Best Buy 2012 Annual Report Download - page 89

Download and view the complete annual report

Please find page 89 of the 2012 Best Buy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 117

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117

$ in millions, except per share amounts or as otherwise noted
89
The following table summarizes our restructuring accrual activity during fiscal 2012 related to termination benefits and facility
closure and other costs associated with our fiscal 2012 restructuring activities:
Termination
Benefits
Facility
Closure and
Other Costs Total
Balance at February 26, 2011 $ — $ — $ —
Charges 17 87 104
Cash payments — — —
Changes in foreign currency exchange rates — (2)(2)
Balance at March 3, 2012 $ 17 $ 85 $ 102
Fiscal 2011 Restructuring
In the fourth quarter of fiscal 2011, we implemented a series of actions to restructure operations in our Domestic and
International segments in order to improve performance and enhance customer service. The restructuring actions included plans
to improve supply chain and operational efficiencies in our Domestic segment's operations, primarily focused on modifications
to our distribution channels and exit from certain digital delivery services within our entertainment product category. The
actions also included plans to exit the Turkey market and restructure the Best Buy branded stores in China. As part of the
international restructuring, we also impaired certain IT 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. All restructuring charges directly related to Turkey and China, as well
as the Domestic charges directly related to our exit from certain digital delivery services within our entertainment product
category, are reported within discontinued operations in our Consolidated Statements of Earnings. Refer to Note 3,
Discontinued Operations.
We incurred $222 of charges related to the fiscal 2011 restructuring during the fourth quarter of fiscal 2011. Of the total
charges, $50 related to our Domestic segment, primarily for employee termination benefits, property and equipment
impairments, intangible asset impairments and inventory write-downs. The remaining $172 of the charges impacted our
International segment and related primarily to property and equipment impairments (including the IT assets), inventory write-
downs, facility closure and other costs and employee termination benefits.
In fiscal 2012, we incurred an additional $44 of charges related to the fiscal 2011 restructuring activities. Of the total charge,
$45 related to our Domestic segment, consisting primarily of property and equipment impairments (notably IT assets),
employee termination benefits, intangible asset impairments and other costs associated with the exit from certain digital
delivery services within our entertainment product category. Within our Domestic segment, we also incurred additional
inventory write-downs as we completed the exit from certain distribution facilities associated with our entertainment product
category at the end of fiscal 2012. We do not expect to incur further material restructuring charges related to our fiscal 2011
restructuring activities in fiscal 2013. However, subsequent to the end of fiscal 2012, we sold the previously impaired
distribution facility and equipment. Therefore, we will record a reduction in restructuring charges in the first quarter of fiscal
2013 for the amount of gain on sale, thus reducing the cumulative charges under the fiscal 2011 restructuring. The $(1) of net
charges in our International segment in fiscal 2012 was the result of employee termination benefits, offset by adjustments to
facility closure and other costs from the completion of our exit from the Turkey market and exiting of lease locations in China.