 
347


 
63


 


 
410


Accrued compensation and related expenses


 
174


 
315


 


 
489


Accrued liabilities
51


 
711


 
829


 
(11
)
 
1,580


Accrued income taxes
2


 


 


 


 
2


Short-term debt


 


 
392


 


 
392


Current portion of long-term debt
403


 
23


 
18


 


 
444


Intercompany payable
8,132


 
1,711


 


 
(9,843
)
 


Intercompany note payable
106


 
501


 
394


 
(1,001
)
 


Total current liabilities
9,035


 
3,529


 
7,438


 
(10,855
)
 
9,147


 
 
 
 
 
 
 
 
 
 
Long-Term Liabilities
466


 
781


 
174


 
(245
)
 
1,176


Long-Term Debt
1,496


 
118


 
82


 


 
1,696


 
 
 
 
 
 
 
 
 
 
Equity
 


 
 


 
 


 
 


 
 


Shareholders’ equity
6,135


 
2,556


 
14,487


 
(17,091
)
 
6,087


Noncontrolling interests


 


 
723


 


 
723


Total equity
6,135


 
2,556


 
15,210


 
(17,091
)
 
6,810


 
 
 
 
 
 
 
 
 
 
Total Liabilities and Equity
$
17,132


 
$
6,984


 
$
22,904


 
$
(28,191
)
 
$
18,829




Condensed Consolidating Balance Sheets
At February 26, 2011
(Unaudited)
 
Best Buy
Co., Inc.
 
Guarantor
Subsidiary
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 


 
 


 
 


 
 


 
 


Current Assets
 


 
 


 
 


 
 


 
 


Cash and cash equivalents
$
282


 
$
51


 
$
770


 
$


 
$
1,103


Short-term investments
20


 


 
2


 


 
22


Receivables
3


 
738


 
1,607


 


 
2,348


Merchandise inventories


 
3,973


 
1,999


 
(75
)
 
5,897


Other current assets
234


 
117


 
752


 


 
1,103


Intercompany receivable


 


 
9,300


 
(9,300
)
 


Intercompany note receivable
854


 


 
91


 
(945
)
 


Total current assets
1,393


 
4,879


 
14,521


 
(10,320
)
 
10,473


 
 
 
 
 
 
 
 
 
 
Property and Equipment, Net
200


 
1,803


 
1,820


 


 
3,823


Goodwill


 
6


 
2,448


 


 
2,454


Tradenames, Net


 


 
133


 


 
133


Customer Relationships, Net


 


 
203


 


 
203


Equity and Other Investments
162


 


 
166


 


 
328


Other Assets
181


 
36


 
273


 
(55
)
 
435


Investments in Subsidiaries
14,030


 
229


 
2,444


 
(16,703
)
 


 
 
 
 
 
 
 
 
 
 
Total Assets
$
15,966


 
$
6,953


 
$
22,008


 
$
(27,078
)
 
$
17,849


 
 
 
 
 
 
 
 
 
 
Liabilities and Shareholders’ Equity
 


 
 


 
 


 
 


 
 


Current Liabilities
 


 
 


 
 


 
 


 
 


Accounts payable
$
361


 
$
101


 
$
4,432


 
$


 
$
4,894


Unredeemed gift card liabilities


 
404


 
70


 


 
474


Accrued compensation and related expenses


 
200


 
370


 


 
570


Accrued liabilities
13


 
625


 
833


 


 
1,471


Accrued income taxes
256


 


 


 


 
256


Short-term debt


 


 
557


 


 
557


Current portion of long-term debt
402


 
23


 
16


 


 
441


Intercompany payable
7,497


 
1,665


 
138


 
(9,300
)
 


Intercompany note payable
103


 
500


 
342


 
(945
)
 


Total current liabilities
8,632


 
3,518


 
6,758


 
(10,245
)
 
8,663


 
 
 
 
 
 
 
 
 
 
Long-Term Liabilities
160


 
863


 
447


 
(287
)
 
1,183


Long-Term Debt
500


 
128


 
83


 


 
711


 
 
 
 
 
 
 
 
 
 
Equity
 


 
 


 
 


 
 


 
 


Shareholders’ equity
6,674


 
2,444


 
14,030


 
(16,546
)
 
6,602


Noncontrolling interests


 


 
690


 


 
690


Total equity
6,674


 
2,444


 
14,720


 
(16,546
)
 
7,292


 
 
 
 
 
 
 
 
 
 
Total Liabilities and Equity
$
15,966


 
$
6,953


 
$
22,008


 
$
(27,078
)
 
$
17,849




Condensed Consolidating Balance Sheets
At August 28, 2010
(Unaudited) 
 
Best Buy
Co., Inc.
 
Guarantor
Subsidiary
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 


 
 


 
 


 
 


 
 


Current Assets
 


 
 


 
 


 
 


 
 


Cash and cash equivalents
$
136


 
$
29


 
$
678


 
$


 
$
843


Short-term investments


 


 
2


 


 
2


Receivables
1


 
500


 
1,219


 


 
1,720


Merchandise inventories


 
4,387


 
2,032


 
(73
)
 
6,346


Other current assets
242


 
74


 
733


 
(1
)
 
1,048


Intercompany receivable


 


 
8,604


 
(8,604
)
 


Intercompany note receivable
1,566


 


 
7


 
(1,573
)
 


Total current assets
1,945


 
4,990


 
13,275


 
(10,251
)
 
9,959


 
 
 
 
 
 
 
 
 
 
Property and Equipment, Net
211


 
1,798


 
1,906


 


 
3,915


Goodwill


 
6


 
2,359


 


 
2,365


Tradenames, Net


 


 
147


 


 
147


Customer Relationships, Net


 


 
227


 


 
227


Equity and Other Investments
166


 


 
127


 


 
293


Other Assets
92


 
27


 
375


 
(38
)
 
456


Investments in Subsidiaries
12,043


 
296


 
2,411


 
(14,750
)
 


 
 
 
 
 
 
 
 
 
 
Total Assets
$
14,457


 
$
7,117


 
$
20,827


 
$
(25,039
)
 
$
17,362


 
 
 
 
 
 
 
 
 
 
Liabilities and Shareholders’ Equity
 


 
 


 
 


 
 


 
 


Current Liabilities
 


 
 


 
 


 
 


 
 


Accounts payable
$
350


 
$
34


 
$
5,189


 
$


 
$
5,573


Unredeemed gift card liabilities


 
344


 
56


 


 
400


Accrued compensation and related expenses
1


 
191


 
275


 


 
467


Accrued liabilities
18


 
670


 
901


 


 
1,589


Accrued income taxes
27


 


 


 


 
27


Short-term debt


 


 
383


 


 
383


Current portion of long-term debt


 
20


 
12


 


 
32


Intercompany payable
6,869


 
1,735


 


 
(8,604
)
 


Intercompany note payable
19


 
500


 
1,054


 
(1,573
)
 


Total current liabilities
7,284


 
3,494


 
7,870


 
(10,177
)
 
8,471


 
 
 
 
 
 
 
 
 
 
Long-Term Liabilities
185


 
1,089


 
245


 
(338
)
 
1,181


Long-Term Debt
902


 
123


 
63


 


 
1,088


 
 
 
 
 
 
 
 
 
 
Equity
 


 
 


 
 


 
 


 
 


Shareholders’ equity
6,086


 
2,411


 
12,042


 
(14,524
)
 
6,015


Noncontrolling interests


 


 
607


 


 
607


Total equity
6,086


 
2,411


 
12,649


 
(14,524
)
 
6,622


 
 
 
 
 
 
 
 
 
 
Total Liabilities and Equity
$
14,457


 
$
7,117


 
$
20,827


 
$
(25,039
)
 
$
17,362






Condensed Consolidating Statements of Earnings
Three Months Ended August 27, 2011
(Unaudited) 
 
Best Buy
Co., Inc.
 
Guarantor
Subsidiary
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenue
$
4


 
$
7,591


 
$
9,810


 
$
(6,058
)
 
$
11,347


 
 
 
 
 
 
 
 
 
 
Cost of goods sold


 
5,625


 
8,381


 
(5,531
)
 
8,475


 
 
 
 
 
 
 
 
 
 
Gross profit
4


 
1,966


 
1,429


 
(527
)
 
2,872


 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
37


 
1,890


 
1,233


 
(577
)
 
2,583


Restructuring charges


 


 
2


 


 
2


 
 
 
 
 
 
 
 
 
 
Operating (loss) income
(33
)
 
76


 
194


 
50


 
287


 
 
 
 
 
 
 
 
 
 
Other income (expense)
 


 
 


 
 


 
 


 
 


Investment income and other
6


 


 
5


 
(5
)
 
6


Interest expense
(23
)
 
(3
)
 
(13
)
 
5


 
(34
)
 
 
 
 
 
 
 
 
 
 
(Loss) earnings before equity in earnings of subsidiaries
(50
)
 
73


 
186


 
50


 
259


 
 
 
 
 
 
 
 
 
 
Equity in earnings of subsidiaries
175


 
9


 
48


 
(232
)
 


 
 
 
 
 
 
 
 
 
 
Earnings before income tax expense and equity in loss of affiliates
125


 
82


 
234


 
(182
)
 
259


 
 
 
 
 
 
 
 
 
 
Income tax (benefit) expense
(2
)
 
25


 
76


 


 
99


 
 
 
 
 
 
 
 
 
 
Equity in loss of affiliates


 


 


 


 


 
 
 
 
 
 
 
 
 
 
Net earnings including noncontrolling interests
127


 
57


 
158


 
(182
)
 
160


 
 
 
 
 
 
 
 
 
 
Net loss attributable to noncontrolling interests


 


 
17


 


 
17


 
 
 
 
 
 
 
 
 
 
Net earnings attributable to Best Buy Co., Inc.
$
127


 
$
57


 
$
175


 
$
(182
)
 
$
177




Condensed Consolidating Statements of Earnings
Six Months Ended August 27, 2011
(Unaudited) 
 
Best Buy
Co., Inc.
 
Guarantor
Subsidiary
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenue
$
8


 
$
14,799


 
$
20,169


 
$
(12,689
)
 
$
22,287


 
 
 
 
 
 
 
 
 
 
Cost of goods sold


 
10,998


 
17,368


 
(11,719
)
 
16,647


 
 
 
 
 
 
 
 
 
 
Gross profit
8


 
3,801


 
2,801


 
(970
)
 
5,640


 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
73


 
3,655


 
2,406


 
(1,067
)
 
5,067


Restructuring charges


 
(2
)
 
6


 


 
4


 
 
 
 
 
 
 
 
 
 
Operating (loss) income
(65
)
 
148


 
389


 
97


 
569


 
 
 
 
 
 
 
 
 
 
Other income (expense)
 


 
 


 
 


 
 


 
 


Investment income and other
10


 


 
17


 
(9
)
 
18


Interest expense
(46
)
 
(6
)
 
(22
)
 
9


 
(65
)
 
 
 
 
 
 
 
 
 
 
(Loss) earnings before equity in earnings of subsidiaries
(101
)
 
142


 
384


 
97


 
522


 
 
 
 
 
 
 
 
 
 
Equity in earnings of subsidiaries
320


 
18


 
93


 
(431
)
 


 
 
 
 
 
 
 
 
 
 
Earnings before income tax expense and equity in loss of affiliates
219


 
160


 
477


 
(334
)
 
522


 
 
 
 
 
 
 
 
 
 
Income tax expense
3


 
49


 
146


 


 
198


 
 
 
 
 
 
 
 
 
 
Equity in loss of affiliates


 


 
(1
)
 


 
(1
)
 
 
 
 
 
 
 
 
 
 
Net earnings including noncontrolling interests
216


 
111


 
330


 
(334
)
 
323


 
 
 
 
 
 
 
 
 
 
Net earnings attributable to noncontrolling interests


 


 
(10
)
 


 
(10
)
 
 
 
 
 
 
 
 
 
 
Net earnings attributable to Best Buy Co., Inc.
$
216


 
$
111


 
$
320


 
$
(334
)
 
$
313




Condensed Consolidating Statements of Earnings
Three Months Ended August 28, 2010
(Unaudited) 
 
Best Buy
Co., Inc.
 
Guarantor
Subsidiary
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenue
$
4


 
$
7,780


 
$
10,162


 
$
(6,607
)
 
$
11,339


 
 
 
 
 
 
 
 
 
 
Cost of goods sold


 
5,739


 
8,674


 
(5,992
)
 
8,421


 
 
 
 
 
 
 
 
 
 
Gross profit
4


 
2,041


 
1,488


 
(615
)
 
2,918


 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
34


 
1,970


 
1,166


 
(663
)
 
2,507


 
 
 
 
 
 
 
 
 
 
Operating (loss) income
(30
)
 
71


 
322


 
48


 
411


 
 
 
 
 
 
 
 
 
 
Other income (expense)
 


 
 


 
 


 
 


 
 


Investment income and other
11


 


 
14


 
(12
)
 
13


Interest expense
(11
)
 
(3
)
 
(19
)
 
12


 
(21
)
 
 
 
 
 
 
 
 
 
 
(Loss) earnings before equity in earnings of subsidiaries
(30
)
 
68


 
317


 
48


 
403


 
 
 
 
 
 
 
 
 
 
Equity in earnings of subsidiaries
248


 
27


 
109


 
(384
)
 


 
 
 
 
 
 
 
 
 
 
Earnings before income tax expense
218


 
95


 
426


 
(336
)
 
403


 
 
 
 
 
 
 
 
 
 
Income tax expense (benefit)
12


 
(41
)
 
175


 


 
146


 
 
 
 
 
 
 
 
 
 
Net earnings including noncontrolling interests
206


 
136


 
251


 
(336
)
 
257


 
 
 
 
 
 
 
 
 
 
Net earnings attributable to noncontrolling interests


 


 
(3
)
 


 
(3
)
 
 
 
 
 
 
 
 
 
 
Net earnings attributable to Best Buy Co., Inc.
$
206


 
$
136


 
$
248


 
$
(336
)
 
$
254




Condensed Consolidating Statements of Earnings
Six Months Ended August 28, 2010
(Unaudited) 
 
Best Buy
Co., Inc.
 
Guarantor
Subsidiary
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenue
$
8


 
$
15,075


 
$
20,697


 
$
(13,654
)
 
$
22,126


 
 
 
 
 
 
 
 
 
 
Cost of goods sold


 
11,119


 
17,756


 
(12,460
)
 
16,415


 
 
 
 
 
 
 
 
 
 
Gross profit
8


 
3,956


 
2,941


 
(1,194
)
 
5,711


 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
71


 
3,806


 
2,392


 
(1,282
)
 
4,987


 
 
 
 
 
 
 
 
 
 
Operating (loss) income
(63
)
 
150


 
549


 
88


 
724


 
 
 
 
 
 
 
 
 
 
Other income (expense)
 


 
 


 
 


 
 


 
 


Investment income and other
19


 


 
25


 
(19
)
 
25


Interest expense
(23
)
 
(6
)
 
(34
)
 
19


 
(44
)
 
 
 
 
 
 
 
 
 
 
(Loss) earnings before equity in earnings of subsidiaries
(67
)
 
144


 
540


 
88


 
705


 
 
 
 
 
 
 
 
 
 
Equity in earnings of subsidiaries
382


 
23


 
91


 
(496
)
 


 
 
 
 
 
 
 
 
 
 
Earnings before income tax expense
315


 
167


 
631


 
(408
)
 
705


 
 
 
 
 
 
 
 
 
 
Income tax (benefit) expense
(6
)
 
53


 
220


 


 
267


 
 
 
 
 
 
 
 
 
 
Net earnings including noncontrolling interests
321


 
114


 
411


 
(408
)
 
438


 
 
 
 
 
 
 
 
 
 
Net earnings attributable to noncontrolling interests


 


 
(29
)
 


 
(29
)
 
 
 
 
 
 
 
 
 
 
Net earnings attributable to Best Buy Co., Inc.
$
321


 
$
114


 
$
382


 
$
(408
)
 
$
409




Condensed Consolidating Statements of Cash Flows
Six Months Ended August 27, 2011
(Unaudited) 
 
Best Buy
Co., Inc.
 
Guarantor
Subsidiary
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Total cash (used in) provided by operating activities
$
(151
)
 
$
200


 
$
1,488


 
$


 
$
1,537


 
 
 
 
 
 
 
 
 
 
Investing activities
 


 
 


 
 


 
 


 
 


Additions to property and equipment
(2
)
 
(191
)
 
(218
)
 


 
(411
)
Purchases of investments
(86
)
 


 
(20
)
 


 
(106
)
Sales of investments
43


 


 
23


 


 
66


Proceeds from sale of business


 


 


 


 


Change in restricted assets


 


 
(45
)
 


 
(45
)
Settlement of net investment hedges


 


 


 


 


Other, net


 


 


 


 


Total cash (used in) investing activities
(45
)
 
(191
)
 
(260
)
 


 
(496
)
 
 
 
 
 
 
 
 
 
 
Financing activities
 


 
 


 
 


 
 


 
 


Repurchase of common stock
(846
)
 


 


 


 
(846
)
Borrowings of debt
997


 


 
999


 


 
1,996


Repayments of debt


 
(6
)
 
(1,181
)
 


 
(1,187
)
Dividends paid
(115
)
 


 


 


 
(115
)
Issuance of common stock under employee stock purchase plan and for the exercise of stock options
49


 


 


 


 
49


Excess tax benefits from stock-based compensation


 


 


 


 


Other, net
(8
)
 


 
6


 


 
(2
)
Change in intercompany receivable/payable
780


 
(2
)
 
(778
)
 


 


Total cash provided by (used in) financing activities
857


 
(8
)
 
(954
)
 


 
(105
)
 
 
 
 
 
 
 
 
 
 
Effect of exchange rate changes on cash


 


 
1


 


 
1


 
 
 
 
 
 
 
 
 
 
Increase in cash and cash equivalents
661


 
1


 
275


 


 
937


 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents at beginning of period
282


 
51


 
770


 


 
1,103


Cash and cash equivalents at end of period
$
943


 
$
52


 
$
1,045


 
$


 
$
2,040




Condensed Consolidating Statements of Cash Flows
Six Months Ended August 28, 2010
(Unaudited) 
 
Best Buy
Co., Inc.
 
Guarantor
Subsidiary
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Total cash provided by (used in) operating activities
$
199


 
$
(472
)
 
$
357


 
$


 
$
84


 
 
 
 
 
 
 
 
 
 
Investing activities
 


 
 


 
 


 
 


 
 


Additions to property and equipment


 
(129
)
 
(213
)
 


 
(342
)
Purchases of investments
(241
)
 


 


 


 
(241
)
Sales of investments
378


 


 
1


 


 
379


Proceeds from sale of business


 


 
21


 


 
21


Change in restricted assets


 


 
12


 


 
12


Settlement of net investment hedges


 


 
12


 


 
12


Other, net


 


 
(1
)
 


 
(1
)
Total cash provided by (used in) investing activities
137


 
(129
)
 
(168
)
 


 
(160
)
 
 
 
 
 
 
 
 
 
 
Financing activities
 


 
 


 
 


 
 


 
 


Repurchase of common stock
(667
)
 


 


 


 
(667
)
Borrowings of debt


 


 
955


 


 
955


Repayments of debt
(1
)
 
(6
)
 
(1,200
)
 


 
(1,207
)
Dividends paid
(118
)
 


 


 


 
(118
)
Issuance of common stock under employee stock purchase plan and for the exercise of stock options
113


 


 


 


 
113


Excess tax benefits from stock-based compensation
10


 


 


 


 
10


Other, net


 


 
9


 


 
9


Change in intercompany receivable/payable
(707
)
 
583


 
124


 


 


Total cash (used in) provided by financing activities
(1,370
)
 
577


 
(112
)
 


 
(905
)
 
 
 
 
 
 
 
 
 
 
Effect of exchange rate changes on cash


 


 
(2
)
 


 
(2
)
 
 
 
 
 
 
 
 
 
 
(Decrease) increase in cash and cash equivalents
(1,034
)
 
(24
)
 
75


 


 
(983
)
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents at beginning of period
1,170


 
53


 
603


 


 
1,826


Cash and cash equivalents at end of period
$
136


 
$
29


 
$
678


 
$


 
$
843




Basis of Presentation Basis of Presentation (Policies)
Fair Value of Financial Instruments, Policy [Policy Text Block]
The following methods and assumptions were used to estimate the fair value of each class of financial instrument:
 
Money Market Funds.  Our money market fund investments that are traded in an active market were measured at fair value using quoted market prices and, therefore, were classified as Level 1. Our money market fund investments not traded on a regular basis or in an active market, and for which we have been unable to obtain pricing information on an ongoing basis, were measured using inputs other than quoted market prices that are observable for the investments and, therefore, were classified as Level 2.
 
U.S. Treasury Bills.  Our U.S. Treasury notes were classified as Level 1 as they trade with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis.
 
Commercial Paper.  Our investments in commercial paper were measured using inputs based upon quoted prices for similar instruments in active markets and, therefore, were classified as Level 2.
 
Foreign Currency Derivative Instruments.  Comprised primarily of foreign currency forward contracts and foreign currency swap contracts, our foreign currency derivative instruments were measured at fair value using readily observable market inputs, such as quotations on forward foreign exchange points and foreign interest rates. Our foreign currency derivative instruments were classified as Level 2 as these instruments are custom, over-the-counter contracts with various bank counterparties that are not traded in an active market.
 
Auction Rate Securities.  Our investments in ARS were classified as Level 3 as quoted prices were unavailable due to events described in Note 2, Investments. Due to limited market information, we utilized a discounted cash flow (“DCF”) model to derive an estimate of fair value. The assumptions we used in preparing the DCF model included estimates with respect to the amount and timing of future interest and principal payments, forward projections of the interest rate benchmarks, the probability of full repayment of the principal considering the credit quality and guarantees in place, and the rate of return required by investors to own such securities given the current liquidity risk associated with ARS.
 
Marketable Equity Securities.  Our marketable equity securities were measured at fair value using quoted market prices. They were classified as Level 1 as they trade in an active market for which closing stock prices are readily available.
 
Deferred Compensation.  Our deferred compensation liabilities and the assets that fund our deferred compensation consist of investments in mutual funds. These investments were classified as Level 1 as the shares of these mutual funds trade with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis.


Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis
 
Assets and liabilities that are measured at fair value on a nonrecurring basis relate primarily to our tangible fixed assets, goodwill and other intangible assets, which are remeasured when the derived fair value is below carrying value on our condensed consolidated balance sheets. For these assets, we do not periodically adjust carrying value to fair value except in the event of impairment. When we determine that impairment has occurred, the carrying value of the asset is reduced to fair value and the difference is recorded within operating income in our consolidated statements of earnings. During the six months ended August 27, 2011, and August 28, 2010, we had no significant remeasurements of such assets or liabilities to fair value.
 
Fair Value of Financial Instruments
 
Our financial instruments, other than those presented in the disclosures above, include cash, receivables, other investments, accounts payable, accrued liabilities and short- and long-term debt. The fair values of cash, receivables, accounts payable, accrued liabilities and short-term debt approximated carrying values because of the short-term nature of these instruments. Fair values for other investments held at cost are not readily available, but we estimate that the carrying values for these investments approximate fair value. See Note 6, Debt, for information about the fair value of our long-term debt.
Investments (Tables)
Investments were comprised of the following:


 
 
August 27,

2011
 
February 26,

2011
 
August 28,

2010
Short-term investments
 


 
 


 
 


Money market fund
$


 
$
2


 
$
2


U.S. Treasury bills
80


 
20


 


Total short-term investments
$
80


 
$
22


 
$
2


 
 
 
 
 
 
Equity and other investments
 


 
 


 
 


Debt securities (auction rate securities)
$
88


 
$
110


 
$
134


Marketable equity securities
122


 
146


 
97


Other investments
74


 
72


 
62


Total equity and other investments
$
284


 
$
328


 
$
293


Our ARS portfolio consisted of the following, at fair value:
 
Description
 
Nature of collateral or guarantee
 
August 27,

2011
 
February 26,

2011
 
August 28,

2010
Student loan bonds
 
Student loans guaranteed 95% to 100% by the U.S. government
 
$
86


 
$
108


 
$
116


Municipal revenue bonds
 
100% insured by AA/Aa-rated bond insurers at August 27, 2011
 
2


 
2


 
18


Total fair value plus accrued interest(1)
 
 
 
$
88


 
$
110


 
$
134


 
(1) 
The par value and weighted-average interest rates (taxable equivalent) of our ARS were $93, $115 and $144, and 0.40%, 0.80% and 0.91%, respectively, at August 27, 2011, February 26, 2011, and August 28, 2010, respectively.
Our investments in marketable equity securities were as follows:
 
 
August 27,

2011
 
February 26,

2011
 
August 28,

2010
Common stock of TalkTalk Telecom Group PLC
$
69


 
$
62


 
$
51


Common stock of Carphone Warehouse Group plc
53


 
84


 
44


Other


 


 
2


Total
$
122


 
$
146


 
$
97


Fair Value Measurements (Tables)
The following tables set forth by level within the fair value hierarchy, our financial assets and liabilities that were accounted for at fair value on a recurring basis at August 27, 2011, February 26, 2011, and August 28, 2010, according to the valuation techniques we used to determine their fair values.
 
 
 
 
Fair Value Measurements
Using Inputs Considered as
 
Fair Value at

August 27, 2011
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
ASSETS
 


 
 


 
 


 
 


Cash and cash equivalents
 


 
 


 
 


 
 


Money market funds
$
560


 
$
560


 
$


 
$


Commercial paper
15


 


 
15


 


Short-term investments
 


 
 


 
 


 
 


U.S. Treasury bills
80


 
80


 


 


Other current assets
 


 
 


 
 


 
 


Money market funds (restricted cash)
157


 
157


 


 


U.S. Treasury bills (restricted cash)
30


 
30


 


 


Foreign currency derivative instruments
6


 


 
6


 


Equity and other investments
 


 
 


 
 


 
 


Auction rate securities
88


 


 


 
88


Marketable equity securities
122


 
122


 


 


Other assets
 


 
 


 
 


 
 


Marketable equity securities that fund deferred compensation
83


 
83


 


 


Foreign currency derivative instruments
1


 


 
1


 


 
 
 
 
 
 
 
 
LIABILITIES
 


 
 


 
 


 
 


Long-term liabilities
 


 
 


 
 


 
 


Deferred compensation
65


 
65


 


 


 
 
 
Fair Value Measurements
Using Inputs Considered as
 
Fair Value at

February 26, 2011
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
ASSETS
 


 
 


 
 


 
 


Cash and cash equivalents
 


 
 


 
 


 
 


Money market funds
$
70


 
$
70


 
$


 
$


Short-term investments
 


 
 


 
 


 
 


Money market fund
2


 


 
2


 


U.S. Treasury bills
20


 
20


 


 


Other current assets
 


 
 


 
 


 
 


Money market funds (restricted cash)
63


 
63


 


 


U.S. Treasury bills (restricted cash)
105


 
105


 


 


Foreign currency derivative instruments
2


 


 
2


 


Equity and other investments
 


 
 


 
 


 
 


Auction rate securities
110


 


 


 
110


Marketable equity securities
146


 
146


 


 


Other assets
 


 
 


 
 


 
 


Marketable equity securities that fund deferred compensation
83


 
83


 


 


 
 
 
 
 
 
 
 
LIABILITIES
 


 
 


 
 


 
 


Accrued liabilities
 


 
 


 
 


 
 


Foreign currency derivative instruments
1


 


 
1


 


Long-term liabilities
 


 
 


 
 


 
 


Deferred compensation
64


 
64


 


 


Foreign currency derivative instruments
2


 


 
2


 


 
 
 
 
Fair Value Measurements
Using Inputs Considered as
 
Fair Value at

August 28, 2010
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
ASSETS
 


 
 


 
 


 
 


Cash and cash equivalents
 


 
 


 
 


 
 


Money market funds
$
1


 
$
1


 
$


 
$


Short-term investments
 


 
 


 
 


 
 


Money market fund
2


 


 
2


 


Other current assets
 


 
 


 
 


 
 


Money market funds (restricted cash)
49


 
49


 


 


U.S. Treasury bills (restricted cash)
100


 
100


 


 


Foreign currency derivative instruments
6


 


 
6


 


Equity and other investments
 


 
 


 
 


 
 


Auction rate securities
134


 


 


 
134


Marketable equity securities
97


 
97


 


 


Other assets
 


 
 


 
 


 
 


Marketable equity securities that fund deferred compensation
77


 
77


 


 


Foreign currency derivative instruments
6


 


 
6


 


 
 
 
 
 
 
 
 
LIABILITIES
 


 
 


 
 


 
 


Long-term liabilities
 


 
 


 
 


 
 


Deferred compensation
64


 
64


 


 


The following tables provide a reconciliation between the beginning and ending balances of items measured at fair value on a recurring basis in the tables above that used significant unobservable inputs (Level 3) for the three and six months ended August 27, 2011, and August 28, 2010.
 
 
Debt securities-
Auction rate securities only
 
Student loan
bonds
 
Municipal
revenue bonds
 
Total
Balances at May 28, 2011
$
97


 
$
2


 
$
99


Changes in unrealized losses included in other comprehensive income
(3
)
 


 
(3
)
Sales
(8
)
 


 
(8
)
Balances at August 27, 2011
$
86


 
$
2


 
$
88


 
 
Debt securities-
Auction rate securities only
 
Student loan
bonds
 
Municipal
revenue bonds
 
Total
Balances at February 26, 2011
$
108


 
$
2


 
$
110


Changes in unrealized losses included in other comprehensive income


 


 


Sales
(22
)
 


 
(22
)
Balances at August 27, 2011
$
86


 
$
2


 
$
88


 


 
Debt securities-
Auction rate securities only
 
Student loan
bonds
 
Municipal
revenue bonds
 
Total
Balances at May 29, 2010
$
214


 
$
19


 
$
233


Changes in unrealized losses included in other comprehensive income


 


 


Sales
(98
)
 
(1
)
 
(99
)
Balances at August 28, 2010
$
116


 
$
18


 
$
134


 
 
Debt securities-
Auction rate securities only
 
Student loan
bonds
 
Municipal
revenue bonds
 
Total
Balances at February 27, 2010
$
261


 
$
19


 
$
280


Changes in unrealized losses included in other comprehensive income
(5
)
 


 
(5
)
Sales
(139
)
 
(1
)
 
(140
)
Interest received
(1
)
 


 
(1
)
Balances at August 28, 2010
$
116


 
$
18


 
$
134


Goodwill and Intangible Assets (Tables)
The changes in the carrying values of goodwill and indefinite-lived tradenames by segment were as follows in the six months ended August 27, 2011, and August 28, 2010:
 
 
Goodwill
 
Indefinite-lived Tradenames
 
Domestic
 
International
 
Total
 
Domestic
 
International
 
Total
Balances at February 26, 2011
$
422


 
$
2,032


 
$
2,454


 
$
21


 
$
84


 
$
105


Changes in foreign currency exchange rates


 
32


 
32


 


 
1


 
1


Other(1)


 


 


 


 
28


 
28


Balances at August 27, 2011
$
422


 
$
2,064


 
$
2,486


 
$
21


 
$
113


 
$
134


 
(1)         
Represents the transfer of certain definite-lived tradenames (at their net book value) to indefinite-lived tradenames following our decision to no longer phase out certain tradenames. We believe these tradenames will continue to contribute to our future cash flows indefinitely.
 
 
Goodwill
 
Indefinite-lived Tradenames
 
Domestic
 
International
 
Total
 
Domestic
 
International
 
Total
Balances at February 27, 2010
$
434


 
$
2,018


 
$
2,452


 
$
32


 
$
80


 
$
112


Sale of business(1)
(12
)
 


 
(12
)
 
(1
)
 


 
(1
)
Changes in foreign currency exchange rates


 
(75
)
 
(75
)
 


 


 


Balances at August 28, 2010
$
422


 
$
1,943


 
$
2,365


 
$
31


 
$
80


 
$
111


 
(1)            
As a result of the sale of our Speakeasy business in the second quarter of fiscal 2011, we wrote off the carrying value of the related goodwill and indefinite-lived tradenames as of the date of sale.
The following table provides the gross carrying amount of goodwill and cumulative goodwill impairment losses:
 
 
August 27, 2011
 
February 26, 2011
 
August 28, 2010
 
Gross
Carrying
Amount
 
Cumulative
Impairment
 
Gross
Carrying
Amount
 
Cumulative
Impairment
 
Gross
Carrying
Amount
 
Cumulative
Impairment
Goodwill
$
2,551


 
$
(65
)
 
$
2,519


 
$
(65
)
 
$
2,430


 
$
(65
)
The following table provides the gross carrying values and related accumulated amortization of definite-lived intangible assets:
 
 
August 27, 2011
 
February 26, 2011
 
August 28, 2010
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Gross
Carrying
Amount
 
Accumulated
Amortization
Tradenames
$


 
$


 
$
73


 
$
(45
)
 
$
71


 
$
(35
)
Customer relationships
393


 
(214
)
 
383


 
(180
)
 
372


 
(145
)
Total
$
393


 
$
(214
)
 
$
456


 
$
(225
)
 
$
443


 
$
(180
)
The estimated future amortization expense for identifiable intangible assets is as follows:
 
Fiscal Year
 
Remainder of fiscal 2012
$
18


2013
36


2014
36


2015
36


2016
36


Thereafter
17


Restructuring Charges (Tables)
The composition of the restructuring charges we incurred in the six months ended August 27, 2011, as well as the cumulative amount incurred through August 27, 2011, for our fiscal 2011 restructuring activities for both the Domestic and International segments, were as follows:
 
 
Domestic
 
International
 
Total
 
Six Months

Ended

August 27, 2011
 
Cumulative

Amount

through

August 27, 2011
 
Six Months

Ended

August 27, 2011
 
Cumulative

Amount

through

August 27, 2011
 
Six Months

Ended

August 27, 2011
 
Cumulative

Amount

through

August 27, 2011
Inventory write-downs
$


 
$
10


 
$


 
$
14


 
$


 
$
24


Property and equipment impairments


 
15


 


 
132


 


 
147


Termination benefits
(3
)
 
13


 
6


 
18


 
3


 
31


Intangible asset impairments


 
10


 


 


 


 
10


Facility closure and other costs, net
4


 
4


 
(3
)
 
10


 
1


 
14


Total
$
1


 
$
52


 
$
3


 
$
174


 
$
4


 
$
226


 
The following table summarizes our restructuring accrual activity during the six months ended August 27, 2011, related to termination benefits and facility closure and other costs:
 
 
Termination
Benefits
 
Facility
Closure and
Other Costs(1)
 
Total
Balance at February 26, 2011
$
28


 
$
13


 
$
41


Charges
6


 
2


 
8


Cash payments
(25
)
 
(11
)
 
(36
)
Adjustments
(3
)
 
8


 
5


Changes in foreign currency exchange rates


 
1


 
1


Balance at August 27, 2011
$
6


 
$
13


 
$
19


 
(1) 
Included within the facility closure and other costs adjustments is $10 from the first quarter of fiscal 2011, representing an adjustment to exclude non-cash charges or benefits, which had no impact on our consolidated statements of earnings in the first six months of fiscal 2012.
Debt (Tables)
Short-term debt consisted of the following:
 
 
August 27,

2011
 
February 26,

2011
 
August 28,

2010
JPMorgan revolving credit facility
$


 
$


 
$


Europe receivables financing facility(1)
386


 
455


 
350


Europe revolving credit facility


 
98


 


Canada revolving demand facility


 


 


China revolving demand facilities
6


 
4


 
33


Total short-term debt
$
392


 
$
557


 
$
383


 
(1)        
This facility is secured by certain network carrier receivables of Best Buy Europe, which are included within receivables in our condensed consolidated balance sheets.  The total amount available for borrowing under this facility is based on a percentage of the available acceptable receivables, as defined in the agreement for the facility, and was £277 (or $445) at August 27, 2011.
 
Long-term debt consisted of the following:
 
 
August 27,

2011
 
February 26,

2011
 
August 28,

2010
2021 Notes
$
648


 
$


 
$


2013 Notes
500


 
500


 
500


2016 Notes
349


 


 


Convertible debentures
402


 
402


 
402


Financing lease obligations
167


 
170


 
175


Capital lease obligations
72


 
79


 
41


Other debt
2


 
1


 
2


Total long-term debt
2,140


 
1,152


 
1,120


Less: current portion(1)
(444
)
 
(441
)
 
(32
)
Total long-term debt, less current portion
$
1,696


 
$
711


 
$
1,088


 
(1)           
Since holders of our convertible debentures may require us to purchase all or a portion of the debentures on January 15, 2012, we classified the $402 for such debentures in the current portion of long-term debt at August 27, 2011, and February 26, 2011.
Derivative Instruments (Tables)
The following table presents the gross fair values for derivative instruments and the corresponding classification at August 27, 2011, February 26, 2011, and August 28, 2010:
 
 
 
August 27, 2011
 
February 26, 2011
 
August 28, 2010
Contract Type
 
Assets
 
Liabilities
 
Assets
 
Liabilities
 
Assets
 
Liabilities
Cash flow hedges (foreign exchange forward contracts)
 
$
6


 
$


 
$
1


 
$
(2
)
 
$
13


 
$
(4
)
No hedge designation (foreign exchange forward contracts)
 
1


 


 
2


 
(2
)
 
3


 


Total
 
$
7


 
$


 
$
3


 
$
(4
)
 
$
16


 
$
(4
)
The following tables present the effects of derivative instruments on other comprehensive income (“OCI”) and on our consolidated statements of earnings for the three and six months ended August 27, 2011 and August 28, 2010:
 
 
 
Three Months Ended
 
Six Months Ended
 
 
August 27, 2011
 
August 27, 2011
Contract Type
 
Pre-tax
Gain
Recognized in
OCI(1)
 
Gain
Reclassified
from
Accumulated
OCI to Earnings
(Effective
Portion)(2)
 
Pre-tax
Gain
Recognized in
OCI(1)
 
Gain
Reclassified
from
Accumulated
OCI to Earnings
(Effective
Portion)(2)
Cash flow hedges (foreign exchange forward contracts)
 
$
5


 
$
5


 
$
13


 
$
7


 
 
 
Three Months Ended
 
Six Months Ended
 
 
August 28, 2010
 
August 28, 2010
Contract Type
 
Pre-tax
Gain
Recognized in
OCI(1)
 
Gain
Reclassified
from
Accumulated
OCI to Earnings
(Effective
Portion)(2)
 
Pre-tax
Gain
Recognized in
OCI(1)
 
Gain
Reclassified
from
Accumulated
OCI to Earnings
(Effective
Portion)(2)
Cash flow hedges (foreign exchange forward contracts)
 
$
10


 
$


 
$
10


 
$
1


Net investment hedges (foreign exchange swap contracts)
 


 


 
8


 


Total
 
$
10


 
$


 
$
18


 
$
1




(1)          
Reflects the amount recognized in OCI prior to the reclassification of 50% to noncontrolling interests for the cash flow and net investment hedges, respectively.
 
(2)         
Gain reclassified from accumulated OCI is included within selling, general and administrative expenses (“SG&A”) in our consolidated statements of earnings.
 
The following table presents the effects of derivatives not designated as hedging instruments on our consolidated statements of earnings for the three and six months ended August 27, 2011 and August 28, 2010:
 
 
 
(Loss) Gain Recognized within SG&A
 
 
Three Months Ended
 
Six Months Ended
 
Three Months Ended
 
Six Months Ended
Contract Type
 
August 27, 2011
 
August 27, 2011
 
August 28, 2010
 
August 28, 2010
No hedge designation (foreign exchange forward contracts)
 
$
(3
)
 
$
(9
)
 
$
7


 
$
12


The following table presents the notional amounts of our foreign currency exchange contracts at August 27, 2011, February 26, 2011, and August 28, 2010:
 
 
 
Notional Amount
Contract Type
 
August 27,

2011
 
February 26,

2011
 
August 28,

2010
Derivatives designated as cash flow hedging instruments
 
$
268


 
$
264


 
$
311


Derivatives not designated as hedging instruments
 
286


 
493


 
255


Total
 
$
554


 
$
757


 
$
566




 
Earnings per Share (Tables)
Schedule of Calculation of Numerator and Denominator in Earnings Per Share
The following table presents a reconciliation of the numerators and denominators of basic and diluted earnings per share attributable to Best Buy Co., Inc. (shares in millions):
 
 
Three Months Ended
 
Six Months Ended
 
August 27,

2011
 
August 28,

2010
 
August 27,

2011
 
August 28,

2010
Numerator
 


 
 


 
 
 
 
Net earnings attributable to Best Buy Co., Inc., basic
$
177


 
$
254


 
$
313


 
$
409


Adjustment for assumed dilution:




 




 




 




Interest on convertible debentures, net of tax
2


 
1


 
3


 
2


Net earnings attributable to Best Buy Co., Inc., diluted
$
179


 
$
255


 
$
316


 
$
411


 




 




 




 




Denominator
 
 
 
 
 
 
 
Weighted-average common shares outstanding
371.9


 
413.5


 
379.8


 
416.9


Effect of potentially dilutive securities:




 




 




 




Shares from assumed conversion of convertible debentures
8.8


 
8.8


 
8.8


 
8.8


Stock options and other
0.7


 
1.3


 
0.9


 
2.0


Weighted-average common shares outstanding, assuming dilution
381.4


 
423.6


 
389.5


 
427.7


 
 
 
 
 
 
 
 
Earnings per share attributable to Best Buy Co., Inc.
 
 
 
 
 
 
 
Basic
$
0.48


 
$
0.61


 
$
0.82


 
$
0.98


Diluted
$
0.47


 
$
0.60


 
$
0.81


 
$
0.96


Comprehensive Income (Tables)
Schedule of Accumulated Other Comprehensive Income (Loss)
The components of accumulated other comprehensive income (loss), net of tax, attributable to Best Buy Co., Inc. were as follows:
 
 
August 27,

2011
 
February 26,

2011
 
August 28,

2010
Foreign currency translation
$
159


 
$
102


 
$
(58
)
Unrealized gains on available-for-sale investments
51


 
72


 
29


Unrealized gains (losses) on derivative instruments (cash flow hedges)
1


 
(1
)
 
4


Total
$
211


 
$
173


 
$
(25
)
Repurchase of Common Stock Repurcahse of Common Stock (Tables)
Schedule of Repurchases of Common Stock
The following table shows the amount and cost of shares we repurchased and retired for the three and six months ended August 27, 2011, and August 28, 2010, under the June 2011 program and the June 2007 program.


 
Three Months Ended
 
Six Months Ended
 
August 27,

2011
 
August 28,

2010
 
August 27,

2011
 
August 28,

2010
June 2011 Program
 
 
 
 
 
 
 
Number of shares repurchased
9.1


 


 
9.1


 


Cost of shares repurchased
$
252


 
$


 
$
252


 
$


 
 
 
 
 
 
 
 
June 2007 Program
 
 
 
 
 
 
 
Number of shares repurchased
3.6


 
17.3


 
20.1


 
19.8


Cost of shares repurchased
$
106


 
$
594


 
$
611


 
$
705


Segments (Tables)
Business segment information
Revenue by reportable segment was as follows:
 
 
Three Months Ended
 
Six Months Ended
 
August 27,

2011
 
August 28,

2010
 
August 27,

2011
 
August 28,

2010
Domestic
$
8,311


 
$
8,436


 
$
16,170


 
$
16,359


International
3,036


 
2,903


 
6,117


 
5,767


Total
$
11,347


 
$
11,339


 
$
22,287


 
$
22,126


 
Operating income (loss) by reportable segment and the reconciliation to earnings before income tax expense and equity in loss of affiliates were as follows:
 
 
Three Months Ended
 
Six Months Ended
 
August 27,

2011
 
August 28,

2010
 
August 27,

2011
 
August 28,

2010
Domestic
$
303


 
$
407


 
$
537


 
$
705


International
(16
)
 
4


 
32


 
19


Total operating income
287


 
411


 
569


 
724


Other income (expense)
 
 
 
 
 
 
 
Investment income and other
6


 
13


 
18


 
25


Interest expense
(34
)
 
(21
)
 
(65
)
 
(44
)
Earnings before income tax expense and equity in loss of affiliates
$
259


 
$
403


 
$
522


 
$
705


 
Assets by reportable segment were as follows:
 
 
August 27,

2011
 
February 26,

2011
 
August 28,

2010
Domestic
$
10,360


 
$
9,610


 
$
9,818


International
8,469


 
8,239


 
7,544


Total
$
18,829


 
$
17,849


 
$
17,362


Condensed Consolidating Financial Information (Tables)
At August 27, 2011
(Unaudited)
 
Best Buy
Co., Inc.
 
Guarantor
Subsidiary
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 


 
 


 
 


 
 


 
 


Current Assets
 


 
 


 
 


 
 


 
 


Cash and cash equivalents
$
943


 
$
52


 
$
1,045


 
$


 
$
2,040


Short-term investments
80


 


 


 


 
80


Receivables
1


 
522


 
1,422


 


 
1,945


Merchandise inventories


 
4,329


 
2,125


 
(51
)
 
6,403


Other current assets
157


 
57


 
831


 
(12
)
 
1,033


Intercompany receivable


 


 
9,843


 
(9,843
)
 


Intercompany note receivable
895


 


 
106


 
(1,001
)
 


Total current assets
2,076


 
4,960


 
15,372


 
(10,907
)
 
11,501


 
 
 
 
 
 
 
 
 
 
Property and Equipment, Net
200


 
1,742


 
1,819


 


 
3,761


Goodwill


 
6


 
2,480


 


 
2,486


Tradenames, Net


 


 
134


 


 
134


Customer Relationships, Net


 


 
179


 


 
179


Equity and Other Investments
143


 


 
141


 


 
284


Other Assets
226


 
35


 
223


 


 
484


Investments in Subsidiaries
14,487


 
241


 
2,556


 
(17,284
)
 


 
 
 
 
 
 
 
 
 
 
Total Assets
$
17,132


 
$
6,984


 
$
22,904


 
$
(28,191
)
 
$
18,829


 
 
 
 
 
 
 
 
 
 
Liabilities and Shareholders’ Equity
 


 
 


 
 


 
 


 
 


Current Liabilities
 


 
 


 
 


 
 


 
 


Accounts payable
$
341


 
$
62


 
$
5,427


 
$


 
$
5,830


Unredeemed gift card liabilities


 
347


 
63


 


 
410


Accrued compensation and related expenses


 
174


 
315


 


 
489


Accrued liabilities
51


 
711


 
829


 
(11
)
 
1,580


Accrued income taxes
2


 


 


 


 
2


Short-term debt


 


 
392


 


 
392


Current portion of long-term debt
403


 
23


 
18


 


 
444


Intercompany payable
8,132


 
1,711


 


 
(9,843
)
 


Intercompany note payable
106


 
501


 
394


 
(1,001
)
 


Total current liabilities
9,035


 
3,529


 
7,438


 
(10,855
)
 
9,147


 
 
 
 
 
 
 
 
 
 
Long-Term Liabilities
466


 
781


 
174


 
(245
)
 
1,176


Long-Term Debt
1,496


 
118


 
82


 


 
1,696


 
 
 
 
 
 
 
 
 
 
Equity
 


 
 


 
 


 
 


 
 


Shareholders’ equity
6,135


 
2,556


 
14,487


 
(17,091
)
 
6,087


Noncontrolling interests


 


 
723


 


 
723


Total equity
6,135


 
2,556


 
15,210


 
(17,091
)
 
6,810


 
 
 
 
 
 
 
 
 
 
Total Liabilities and Equity
$
17,132


 
$
6,984


 
$
22,904


 
$
(28,191
)
 
$
18,829




Condensed Consolidating Balance Sheets
At February 26, 2011
(Unaudited)
 
Best Buy
Co., Inc.
 
Guarantor
Subsidiary
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 


 
 


 
 


 
 


 
 


Current Assets
 


 
 


 
 


 
 


 
 


Cash and cash equivalents
$
282


 
$
51


 
$
770


 
$


 
$
1,103


Short-term investments
20


 


 
2


 


 
22


Receivables
3


 
738


 
1,607


 


 
2,348


Merchandise inventories


 
3,973


 
1,999


 
(75
)
 
5,897


Other current assets
234


 
117


 
752


 


 
1,103


Intercompany receivable


 


 
9,300


 
(9,300
)
 


Intercompany note receivable
854


 


 
91


 
(945
)
 


Total current assets
1,393


 
4,879


 
14,521


 
(10,320
)
 
10,473


 
 
 
 
 
 
 
 
 
 
Property and Equipment, Net
200


 
1,803


 
1,820


 


 
3,823


Goodwill


 
6


 
2,448


 


 
2,454


Tradenames, Net


 


 
133


 


 
133


Customer Relationships, Net


 


 
203


 


 
203


Equity and Other Investments
162


 


 
166


 


 
328


Other Assets
181


 
36


 
273


 
(55
)
 
435


Investments in Subsidiaries
14,030


 
229


 
2,444


 
(16,703
)
 


 
 
 
 
 
 
 
 
 
 
Total Assets
$
15,966


 
$
6,953


 
$
22,008


 
$
(27,078
)
 
$
17,849


 
 
 
 
 
 
 
 
 
 
Liabilities and Shareholders’ Equity
 


 
 


 
 


 
 


 
 


Current Liabilities
 


 
 


 
 


 
 


 
 


Accounts payable
$
361


 
$
101


 
$
4,432


 
$


 
$
4,894


Unredeemed gift card liabilities


 
404


 
70


 


 
474


Accrued compensation and related expenses


 
200


 
370


 


 
570


Accrued liabilities
13


 
625


 
833


 


 
1,471


Accrued income taxes
256


 


 


 


 
256


Short-term debt


 


 
557


 


 
557


Current portion of long-term debt
402


 
23


 
16


 


 
441


Intercompany payable
7,497


 
1,665


 
138


 
(9,300
)
 


Intercompany note payable
103


 
500


 
342


 
(945
)
 


Total current liabilities
8,632


 
3,518


 
6,758


 
(10,245
)
 
8,663


 
 
 
 
 
 
 
 
 
 
Long-Term Liabilities
160


 
863


 
447


 
(287
)
 
1,183


Long-Term Debt
500


 
128


 
83


 


 
711


 
 
 
 
 
 
 
 
 
 
Equity
 


 
 


 
 


 
 


 
 


Shareholders’ equity
6,674


 
2,444


 
14,030


 
(16,546
)
 
6,602


Noncontrolling interests


 


 
690


 


 
690


Total equity
6,674


 
2,444


 
14,720


 
(16,546
)
 
7,292


 
 
 
 
 
 
 
 
 
 
Total Liabilities and Equity
$
15,966


 
$
6,953


 
$
22,008


 
$
(27,078
)
 
$
17,849




Condensed Consolidating Balance Sheets
At August 28, 2010
(Unaudited) 
 
Best Buy
Co., Inc.
 
Guarantor
Subsidiary
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Assets
 


 
 


 
 


 
 


 
 


Current Assets
 


 
 


 
 


 
 


 
 


Cash and cash equivalents
$
136


 
$
29


 
$
678


 
$


 
$
843


Short-term investments


 


 
2


 


 
2


Receivables
1


 
500


 
1,219


 


 
1,720


Merchandise inventories


 
4,387


 
2,032


 
(73
)
 
6,346


Other current assets
242


 
74


 
733


 
(1
)
 
1,048


Intercompany receivable


 


 
8,604


 
(8,604
)
 


Intercompany note receivable
1,566


 


 
7


 
(1,573
)
 


Total current assets
1,945


 
4,990


 
13,275


 
(10,251
)
 
9,959


 
 
 
 
 
 
 
 
 
 
Property and Equipment, Net
211


 
1,798


 
1,906


 


 
3,915


Goodwill


 
6


 
2,359


 


 
2,365


Tradenames, Net


 


 
147


 


 
147


Customer Relationships, Net


 


 
227


 


 
227


Equity and Other Investments
166


 


 
127


 


 
293


Other Assets
92


 
27


 
375


 
(38
)
 
456


Investments in Subsidiaries
12,043


 
296


 
2,411


 
(14,750
)
 


 
 
 
 
 
 
 
 
 
 
Total Assets
$
14,457


 
$
7,117


 
$
20,827


 
$
(25,039
)
 
$
17,362


 
 
 
 
 
 
 
 
 
 
Liabilities and Shareholders’ Equity
 


 
 


 
 


 
 


 
 


Current Liabilities
 


 
 


 
 


 
 


 
 


Accounts payable
$
350


 
$
34


 
$
5,189


 
$


 
$
5,573


Unredeemed gift card liabilities


 
344


 
56


 


 
400


Accrued compensation and related expenses
1


 
191


 
275


 


 
467


Accrued liabilities
18


 
670


 
901


 


 
1,589


Accrued income taxes
27


 


 


 


 
27


Short-term debt


 


 
383


 


 
383


Current portion of long-term debt


 
20


 
12


 


 
32


Intercompany payable
6,869


 
1,735


 


 
(8,604
)
 


Intercompany note payable
19


 
500


 
1,054


 
(1,573
)
 


Total current liabilities
7,284


 
3,494


 
7,870


 
(10,177
)
 
8,471


 
 
 
 
 
 
 
 
 
 
Long-Term Liabilities
185


 
1,089


 
245


 
(338
)
 
1,181


Long-Term Debt
902


 
123


 
63


 


 
1,088


 
 
 
 
 
 
 
 
 
 
Equity
 


 
 


 
 


 
 


 
 


Shareholders’ equity
6,086


 
2,411


 
12,042


 
(14,524
)
 
6,015


Noncontrolling interests


 


 
607


 


 
607


Total equity
6,086


 
2,411


 
12,649


 
(14,524
)
 
6,622


 
 
 
 
 
 
 
 
 
 
Total Liabilities and Equity
$
14,457


 
$
7,117


 
$
20,827


 
$
(25,039
)
 
$
17,362




Three Months Ended August 27, 2011
(Unaudited) 
 
Best Buy
Co., Inc.
 
Guarantor
Subsidiary
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenue
$
4


 
$
7,591


 
$
9,810


 
$
(6,058
)
 
$
11,347


 
 
 
 
 
 
 
 
 
 
Cost of goods sold


 
5,625


 
8,381


 
(5,531
)
 
8,475


 
 
 
 
 
 
 
 
 
 
Gross profit
4


 
1,966


 
1,429


 
(527
)
 
2,872


 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
37


 
1,890


 
1,233


 
(577
)
 
2,583


Restructuring charges


 


 
2


 


 
2


 
 
 
 
 
 
 
 
 
 
Operating (loss) income
(33
)
 
76


 
194


 
50


 
287


 
 
 
 
 
 
 
 
 
 
Other income (expense)
 


 
 


 
 


 
 


 
 


Investment income and other
6


 


 
5


 
(5
)
 
6


Interest expense
(23
)
 
(3
)
 
(13
)
 
5


 
(34
)
 
 
 
 
 
 
 
 
 
 
(Loss) earnings before equity in earnings of subsidiaries
(50
)
 
73


 
186


 
50


 
259


 
 
 
 
 
 
 
 
 
 
Equity in earnings of subsidiaries
175


 
9


 
48


 
(232
)
 


 
 
 
 
 
 
 
 
 
 
Earnings before income tax expense and equity in loss of affiliates
125


 
82


 
234


 
(182
)
 
259


 
 
 
 
 
 
 
 
 
 
Income tax (benefit) expense
(2
)
 
25


 
76


 


 
99


 
 
 
 
 
 
 
 
 
 
Equity in loss of affiliates


 


 


 


 


 
 
 
 
 
 
 
 
 
 
Net earnings including noncontrolling interests
127


 
57


 
158


 
(182
)
 
160


 
 
 
 
 
 
 
 
 
 
Net loss attributable to noncontrolling interests


 


 
17


 


 
17


 
 
 
 
 
 
 
 
 
 
Net earnings attributable to Best Buy Co., Inc.
$
127


 
$
57


 
$
175


 
$
(182
)
 
$
177




Condensed Consolidating Statements of Earnings
Six Months Ended August 27, 2011
(Unaudited) 
 
Best Buy
Co., Inc.
 
Guarantor
Subsidiary
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenue
$
8


 
$
14,799


 
$
20,169


 
$
(12,689
)
 
$
22,287


 
 
 
 
 
 
 
 
 
 
Cost of goods sold


 
10,998


 
17,368


 
(11,719
)
 
16,647


 
 
 
 
 
 
 
 
 
 
Gross profit
8


 
3,801


 
2,801


 
(970
)
 
5,640


 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
73


 
3,655


 
2,406


 
(1,067
)
 
5,067


Restructuring charges


 
(2
)
 
6


 


 
4


 
 
 
 
 
 
 
 
 
 
Operating (loss) income
(65
)
 
148


 
389


 
97


 
569


 
 
 
 
 
 
 
 
 
 
Other income (expense)
 


 
 


 
 


 
 


 
 


Investment income and other
10


 


 
17


 
(9
)
 
18


Interest expense
(46
)
 
(6
)
 
(22
)
 
9


 
(65
)
 
 
 
 
 
 
 
 
 
 
(Loss) earnings before equity in earnings of subsidiaries
(101
)
 
142


 
384


 
97


 
522


 
 
 
 
 
 
 
 
 
 
Equity in earnings of subsidiaries
320


 
18


 
93


 
(431
)
 


 
 
 
 
 
 
 
 
 
 
Earnings before income tax expense and equity in loss of affiliates
219


 
160


 
477


 
(334
)
 
522


 
 
 
 
 
 
 
 
 
 
Income tax expense
3


 
49


 
146


 


 
198


 
 
 
 
 
 
 
 
 
 
Equity in loss of affiliates


 


 
(1
)
 


 
(1
)
 
 
 
 
 
 
 
 
 
 
Net earnings including noncontrolling interests
216


 
111


 
330


 
(334
)
 
323


 
 
 
 
 
 
 
 
 
 
Net earnings attributable to noncontrolling interests


 


 
(10
)
 


 
(10
)
 
 
 
 
 
 
 
 
 
 
Net earnings attributable to Best Buy Co., Inc.
$
216


 
$
111


 
$
320


 
$
(334
)
 
$
313




Condensed Consolidating Statements of Earnings
Three Months Ended August 28, 2010
(Unaudited) 
 
Best Buy
Co., Inc.
 
Guarantor
Subsidiary
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenue
$
4


 
$
7,780


 
$
10,162


 
$
(6,607
)
 
$
11,339


 
 
 
 
 
 
 
 
 
 
Cost of goods sold


 
5,739


 
8,674


 
(5,992
)
 
8,421


 
 
 
 
 
 
 
 
 
 
Gross profit
4


 
2,041


 
1,488


 
(615
)
 
2,918


 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
34


 
1,970


 
1,166


 
(663
)
 
2,507


 
 
 
 
 
 
 
 
 
 
Operating (loss) income
(30
)
 
71


 
322


 
48


 
411


 
 
 
 
 
 
 
 
 
 
Other income (expense)
 


 
 


 
 


 
 


 
 


Investment income and other
11


 


 
14


 
(12
)
 
13


Interest expense
(11
)
 
(3
)
 
(19
)
 
12


 
(21
)
 
 
 
 
 
 
 
 
 
 
(Loss) earnings before equity in earnings of subsidiaries
(30
)
 
68


 
317


 
48


 
403


 
 
 
 
 
 
 
 
 
 
Equity in earnings of subsidiaries
248


 
27


 
109


 
(384
)
 


 
 
 
 
 
 
 
 
 
 
Earnings before income tax expense
218


 
95


 
426


 
(336
)
 
403


 
 
 
 
 
 
 
 
 
 
Income tax expense (benefit)
12


 
(41
)
 
175


 


 
146


 
 
 
 
 
 
 
 
 
 
Net earnings including noncontrolling interests
206


 
136


 
251


 
(336
)
 
257


 
 
 
 
 
 
 
 
 
 
Net earnings attributable to noncontrolling interests


 


 
(3
)
 


 
(3
)
 
 
 
 
 
 
 
 
 
 
Net earnings attributable to Best Buy Co., Inc.
$
206


 
$
136


 
$
248


 
$
(336
)
 
$
254




Condensed Consolidating Statements of Earnings
Six Months Ended August 28, 2010
(Unaudited) 
 
Best Buy
Co., Inc.
 
Guarantor
Subsidiary
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenue
$
8


 
$
15,075


 
$
20,697


 
$
(13,654
)
 
$
22,126


 
 
 
 
 
 
 
 
 
 
Cost of goods sold


 
11,119


 
17,756


 
(12,460
)
 
16,415


 
 
 
 
 
 
 
 
 
 
Gross profit
8


 
3,956


 
2,941


 
(1,194
)
 
5,711


 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
71


 
3,806


 
2,392


 
(1,282
)
 
4,987


 
 
 
 
 
 
 
 
 
 
Operating (loss) income
(63
)
 
150


 
549


 
88


 
724


 
 
 
 
 
 
 
 
 
 
Other income (expense)
 


 
 


 
 


 
 


 
 


Investment income and other
19


 


 
25


 
(19
)
 
25


Interest expense
(23
)
 
(6
)
 
(34
)
 
19


 
(44
)
 
 
 
 
 
 
 
 
 
 
(Loss) earnings before equity in earnings of subsidiaries
(67
)
 
144


 
540


 
88


 
705


 
 
 
 
 
 
 
 
 
 
Equity in earnings of subsidiaries
382


 
23


 
91


 
(496
)
 


 
 
 
 
 
 
 
 
 
 
Earnings before income tax expense
315


 
167


 
631


 
(408
)
 
705


 
 
 
 
 
 
 
 
 
 
Income tax (benefit) expense
(6
)
 
53


 
220


 


 
267


 
 
 
 
 
 
 
 
 
 
Net earnings including noncontrolling interests
321


 
114


 
411


 
(408
)
 
438


 
 
 
 
 
 
 
 
 
 
Net earnings attributable to noncontrolling interests


 


 
(29
)
 


 
(29
)
 
 
 
 
 
 
 
 
 
 
Net earnings attributable to Best Buy Co., Inc.
$
321


 
$
114


 
$
382


 
$
(408
)
 
$
409




Six Months Ended August 27, 2011
(Unaudited) 
 
Best Buy
Co., Inc.
 
Guarantor
Subsidiary
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Total cash (used in) provided by operating activities
$
(151
)
 
$
200


 
$
1,488


 
$


 
$
1,537


 
 
 
 
 
 
 
 
 
 
Investing activities
 


 
 


 
 


 
 


 
 


Additions to property and equipment
(2
)
 
(191
)
 
(218
)
 


 
(411
)
Purchases of investments
(86
)
 


 
(20
)
 


 
(106
)
Sales of investments
43


 


 
23


 


 
66


Proceeds from sale of business


 


 


 


 


Change in restricted assets


 


 
(45
)
 


 
(45
)
Settlement of net investment hedges


 


 


 


 


Other, net


 


 


 


 


Total cash (used in) investing activities
(45
)
 
(191
)
 
(260
)
 


 
(496
)
 
 
 
 
 
 
 
 
 
 
Financing activities
 


 
 


 
 


 
 


 
 


Repurchase of common stock
(846
)
 


 


 


 
(846
)
Borrowings of debt
997


 


 
999


 


 
1,996


Repayments of debt


 
(6
)
 
(1,181
)
 


 
(1,187
)
Dividends paid
(115
)
 


 


 


 
(115
)
Issuance of common stock under employee stock purchase plan and for the exercise of stock options
49


 


 


 


 
49


Excess tax benefits from stock-based compensation


 


 


 


 


Other, net
(8
)
 


 
6


 


 
(2
)
Change in intercompany receivable/payable
780


 
(2
)
 
(778
)
 


 


Total cash provided by (used in) financing activities
857


 
(8
)
 
(954
)
 


 
(105
)
 
 
 
 
 
 
 
 
 
 
Effect of exchange rate changes on cash


 


 
1


 


 
1


 
 
 
 
 
 
 
 
 
 
Increase in cash and cash equivalents
661


 
1


 
275


 


 
937


 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents at beginning of period
282


 
51


 
770


 


 
1,103


Cash and cash equivalents at end of period
$
943


 
$
52


 
$
1,045


 
$


 
$
2,040




Condensed Consolidating Statements of Cash Flows
Six Months Ended August 28, 2010
(Unaudited) 
 
Best Buy
Co., Inc.
 
Guarantor
Subsidiary
 
Non-
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Total cash provided by (used in) operating activities
$
199


 
$
(472
)
 
$
357


 
$


 
$
84


 
 
 
 
 
 
 
 
 
 
Investing activities
 


 
 


 
 


 
 


 
 


Additions to property and equipment


 
(129
)
 
(213
)
 


 
(342
)
Purchases of investments
(241
)
 


 


 


 
(241
)
Sales of investments
378


 


 
1


 


 
379


Proceeds from sale of business


 


 
21


 


 
21


Change in restricted assets


 


 
12


 


 
12


Settlement of net investment hedges


 


 
12


 


 
12


Other, net


 


 
(1
)
 


 
(1
)
Total cash provided by (used in) investing activities
137


 
(129
)
 
(168
)
 


 
(160
)
 
 
 
 
 
 
 
 
 
 
Financing activities
 


 
 


 
 


 
 


 
 


Repurchase of common stock
(667
)
 


 


 


 
(667
)
Borrowings of debt


 


 
955


 


 
955


Repayments of debt
(1
)
 
(6
)
 
(1,200
)
 


 
(1,207
)
Dividends paid
(118
)
 


 


 


 
(118
)
Issuance of common stock under employee stock purchase plan and for the exercise of stock options
113


 


 


 


 
113


Excess tax benefits from stock-based compensation
10


 


 


 


 
10


Other, net


 


 
9


 


 
9


Change in intercompany receivable/payable
(707
)
 
583


 
124


 


 


Total cash (used in) provided by financing activities
(1,370
)
 
577


 
(112
)
 


 
(905
)
 
 
 
 
 
 
 
 
 
 
Effect of exchange rate changes on cash


 


 
(2
)
 


 
(2
)
 
 
 
 
 
 
 
 
 
 
(Decrease) increase in cash and cash equivalents
(1,034
)
 
(24
)
 
75


 


 
(983
)
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents at beginning of period
1,170


 
53


 
603


 


 
1,826


Cash and cash equivalents at end of period
$
136


 
$
29


 
$
678


 
$


 
$
843


Basis of Presentation (Details)
6 Months Ended
Aug. 27, 2011
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
Reporting period lag for consolidation of financial results (in months)
Investments (Details) (USD $)
In Millions, unless otherwise specified
1 Months Ended
Mar. 31, 2010
company
3 Months Ended
Aug. 27, 2011
6 Months Ended
Aug. 27, 2011
investments
12 Months Ended
Mar. 1, 2008
Feb. 26, 2011
Aug. 28, 2010
Schedule of Investments
 
 
 
 
 
 
Total short-term investments
 
$ 80 
$ 80 
 
$ 22 
$ 2 
Total equity and other investments
 
284 
284 
 
328 
293 
Interval of auction process
 
seven, 28 and 35 days 
 
 
 
 
Securities redeemed
 
 
 
 
 
Investments in portfolio (investments)
 
 
19 
 
 
 
Aggregate value of failed auctions
 
93 
93 
 
 
 
Auction Rate Securities, Maturity Date Range, End (in years)
 
 
30 
 
 
 
Marketable Equity Security, Ownership Percentage as of Purchase Date (as a percent)
 
 
 
3.00% 
 
 
Accumulated Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax
 
51 
51 
 
72 
29 
Number of companies formed after CPW demerger
 
 
 
 
 
Percentage ownership of former CPW in Best Buy Europe, included in Carphone Warehouse holding company (as a percent)
50.00% 
 
 
 
 
 
Money Market Fund
 
 
 
 
 
 
Schedule of Investments
 
 
 
 
 
 
Total short-term investments
 
 
U.S. Treasury bills
 
 
 
 
 
 
Schedule of Investments
 
 
 
 
 
 
Total short-term investments
 
80 
80 
 
20 
Debt Securities (Auction-Rate Securities)
 
 
 
 
 
 
Schedule of Investments
 
 
 
 
 
 
Total equity and other investments
 
88 
88 
 
110 
134 
Investments, Fair Value Disclosure
 
88 1
88 1
 
110 1
134 1
Auction Rate Securities, Par Value
 
93 
93 
 
115 
144 
Weighted Average Interest Rate Percentage (as a percent)
 
0.40% 
0.40% 
 
0.80% 
0.91% 
Percentage of Portfolio With Credit Rating AAA/Aaa (as a percent)
 
88.00% 
88.00% 
 
 
 
Percentage of Portfolio With Credit Rating AA/Aa (as a percent)
 
3.00% 
3.00% 
 
 
 
Percentage of Portfolio With Credit Rating A/A (as a percent)
 
9.00% 
9.00% 
 
 
 
Auction Rate Securities, Maturity Date Range, Start (in years)
 
 
 
 
 
Pre-tax unrealized gain (loss) in accumulated other comprehensive income
 
 
(5)
 
 
 
Accumulated Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax
 
(3)
(3)
 
(3)
(6)
Student loan bonds
 
 
 
 
 
 
Schedule of Investments
 
 
 
 
 
 
Investments, Fair Value Disclosure
 
86 
86 
 
108 
116 
Guaranteed or Insured Percentage, Low Range (as a percent)
 
95.00% 
95.00% 
 
 
 
Guaranteed or Insured Percentage, High Range (as a percent)
 
100.00% 
100.00% 
 
 
 
Municipal revenue bonds
 
 
 
 
 
 
Schedule of Investments
 
 
 
 
 
 
Investments, Fair Value Disclosure
 
 
18 
Percentage Insured by Rated Bond Insurers (as a percent)
 
100.00% 
100.00% 
 
 
 
Marketable Equity Securities
 
 
 
 
 
 
Schedule of Investments
 
 
 
 
 
 
Total equity and other investments
 
122 
122 
 
146 
97 
Pre-tax unrealized gain (loss) in accumulated other comprehensive income
 
 
63 
 
 
 
Accumulated Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax
 
54 
54 
 
75 
35 
Common stock of Talk Talk Telecom Group PLC
 
 
 
 
 
 
Schedule of Investments
 
 
 
 
 
 
Total equity and other investments
 
69 
69 
 
62 
51 
Common stock of Carphone Warehouse Group plc
 
 
 
 
 
 
Schedule of Investments
 
 
 
 
 
 
Total equity and other investments
 
53 
53 
 
84 
44 
Marketable Equity Securities, Other
 
 
 
 
 
 
Schedule of Investments
 
 
 
 
 
 
Total equity and other investments
 
 
Other Investments
 
 
 
 
 
 
Schedule of Investments
 
 
 
 
 
 
Total equity and other investments
 
$ 74 
$ 74 
 
$ 72 
$ 62 
Fair Value Measurements (Details) (Fair Value, Measurements, Recurring [Member], USD $)
In Millions
Aug. 27, 2011
Feb. 26, 2011
May 29, 2010
Money Market Funds [Member] |
Fair Value |
Cash and Cash Equivalents [Member]
 
 
 
ASSETS
 
 
 
Cash and cash equivalents
$ 560 
$ 70 
$ 1 
Money Market Funds [Member] |
Fair Value |
Short-term Investments [Member]
 
 
 
ASSETS
 
 
 
Short-term investments
 
Money Market Funds [Member] |
Fair Value |
Other Current Assets [Member]
 
 
 
ASSETS
 
 
 
Restricted cash
157 
63 
49 
US Treasury Securities [Member] |
Fair Value |
Short-term Investments [Member]
 
 
 
ASSETS
 
 
 
Short-term investments
80 
20 
 
US Treasury Securities [Member] |
Fair Value |
Other Current Assets [Member]
 
 
 
ASSETS
 
 
 
Restricted cash
30 
105 
100 
Fair Value |
Cash and Cash Equivalents [Member] |
Commercial Paper [Member]
 
 
 
ASSETS
 
 
 
Cash and cash equivalents
15 
 
 
Fair Value |
Other Current Assets [Member]
 
 
 
ASSETS
 
 
 
Foreign currency derivative instruments
Fair Value |
Equity and Other Investments [Member]
 
 
 
ASSETS
 
 
 
Auction rate securities
88 
110 
134 
Marketable equity securities
122 
146 
97 
Fair Value |
Other Assets [Member]
 
 
 
ASSETS
 
 
 
Foreign currency derivative instruments
 
Marketable equity securities that fund deferred compensation
83 
83 
77 
Fair Value |
Accrued Liabilities [Member]
 
 
 
LIABILITIES
 
 
 
Foreign currency derivative instruments
 
 
Fair Value |
Long-term Liabilities [Member]
 
 
 
LIABILITIES
 
 
 
Deferred compensation
65 
64 
64 
Foreign currency derivative instruments
 
 
Money Market Funds [Member] |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Cash and Cash Equivalents [Member]
 
 
 
ASSETS
 
 
 
Cash and cash equivalents
560 
70 
Money Market Funds [Member] |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Short-term Investments [Member]
 
 
 
ASSETS
 
 
 
Short-term investments
 
Money Market Funds [Member] |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Other Current Assets [Member]
 
 
 
ASSETS
 
 
 
Restricted cash
157 
63 
49 
US Treasury Securities [Member] |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Short-term Investments [Member]
 
 
 
ASSETS
 
 
 
Short-term investments
80 
20 
 
US Treasury Securities [Member] |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Other Current Assets [Member]
 
 
 
ASSETS
 
 
 
Restricted cash
30 
105 
100 
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Cash and Cash Equivalents [Member] |
Commercial Paper [Member]
 
 
 
ASSETS
 
 
 
Cash and cash equivalents
 
 
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Other Current Assets [Member]
 
 
 
ASSETS
 
 
 
Foreign currency derivative instruments
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Equity and Other Investments [Member]
 
 
 
ASSETS
 
 
 
Auction rate securities
Marketable equity securities
122 
146 
97 
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Other Assets [Member]
 
 
 
ASSETS
 
 
 
Foreign currency derivative instruments
 
Marketable equity securities that fund deferred compensation
83 
83 
77 
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Accrued Liabilities [Member]
 
 
 
LIABILITIES
 
 
 
Foreign currency derivative instruments
 
 
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Long-term Liabilities [Member]
 
 
 
LIABILITIES
 
 
 
Deferred compensation
65 
64 
64 
Foreign currency derivative instruments
 
 
Money Market Funds [Member] |
Significant Other Observable Inputs (Level 2) |
Cash and Cash Equivalents [Member]
 
 
 
ASSETS
 
 
 
Cash and cash equivalents
Money Market Funds [Member] |
Significant Other Observable Inputs (Level 2) |
Short-term Investments [Member]
 
 
 
ASSETS
 
 
 
Short-term investments
 
Money Market Funds [Member] |
Significant Other Observable Inputs (Level 2) |
Other Current Assets [Member]
 
 
 
ASSETS
 
 
 
Restricted cash
US Treasury Securities [Member] |
Significant Other Observable Inputs (Level 2) |
Short-term Investments [Member]
 
 
 
ASSETS
 
 
 
Short-term investments
 
US Treasury Securities [Member] |
Significant Other Observable Inputs (Level 2) |
Other Current Assets [Member]
 
 
 
ASSETS
 
 
 
Restricted cash
Significant Other Observable Inputs (Level 2) |
Cash and Cash Equivalents [Member] |
Commercial Paper [Member]
 
 
 
ASSETS
 
 
 
Cash and cash equivalents
15 
 
 
Significant Other Observable Inputs (Level 2) |
Other Current Assets [Member]
 
 
 
ASSETS
 
 
 
Foreign currency derivative instruments
Significant Other Observable Inputs (Level 2) |
Equity and Other Investments [Member]
 
 
 
ASSETS
 
 
 
Auction rate securities
Marketable equity securities
Significant Other Observable Inputs (Level 2) |
Other Assets [Member]
 
 
 
ASSETS
 
 
 
Foreign currency derivative instruments
 
Marketable equity securities that fund deferred compensation
Significant Other Observable Inputs (Level 2) |
Accrued Liabilities [Member]
 
 
 
LIABILITIES
 
 
 
Foreign currency derivative instruments
 
 
Significant Other Observable Inputs (Level 2) |
Long-term Liabilities [Member]
 
 
 
LIABILITIES
 
 
 
Deferred compensation
Foreign currency derivative instruments
 
 
Money Market Funds [Member] |
Significant Unobservable Inputs (Level 3) |
Cash and Cash Equivalents [Member]
 
 
 
ASSETS
 
 
 
Cash and cash equivalents
Money Market Funds [Member] |
Significant Unobservable Inputs (Level 3) |
Short-term Investments [Member]
 
 
 
ASSETS
 
 
 
Short-term investments
 
Money Market Funds [Member] |
Significant Unobservable Inputs (Level 3) |
Other Current Assets [Member]
 
 
 
ASSETS
 
 
 
Restricted cash
US Treasury Securities [Member] |
Significant Unobservable Inputs (Level 3) |
Short-term Investments [Member]
 
 
 
ASSETS
 
 
 
Short-term investments
 
US Treasury Securities [Member] |
Significant Unobservable Inputs (Level 3) |
Other Current Assets [Member]
 
 
 
ASSETS
 
 
 
Restricted cash
Significant Unobservable Inputs (Level 3) |
Cash and Cash Equivalents [Member] |
Commercial Paper [Member]
 
 
 
ASSETS
 
 
 
Cash and cash equivalents
 
 
Significant Unobservable Inputs (Level 3) |
Other Current Assets [Member]
 
 
 
ASSETS
 
 
 
Foreign currency derivative instruments
Significant Unobservable Inputs (Level 3) |
Equity and Other Investments [Member]
 
 
 
ASSETS
 
 
 
Auction rate securities
88 
110 
134 
Marketable equity securities
Significant Unobservable Inputs (Level 3) |
Other Assets [Member]
 
 
 
ASSETS
 
 
 
Foreign currency derivative instruments
 
Marketable equity securities that fund deferred compensation
Significant Unobservable Inputs (Level 3) |
Accrued Liabilities [Member]
 
 
 
LIABILITIES
 
 
 
Foreign currency derivative instruments
 
 
Significant Unobservable Inputs (Level 3) |
Long-term Liabilities [Member]
 
 
 
LIABILITIES
 
 
 
Deferred compensation
Foreign currency derivative instruments
 
$ 0 
 
Fair Value Measurements (Details 2) (USD $)
In Millions
3 Months Ended
Aug. 27, 2011
3 Months Ended
Aug. 28, 2010
6 Months Ended
Aug. 27, 2011
6 Months Ended
Aug. 28, 2010
Fair Value, Assets Measured On Recurring Basis, Unobservable Input Reconciliation.
 
 
 
 
Balance at the beginning of the period
$ 99 
$ 233 
$ 110 
$ 280 
Changes in unrealized losses included in other comprehensive income
(3)
(5)
Sales
(8)
(99)
(22)
(140)
Interest received
 
 
 
(1)
Balance at the end of the period
88 
134 
88 
134 
Student loan bonds
 
 
 
 
Fair Value, Assets Measured On Recurring Basis, Unobservable Input Reconciliation.
 
 
 
 
Balance at the beginning of the period
97 
214 
108 
261 
Changes in unrealized losses included in other comprehensive income
(3)
(5)
Sales
(8)
(98)
(22)
(139)
Interest received
 
 
 
(1)
Balance at the end of the period
86 
116 
86 
116 
Municipal revenue bonds
 
 
 
 
Fair Value, Assets Measured On Recurring Basis, Unobservable Input Reconciliation.
 
 
 
 
Balance at the beginning of the period
19 
19 
Changes in unrealized losses included in other comprehensive income
Sales
(1)
(1)
Interest received
 
 
 
Balance at the end of the period
$ 2 
$ 18 
$ 2 
$ 18 
Goodwill and Intangible Assets (Details) (USD $)
In Millions
6 Months Ended
Aug. 27, 2011
6 Months Ended
Aug. 28, 2010
Feb. 26, 2011
Goodwill
 
 
 
Goodwill, balance at the beginning of the period
$ 2,454 
$ 2,452 
 
Sale of business
 
(12)1
 
Changes in foreign currency exchange rates
32 
(75)
 
Goodwill, balance at the end of the period
2,486 
2,365 
 
Tradenames, beginning balance
105 
112 
 
Sale of business
 
(1)1
 
Changes in foreign currency exchange rates, Tradenames
 
Other
28 2
 
 
Tradenames, ending balance
134 
111 
 
Gross amount of goodwill and the accumulated goodwill impairment losses
 
 
 
Gross Carrying Amount
2,551 
2,430 
2,519 
Cumulative Impairment
(65)
(65)
(65)
Domestic
 
 
 
Goodwill
 
 
 
Goodwill, balance at the beginning of the period
422 
434 
 
Sale of business
 
(12)1
 
Changes in foreign currency exchange rates
 
Goodwill, balance at the end of the period
422 
422 
 
Tradenames, beginning balance
21 
32 
 
Sale of business
 
(1)1
 
Changes in foreign currency exchange rates, Tradenames
 
Other
2
 
 
Tradenames, ending balance
21 
31 
 
International
 
 
 
Goodwill
 
 
 
Goodwill, balance at the beginning of the period
2,032 
2,018 
 
Sale of business
 
1
 
Changes in foreign currency exchange rates
32 
(75)
 
Goodwill, balance at the end of the period
2,064 
1,943 
 
Tradenames, beginning balance
84 
80 
 
Sale of business
 
1
 
Changes in foreign currency exchange rates, Tradenames
 
Other
28 2
 
 
Tradenames, ending balance
$ 113 
$ 80 
 
Goodwill and Intangible Assets (Details 2) (USD $)
In Millions
3 Months Ended
Aug. 27, 2011
3 Months Ended
Aug. 28, 2010
6 Months Ended
Aug. 27, 2011
6 Months Ended
Aug. 28, 2010
Feb. 26, 2011
Finite-Lived Intangible Assets
 
 
 
 
 
Gross Carrying Amount
$ 393 
$ 443 
$ 393 
$ 443 
$ 456 
Accumulated Amortization
(214)
(180)
(214)
(180)
(225)
Amortization expense
15 
21 
30 
43 
 
Tradenames
 
 
 
 
 
Finite-Lived Intangible Assets
 
 
 
 
 
Gross Carrying Amount
71 
71 
73 
Accumulated Amortization
(35)
(35)
(45)
Customer Relationships
 
 
 
 
 
Finite-Lived Intangible Assets
 
 
 
 
 
Gross Carrying Amount
393 
372 
393 
372 
383 
Accumulated Amortization
$ (214)
$ (145)
$ (214)
$ (145)
$ (180)
Goodwill and Intangible Assets (Details 3) (USD $)
In Millions
6 Months Ended
Aug. 27, 2011
Goodwill and Intangible Assets Disclosure [Abstract]
 
Remainder of fiscal 2012
$ 18 
2013
36 
2014
36 
2015
36 
2016
36 
Thereafter
$ 17 
Restructuring Charges (Details) (USD $)
In Millions
6 Months Ended
Aug. 27,
3 Months Ended
Aug. 27, 2011
3 Months Ended
Aug. 28, 2010
6 Months Ended
Aug. 27, 2011
6 Months Ended
Aug. 28, 2010
2011
Domestic
Restructuring Program 2011 [Member]
2011
Domestic
Restructuring Program 2011 [Member]
Inventory write-downs
2011
Domestic
Restructuring Program 2011 [Member]
Property and equipment write-downs
2011
Domestic
Restructuring Program 2011 [Member]
Termination benefits
2011
Domestic
Restructuring Program 2011 [Member]
Intangible asset impairments
2011
Domestic
Restructuring Program 2011 [Member]
Facility closure and other costs
2011
International
Restructuring Program 2011 [Member]
2011
International
Restructuring Program 2011 [Member]
Inventory write-downs
2011
International
Restructuring Program 2011 [Member]
Property and equipment write-downs
2011
International
Restructuring Program 2011 [Member]
Termination benefits
2011
International
Restructuring Program 2011 [Member]
Intangible asset impairments
2011
International
Restructuring Program 2011 [Member]
Facility closure and other costs
2011
Restructuring Program 2011 [Member]
2011
Restructuring Program 2011 [Member]
Inventory write-downs
2011
Restructuring Program 2011 [Member]
Property and equipment write-downs
2011
Restructuring Program 2011 [Member]
Termination benefits
2011
Restructuring Program 2011 [Member]
Intangible asset impairments
2011
Restructuring Program 2011 [Member]
Facility closure and other costs
2011
Termination benefits
3 Months Ended
May 28, 2011
Facility closure and other costs
6 Months Ended
Aug. 27, 2011
Facility closure and other costs
Restructuring Cost and Reserve [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restructuring charges
$ 2 
$ 0 
$ 4 
$ 0 
$ 1 
$ 0 
$ 0 
$ (3)
$ 0 
$ 4 
$ 3 
$ 0 
$ 0 
$ 6 
$ 0 
$ (3)
$ 4 
$ 0 
$ 0 
$ 3 
$ 0 
$ 1 
 
 
 
Cumulative amount
 
 
 
 
52 
10 
15 
13 
10 
174 
14 
132 
18 
10 
226 
24 
147 
31 
10 
14 
 
 
 
Restructuring Reserve [Roll Forward]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restructuring reserve, balance at the beginning of the period
 
 
41 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
28 
13 1
13 1
Charges
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1
Cash payments
 
 
(36)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(25)
 
(11)1
Adjustments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(3)
10 
1
Changes in foreign currency exchange rates
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1
Restructuring reserve, balance at the end of the period
$ 19 
 
$ 19 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 6 
 
$ 13 1
Debt (Details)
In Millions, unless otherwise specified
6 Months Ended
Aug. 27,
6 Months Ended
Aug. 27, 2011
USD ($)
Feb. 26, 2011
USD ($)
Aug. 28, 2010
USD ($)
Aug. 27, 2011
JPMorgan revolving credit facility
USD ($)
Feb. 26, 2011
JPMorgan revolving credit facility
USD ($)
Aug. 28, 2010
JPMorgan revolving credit facility
USD ($)
Aug. 27, 2011
Europe receivables financing facility
USD ($)
Aug. 27, 2011
Europe receivables financing facility
GBP (£)
Feb. 26, 2011
Europe receivables financing facility
USD ($)
Aug. 28, 2010
Europe receivables financing facility
USD ($)
Aug. 27, 2011
Europe revolving credit facility
USD ($)
Aug. 27, 2011
Europe revolving credit facility
GBP (£)
Feb. 26, 2011
Europe revolving credit facility
USD ($)
Aug. 28, 2010
Europe revolving credit facility
USD ($)
Aug. 27, 2011
Canada revolving demand facility
USD ($)
Feb. 26, 2011
Canada revolving demand facility
USD ($)
Aug. 28, 2010
Canada revolving demand facility
USD ($)
Aug. 27, 2011
China revolving demand facilities
USD ($)
Feb. 26, 2011
China revolving demand facilities
USD ($)
Aug. 28, 2010
China revolving demand facilities
USD ($)
2011
ING Bank New RCF [Member]
USD ($)
2011
ING Bank New RCF [Member]
GBP (£)
Short-term Debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-term debt
$ 392 
$ 557 
$ 383 
$ 0 
$ 0 
$ 0 
$ 386 1
 
$ 455 1
$ 350 1
$ 0 
 
$ 98 
$ 0 
$ 0 
$ 0 
$ 0 
$ 6 
$ 4 
$ 33 
 
 
Line of credit facility, current borrowing capacity
 
 
 
 
 
 
445 
277 
 
 
 
125 
 
 
 
 
 
 
 
 
642 
400 
Line of credit facility, maximum borrowing capacity
 
 
 
 
 
 
 
£ 350 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIBOR margin, low end of the range (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.00% 
0.00% 
LIBOR margin, high end of the range (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.50% 
0.50% 
Commitment fee on unused available capacity (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
40.00% 
40.00% 
Initial commitment fee (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
0.75% 
0.75% 
Reporting period lag for consolidation of financial results (in months)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt (Details 2) (USD $)
In Millions, unless otherwise specified
Aug. 27, 2011
Feb. 26, 2011
Aug. 28, 2010
1 Months Ended
Mar. 31, 2011
2016 and 2021 Notes
6 Months Ended
Aug. 27, 2011
2016 and 2021 Notes
Aug. 27, 2011
2021 Notes
Mar. 31, 2011
2021 Notes
Feb. 26, 2011
2021 Notes
Aug. 28, 2010
2021 Notes
Aug. 27, 2011
2016 Notes
Mar. 31, 2011
2016 Notes
Feb. 26, 2011
2016 Notes
Aug. 28, 2010
2016 Notes
Aug. 27, 2011
2013 Notes
Feb. 26, 2011
2013 Notes
Aug. 28, 2010
2013 Notes
Aug. 27, 2011
Convertible debentures
Feb. 26, 2011
Convertible debentures
Aug. 28, 2010
Convertible debentures
Aug. 27, 2011
Financing Lease Obligations
Feb. 26, 2011
Financing Lease Obligations
Aug. 28, 2010
Financing Lease Obligations
Aug. 27, 2011
Capital Lease Obligations
Feb. 26, 2011
Capital Lease Obligations
Aug. 28, 2010
Capital Lease Obligations
Aug. 27, 2011
Other debt
Feb. 26, 2011
Other debt
Aug. 28, 2010
Other debt
Long-term Debt.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total long-term debt
$ 2,140 
$ 1,152 
$ 1,120 
 
 
$ 648 
 
$ 0 
$ 0 
$ 349 
 
$ 0 
$ 0 
$ 500 
$ 500 
$ 500 
$ 402 
$ 402 
$ 402 
$ 167 
$ 170 
$ 175 
$ 72 
$ 79 
$ 41 
$ 2 
$ 1 
$ 2 
Less: current portion
(444)1
(441)1
(32)1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total long-term debt, less current portion
1,696 
711 
1,088 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt, fair value
2,169 
1,210 
1,194 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument issued, principal amount
 
 
 
 
 
 
650 
 
 
 
350 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate (as a percent)
 
 
 
 
 
5.50% 
 
 
 
3.75% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Underwriting discounts
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net proceeds from the sale of the Notes
 
 
 
$ 990 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redemption price, as percentage of principal amount of debt instrument (as a percent)
 
 
 
 
100.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redemption price upon control triggering event, percentage of principal amount (as a percent)
 
 
 
 
101.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Instruments (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Aug. 27, 2011
3 Months Ended
Aug. 28, 2010
6 Months Ended
Aug. 27, 2011
6 Months Ended
Aug. 28, 2010
Feb. 26, 2011
Derivative Instruments and Hedging Activities Disclosure [Abstract]
 
 
 
 
 
Cash flow hedge contract term
 
 
P2Y 
 
 
Derivative Instruments Not Designated as Hedging Instruments, Contract Term 1
6 months 
 
 
 
 
Gross fair values for derivative instruments
 
 
 
 
 
Gross fair values for derivative assets
$ 7 
$ 16 
$ 7 
$ 16 
$ 3 
Gross fair values for derivative liabilities
(4)
(4)
(4)
Pre-tax gain (loss) recognized in OCI
 
10 1
 
18 1
 
Gain (loss) reclassified from accumulated OCI to earnings (effective portion)
 
2
 
2
 
Percent pre-tax gain (loss) recognized in OCI reclassified to noncontrolling interest (as a percent)
50.00% 
50.00% 
50.00% 
50.00% 
 
Derivatives designated as cash flow hedging instruments
268 
311 
268 
311 
264 
Derivatives not designated as hedging instruments
286 
255 
286 
255 
493 
Total notional amount of derivatives
554 
566 
554 
566 
757 
Foreign Exchange Forward [Member] |
Derivatives designated as hedging instruments
 
 
 
 
 
Gross fair values for derivative instruments
 
 
 
 
 
Gross fair values for derivative assets
13 
13 
Gross fair values for derivative liabilities
(4)
(4)
(2)
Foreign Exchange Forward [Member] |
No hedge designation
 
 
 
 
 
Gross fair values for derivative instruments
 
 
 
 
 
Gross fair values for derivative assets
Gross fair values for derivative liabilities
(2)
Foreign Exchange Forward [Member] |
Cash Flow Hedging
 
 
 
 
 
Gross fair values for derivative instruments
 
 
 
 
 
Pre-tax gain (loss) recognized in OCI
1
10 1
13 1
10 1
 
Gain (loss) reclassified from accumulated OCI to earnings (effective portion)
2
2
2
2
 
Foreign Exchange Swap Contracts [Member] |
Net Investment Hedging
 
 
 
 
 
Gross fair values for derivative instruments
 
 
 
 
 
Pre-tax gain (loss) recognized in OCI
 
1
 
1
 
Gain (loss) reclassified from accumulated OCI to earnings (effective portion)
 
2
 
2
 
Operating Expense [Member]
 
 
 
 
 
Gross fair values for derivative instruments
 
 
 
 
 
No hedge designation (foreign exchange forward contracts)
$ (3)
$ 7 
$ (9)
$ 12 
 
Earnings per Share (Details) (USD $)
In Millions, except Per Share data
3 Months Ended
Aug. 27, 2011
3 Months Ended
Aug. 28, 2010
6 Months Ended
Aug. 27, 2011
6 Months Ended
Aug. 28, 2010
Numerator
 
 
 
 
Net earnings attributable to Best Buy Co., Inc., basic (in dollars)
$ 177 
$ 254 
$ 313 
$ 409 
Adjustment for assumed dilution:
 
 
 
 
Interest on convertible debentures, net of tax (in dollars)
Net earnings attributable to Best Buy Co., Inc., diluted (in dollars)
$ 179 
$ 255 
$ 316 
$ 411 
Denominator
 
 
 
 
Weighted-average common shares outstanding (in shares)
371.9 
413.5 
379.8 
416.9 
Effect of potentially dilutive securities:
 
 
 
 
Shares from assumed conversion of convertible debentures (in shares)
8.8 
8.8 
8.8 
8.8 
Stock options and other (in shares)
0.7 
1.3 
0.9 
2.0 
Weighted-average common shares outstanding, assuming dilution (in shares)
381.4 
423.6 
389.5 
427.7 
Earnings per share attributable to Best Buy Co., Inc.
 
 
 
 
Basic (in dollars per share)
$ 0.48 
$ 0.61 
$ 0.82 
$ 0.98 
Diluted (in dollars per share)
$ 0.47 
$ 0.60 
$ 0.81 
$ 0.96 
Antidilutive securities excluded from computation of earnings per share
30.5 
23.2 
30.5 
19.0 
Comprehensive Income (Details) (USD $)
In Millions
Aug. 27, 2011
Feb. 26, 2011
Aug. 28, 2010
Components of accumulated other comprehensive income (loss):
 
 
 
Foreign currency translation
$ 159 
$ 102 
$ (58)
Unrealized gains (losses) on available-for-sale investments
51 
72 
29 
Unrealized gains (losses) on derivative instruments (cash flow hedges)
(1)
Total
$ 211 
$ 173 
$ (25)
Repurchase of Common Stock (Details) (USD $)
In Millions
1 Months Ended
Jun. 30, 2007
June 2007 share repurchase program
3 Months Ended
Aug. 27, 2011
June 2007 share repurchase program
3 Months Ended
Aug. 28, 2010
June 2007 share repurchase program
6 Months Ended
Aug. 27, 2011
June 2007 share repurchase program
6 Months Ended
Aug. 28, 2010
June 2007 share repurchase program
1 Months Ended
Jun. 30, 2011
June 2011 share repurchase program
3 Months Ended
Aug. 27, 2011
June 2011 share repurchase program
3 Months Ended
Aug. 28, 2010
June 2011 share repurchase program
6 Months Ended
Aug. 27, 2011
June 2011 share repurchase program
6 Months Ended
Aug. 28, 2010
June 2011 share repurchase program
Repurchases of common stock
 
 
 
 
 
 
 
 
 
 
Stock Repurchase Program, Authorized Amount
$ 5,500 
 
 
 
 
$ 5,000 
 
 
 
 
Amount remained available for future repurchases
 
 
 
 
 
 
 
 
4,748 
 
Common stock repurchased and retired (in shares)
 
3.6 
17.3 
20.1 
19.8 
 
9.1 
9.1 
Common stock repurchased and retired
 
$ 106 
$ 594 
$ 611 
$ 705 
 
$ 252 
$ 0 
$ 252 
$ 0 
Segments (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Aug. 27, 2011
segments
3 Months Ended
Aug. 28, 2010
6 Months Ended
Aug. 27, 2011
6 Months Ended
Aug. 28, 2010
Feb. 26, 2011
Business segment information
 
 
 
 
 
Total revenue
$ 11,347 
$ 11,339 
$ 22,287 
$ 22,126 
 
Operating income (loss)
287 
411 
569 
724 
 
Other income (expense)
 
 
 
 
 
Investment income and other
13 
18 
25 
 
Interest expense
(34)
(21)
(65)
(44)
 
Earnings before income tax expense and equity in loss of affiliates
259 
403 
522 
705 
 
Total Assets
18,829 
17,362 
18,829 
17,362 
17,849 
Number of Segments
 
 
 
 
Domestic
 
 
 
 
 
Business segment information
 
 
 
 
 
Total revenue
8,311 
8,436 
16,170 
16,359 
 
Operating income (loss)
303 
407 
537 
705 
 
Other income (expense)
 
 
 
 
 
Total Assets
10,360 
9,818 
10,360 
9,818 
9,610 
International
 
 
 
 
 
Business segment information
 
 
 
 
 
Total revenue
3,036 
2,903 
6,117 
5,767 
 
Operating income (loss)
(16)
32 
19 
 
Other income (expense)
 
 
 
 
 
Total Assets
$ 8,469 
$ 7,544 
$ 8,469 
$ 7,544 
$ 8,239 
Contingencies (Details) (Employment Discrimination Action, USD $)
In Millions, unless otherwise specified
1 Months Ended
Jun. 30, 2011
plaintiffs
Employment Discrimination Action
 
Contingencies
 
Number of plaintiffs in a lawsuit
Payment to be made to plaintiffs as per proposed settlement terms
$ 0.3 
Maximum amount of plaintiffs' attorneys' fees and costs to be reimbursed by the entity
$ 10 
Condensed Consolidating Financial Information (Details) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Aug. 27, 2011
Feb. 26, 2011
Aug. 28, 2010
Long-term Debt
$ 2,140 
$ 1,152 
$ 1,120 
Percentage of voting interest of subsidiary (as a percent)
100.00% 
 
 
Convertible Debt [Member]
 
 
 
Long-term Debt
$ 402 
$ 402 
$ 402 
Condensed Consolidating Financial Information (Details 2) (USD $)
In Millions
Aug. 27, 2011
Feb. 26, 2011
Aug. 28, 2010
Feb. 27, 2010
Current Assets
 
 
 
 
Cash and cash equivalents
$ 2,040 
$ 1,103 
$ 843 
$ 1,826 
Short-term investments
80 
22 
 
Receivables
1,945 
2,348 
1,720 
 
Merchandise inventories
6,403 
5,897 
6,346 
 
Other current assets
1,033 
1,103 
1,048 
 
Intercompany receivable
 
Intercompany note receivable
 
Total current assets
11,501 
10,473 
9,959 
 
Property and Equipment, Net
3,761 
3,823 
3,915 
 
Goodwill
2,486 
2,454 
2,365 
2,452 
Tradenames, net
134 
133 
147 
 
Customer Relationships, Net
179 
203 
227 
 
Equity and Other Investments
284 
328 
293 
 
Other Assets
484 
435 
456 
 
Investments in Subsidiaries
 
TOTAL ASSETS
18,829 
17,849 
17,362 
 
Current Liabilities
 
 
 
 
Accounts payable
5,830 
4,894 
5,573 
 
Unredeemed gift card liabilities
410 
474 
400 
 
Accrued compensation and related expenses
489 
570 
467 
 
Accrued liabilities
1,580 
1,471 
1,589 
 
Accrued income taxes
256 
27 
 
Short-term debt
392 
557 
383 
 
Current portion of long-term debt
444 1
441 1
32 1
 
Intercompany payable
 
Intercompany note payable
 
Total current liabilities
9,147 
8,663 
8,471 
 
Long-Term Liabilities
1,176 
1,183 
1,181 
 
Long-Term Debt
1,696 
711 
1,088 
 
Equity
 
 
 
 
Shareholders' equity
6,087 
6,602 
6,015 
 
Noncontrolling interests
723 
690 
607 
 
Total equity
6,810 
7,292 
6,622 
6,964 
TOTAL LIABILITIES AND EQUITY
18,829 
17,849 
17,362 
 
Best Buy Co., Inc.
 
 
 
 
Current Assets
 
 
 
 
Cash and cash equivalents
943 
282 
136 
1,170 
Short-term investments
80 
20 
 
Receivables
 
Merchandise inventories
 
Other current assets
157 
234 
242 
 
Intercompany receivable
 
Intercompany note receivable
895 
854 
1,566 
 
Total current assets
2,076 
1,393 
1,945 
 
Property and Equipment, Net
200 
200 
211 
 
Goodwill
 
Tradenames, net
 
Customer Relationships, Net
 
Equity and Other Investments
143 
162 
166 
 
Other Assets
226 
181 
92 
 
Investments in Subsidiaries
14,487 
14,030 
12,043 
 
TOTAL ASSETS
17,132 
15,966 
14,457 
 
Current Liabilities
 
 
 
 
Accounts payable
341 
361 
350 
 
Unredeemed gift card liabilities
 
Accrued compensation and related expenses
 
Accrued liabilities
51 
13 
18 
 
Accrued income taxes
256 
27 
 
Short-term debt
 
Current portion of long-term debt
403 
402 
 
Intercompany payable
8,132 
7,497 
6,869 
 
Intercompany note payable
106 
103 
19 
 
Total current liabilities
9,035 
8,632 
7,284 
 
Long-Term Liabilities
466 
160 
185 
 
Long-Term Debt
1,496 
500 
902 
 
Equity
 
 
 
 
Shareholders' equity
6,135 
6,674 
6,086 
 
Noncontrolling interests
 
Total equity
6,135 
6,674 
6,086 
 
TOTAL LIABILITIES AND EQUITY
17,132 
15,966 
14,457 
 
Guarantor Subsidiary
 
 
 
 
Current Assets
 
 
 
 
Cash and cash equivalents
52 
51 
29 
53 
Short-term investments
 
Receivables
522 
738 
500 
 
Merchandise inventories
4,329 
3,973 
4,387 
 
Other current assets
57 
117 
74 
 
Intercompany receivable
 
Intercompany note receivable
 
Total current assets
4,960 
4,879 
4,990 
 
Property and Equipment, Net
1,742 
1,803 
1,798 
 
Goodwill
 
Tradenames, net
 
Customer Relationships, Net
 
Equity and Other Investments
 
Other Assets
35 
36 
27 
 
Investments in Subsidiaries
241 
229 
296 
 
TOTAL ASSETS
6,984 
6,953 
7,117 
 
Current Liabilities
 
 
 
 
Accounts payable
62 
101 
34 
 
Unredeemed gift card liabilities
347 
404 
344 
 
Accrued compensation and related expenses
174 
200 
191 
 
Accrued liabilities
711 
625 
670 
 
Accrued income taxes
 
Short-term debt
 
Current portion of long-term debt
23 
23 
20 
 
Intercompany payable
1,711 
1,665 
1,735 
 
Intercompany note payable
501 
500 
500 
 
Total current liabilities
3,529 
3,518 
3,494 
 
Long-Term Liabilities
781 
863 
1,089 
 
Long-Term Debt
118 
128 
123 
 
Equity
 
 
 
 
Shareholders' equity
2,556 
2,444 
2,411 
 
Noncontrolling interests
 
Total equity
2,556 
2,444 
2,411 
 
TOTAL LIABILITIES AND EQUITY
6,984 
6,953 
7,117 
 
Non-Guarantor Subsidiaries
 
 
 
 
Current Assets
 
 
 
 
Cash and cash equivalents
1,045 
770 
678 
603 
Short-term investments
 
Receivables
1,422 
1,607 
1,219 
 
Merchandise inventories
2,125 
1,999 
2,032 
 
Other current assets
831 
752 
733 
 
Intercompany receivable
9,843 
9,300 
8,604 
 
Intercompany note receivable
106 
91 
 
Total current assets
15,372 
14,521 
13,275 
 
Property and Equipment, Net
1,819 
1,820 
1,906 
 
Goodwill
2,480 
2,448 
2,359 
 
Tradenames, net
134 
133 
147 
 
Customer Relationships, Net
179 
203 
227 
 
Equity and Other Investments
141 
166 
127 
 
Other Assets
223 
273 
375 
 
Investments in Subsidiaries
2,556 
2,444 
2,411 
 
TOTAL ASSETS
22,904 
22,008 
20,827 
 
Current Liabilities
 
 
 
 
Accounts payable
5,427 
4,432 
5,189 
 
Unredeemed gift card liabilities
63 
70 
56 
 
Accrued compensation and related expenses
315 
370 
275 
 
Accrued liabilities
829 
833 
901 
 
Accrued income taxes
 
Short-term debt
392 
557 
383 
 
Current portion of long-term debt
18 
16 
12 
 
Intercompany payable
138 
 
Intercompany note payable
394 
342 
1,054 
 
Total current liabilities
7,438 
6,758 
7,870 
 
Long-Term Liabilities
174 
447 
245 
 
Long-Term Debt
82 
83 
63 
 
Equity
 
 
 
 
Shareholders' equity
14,487 
14,030 
12,042 
 
Noncontrolling interests
723 
690 
607 
 
Total equity
15,210 
14,720 
12,649 
 
TOTAL LIABILITIES AND EQUITY
22,904 
22,008 
20,827 
 
Eliminations
 
 
 
 
Current Assets
 
 
 
 
Cash and cash equivalents
Short-term investments
 
Receivables
 
Merchandise inventories
(51)
(75)
(73)
 
Other current assets
(12)
(1)
 
Intercompany receivable
(9,843)
(9,300)
(8,604)
 
Intercompany note receivable
(1,001)
(945)
(1,573)
 
Total current assets
(10,907)
(10,320)
(10,251)
 
Property and Equipment, Net
 
Goodwill
 
Tradenames, net
 
Customer Relationships, Net
 
Equity and Other Investments
 
Other Assets
(55)
(38)
 
Investments in Subsidiaries
(17,284)
(16,703)
(14,750)
 
TOTAL ASSETS
(28,191)
(27,078)
(25,039)
 
Current Liabilities
 
 
 
 
Accounts payable
 
Unredeemed gift card liabilities
 
Accrued compensation and related expenses
 
Accrued liabilities
(11)
 
Accrued income taxes
 
Short-term debt
 
Current portion of long-term debt
 
Intercompany payable
(9,843)
(9,300)
(8,604)
 
Intercompany note payable
(1,001)
(945)
(1,573)
 
Total current liabilities
(10,855)
(10,245)
(10,177)
 
Long-Term Liabilities
(245)
(287)
(338)
 
Long-Term Debt
 
Equity
 
 
 
 
Shareholders' equity
(17,091)
(16,546)
(14,524)
 
Noncontrolling interests
 
Total equity
(17,091)
(16,546)
(14,524)
 
TOTAL LIABILITIES AND EQUITY
$ (28,191)
$ (27,078)
$ (25,039)
 
Condensed Consolidating Financial Information (Details 3) (USD $)
In Millions
3 Months Ended
Aug. 27, 2011
3 Months Ended
Aug. 28, 2010
6 Months Ended
Aug. 27, 2011
6 Months Ended
Aug. 28, 2010
Revenue
$ 11,347 
$ 11,339 
$ 22,287 
$ 22,126 
Cost of goods sold
8,475 
8,421 
16,647 
16,415 
Gross profit
2,872 
2,918 
5,640 
5,711 
Selling, general and administrative expenses
2,583 
2,507 
5,067 
4,987 
Restructuring charges
Operating income (loss)
287 
411 
569 
724 
Other income (expense)
 
 
 
 
Investment income and other
13 
18 
25 
Interest expense
(34)
(21)
(65)
(44)
Earnings (loss) before equity in earnings (loss) of subsidiaries
259 
403 
522 
705 
Equity in earnings (loss) of subsidiaries
Earnings (loss) before income tax expense and equity in loss of affiliates
259 
403 
522 
705 
Income tax expense (benefit)
99 
146 
198 
267 
Equity in loss of affiliates
(1)
Net earnings (loss) including noncontrolling interests
160 
257 
323 
438 
Net loss (earnings) attributable to noncontrolling interests
17 
(3)
(10)
(29)
Net earnings (loss) attributable to Best Buy Co., Inc.
177 
254 
313 
409 
Best Buy Co., Inc.
 
 
 
 
Revenue
Cost of goods sold
Gross profit
Selling, general and administrative expenses
37 
34 
73 
71 
Restructuring charges
 
 
Operating income (loss)
(33)
(30)
(65)
(63)
Other income (expense)
 
 
 
 
Investment income and other
11 
10 
19 
Interest expense
(23)
(11)
(46)
(23)
Earnings (loss) before equity in earnings (loss) of subsidiaries
(50)
(30)
(101)
(67)
Equity in earnings (loss) of subsidiaries
175 
248 
320 
382 
Earnings (loss) before income tax expense and equity in loss of affiliates
125 
218 
219 
315 
Income tax expense (benefit)
(2)
12 
(6)
Equity in loss of affiliates
 
 
Net earnings (loss) including noncontrolling interests
127 
206 
216 
321 
Net loss (earnings) attributable to noncontrolling interests
Net earnings (loss) attributable to Best Buy Co., Inc.
127 
206 
216 
321 
Guarantor Subsidiary
 
 
 
 
Revenue
7,591 
7,780 
14,799 
15,075 
Cost of goods sold
5,625 
5,739 
10,998 
11,119 
Gross profit
1,966 
2,041 
3,801 
3,956 
Selling, general and administrative expenses
1,890 
1,970 
3,655 
3,806 
Restructuring charges
 
(2)
 
Operating income (loss)
76 
71 
148 
150 
Other income (expense)
 
 
 
 
Investment income and other
Interest expense
(3)
(3)
(6)
(6)
Earnings (loss) before equity in earnings (loss) of subsidiaries
73 
68 
142 
144 
Equity in earnings (loss) of subsidiaries
27 
18 
23 
Earnings (loss) before income tax expense and equity in loss of affiliates
82 
95 
160 
167 
Income tax expense (benefit)
25 
(41)
49 
53 
Equity in loss of affiliates
 
 
Net earnings (loss) including noncontrolling interests
57 
136 
111 
114 
Net loss (earnings) attributable to noncontrolling interests
Net earnings (loss) attributable to Best Buy Co., Inc.
57 
136 
111 
114 
Non-Guarantor Subsidiaries
 
 
 
 
Revenue
9,810 
10,162 
20,169 
20,697 
Cost of goods sold
8,381 
8,674 
17,368 
17,756 
Gross profit
1,429 
1,488 
2,801 
2,941 
Selling, general and administrative expenses
1,233 
1,166 
2,406 
2,392 
Restructuring charges
 
 
Operating income (loss)
194 
322 
389 
549 
Other income (expense)
 
 
 
 
Investment income and other
14 
17 
25 
Interest expense
(13)
(19)
(22)
(34)
Earnings (loss) before equity in earnings (loss) of subsidiaries
186 
317 
384 
540 
Equity in earnings (loss) of subsidiaries
48 
109 
93 
91 
Earnings (loss) before income tax expense and equity in loss of affiliates
234 
426 
477 
631 
Income tax expense (benefit)
76 
175 
146 
220 
Equity in loss of affiliates
 
(1)
 
Net earnings (loss) including noncontrolling interests
158 
251 
330 
411 
Net loss (earnings) attributable to noncontrolling interests
17 
(3)
(10)
(29)
Net earnings (loss) attributable to Best Buy Co., Inc.
175 
248 
320 
382 
Eliminations
 
 
 
 
Revenue
(6,058)
(6,607)
(12,689)
(13,654)
Cost of goods sold
(5,531)
(5,992)
(11,719)
(12,460)
Gross profit
(527)
(615)
(970)
(1,194)
Selling, general and administrative expenses
(577)
(663)
(1,067)
(1,282)
Restructuring charges
 
 
Operating income (loss)
50 
48 
97 
88 
Other income (expense)
 
 
 
 
Investment income and other
(5)
(12)
(9)
(19)
Interest expense
12 
19 
Earnings (loss) before equity in earnings (loss) of subsidiaries
50 
48 
97 
88 
Equity in earnings (loss) of subsidiaries
(232)
(384)
(431)
(496)
Earnings (loss) before income tax expense and equity in loss of affiliates
(182)
(336)
(334)
(408)
Income tax expense (benefit)
Equity in loss of affiliates
 
 
Net earnings (loss) including noncontrolling interests
(182)
(336)
(334)
(408)
Net loss (earnings) attributable to noncontrolling interests
Net earnings (loss) attributable to Best Buy Co., Inc.
$ (182)
$ (336)
$ (334)
$ (408)
Condensed Consolidating Financial Information (Details 4) (USD $)
In Millions
6 Months Ended
Aug. 27, 2011
6 Months Ended
Aug. 28, 2010
Total cash provided by (used in) operating activities
$ 1,537 
$ 84 
Investing activities
 
 
Additions to property and equipment
(411)
(342)
Purchases of investments
(106)
(241)
Sales of investments
66 
379 
Proceeds from sale of business
21 
Change in restricted assets
(45)
12 
Settlement of net investment hedges
12 
Other, net
(1)
Total cash provided by (used in) investing activities
(496)
(160)
Financing activities
 
 
Repurchase of common stock
(846)
(667)
Borrowings of debt
1,996 
955 
Repayments of debt
(1,187)
(1,207)
Dividends paid
(115)
(118)
Issuance of common stock under employee stock purchase plan and for the exercise of stock options
49 
113 
Excess tax benefits from stock-based compensation
10 
Other, net
(2)
Change in intercompany receivable/payable
Total cash provided by (used in) financing activities
(105)
(905)
Effect of exchange rate changes on cash
(2)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
937 
(983)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
1,103 
1,826 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
2,040 
843 
Best Buy Co., Inc.
 
 
Total cash provided by (used in) operating activities
(151)
199 
Investing activities
 
 
Additions to property and equipment
(2)
Purchases of investments
(86)
(241)
Sales of investments
43 
378 
Proceeds from sale of business
Change in restricted assets
Settlement of net investment hedges
Other, net
Total cash provided by (used in) investing activities
(45)
137 
Financing activities
 
 
Repurchase of common stock
(846)
(667)
Borrowings of debt
997 
Repayments of debt
(1)
Dividends paid
(115)
(118)
Issuance of common stock under employee stock purchase plan and for the exercise of stock options
49 
113 
Excess tax benefits from stock-based compensation
10 
Other, net
(8)
Change in intercompany receivable/payable
780 
(707)
Total cash provided by (used in) financing activities
857 
(1,370)
Effect of exchange rate changes on cash
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
661 
(1,034)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
282 
1,170 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
943 
136 
Guarantor Subsidiary
 
 
Total cash provided by (used in) operating activities
200 
(472)
Investing activities
 
 
Additions to property and equipment
(191)
(129)
Purchases of investments
Sales of investments
Proceeds from sale of business
Change in restricted assets
Settlement of net investment hedges
Other, net
Total cash provided by (used in) investing activities
(191)
(129)
Financing activities
 
 
Repurchase of common stock
Borrowings of debt
Repayments of debt
(6)
(6)
Dividends paid
Issuance of common stock under employee stock purchase plan and for the exercise of stock options
Excess tax benefits from stock-based compensation
Other, net
Change in intercompany receivable/payable
(2)
583 
Total cash provided by (used in) financing activities
(8)
577 
Effect of exchange rate changes on cash
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(24)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
51 
53 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
52 
29 
Non-Guarantor Subsidiaries
 
 
Total cash provided by (used in) operating activities
1,488 
357 
Investing activities
 
 
Additions to property and equipment
(218)
(213)
Purchases of investments
(20)
Sales of investments
23 
Proceeds from sale of business
21 
Change in restricted assets
(45)
12 
Settlement of net investment hedges
12 
Other, net
(1)
Total cash provided by (used in) investing activities
(260)
(168)
Financing activities
 
 
Repurchase of common stock
Borrowings of debt
999 
955 
Repayments of debt
(1,181)
(1,200)
Dividends paid
Issuance of common stock under employee stock purchase plan and for the exercise of stock options
Excess tax benefits from stock-based compensation
Other, net
Change in intercompany receivable/payable
(778)
124 
Total cash provided by (used in) financing activities
(954)
(112)
Effect of exchange rate changes on cash
(2)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
275 
75 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
770 
603 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
1,045 
678 
Eliminations
 
 
Total cash provided by (used in) operating activities
Investing activities
 
 
Additions to property and equipment
Purchases of investments
Sales of investments
Proceeds from sale of business
Change in restricted assets
Settlement of net investment hedges
Other, net
Total cash provided by (used in) investing activities
Financing activities
 
 
Repurchase of common stock
Borrowings of debt
Repayments of debt
Dividends paid
Issuance of common stock under employee stock purchase plan and for the exercise of stock options
Excess tax benefits from stock-based compensation
Other, net
Change in intercompany receivable/payable
Total cash provided by (used in) financing activities
Effect of exchange rate changes on cash
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$ 0 
$ 0