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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________________________________
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from March 4, 2012 to February 2, 2013
Commission file number 1-9595
________________________________
BEST BUY CO., INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-0907483
State or other jurisdiction of
incorporation or organization (I.R.S. Employer
Identification No.)
7601 Penn Avenue South
Richfield, Minnesota 55423
(Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code 612-291-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, par value $.10 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
____________________________________________________________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) Yes No
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of August 4, 2012, was approximately
$4.1 billion, computed by reference to the price of $17.64 per share, the price at which the common equity was last sold on August 4, 2012, as reported on
the New York Stock Exchange-Composite Index. (For purposes of this calculation all of the registrant's directors and executive officers are deemed
affiliates of the registrant.)
As of March 21, 2013, the registrant had 338,770,740 shares of its Common Stock issued and outstanding.

Table of contents

  • Page 1
    ... billion, computed by reference to the price of $17.64 per share, the price at which the common equity was last sold on August 4, 2012, as reported on the New York Stock Exchange-Composite Index. (For purposes of this calculation all of the registrant's directors and executive officers are deemed...

  • Page 2
    ... materially from the anticipated results expressed in such forward-looking statements. Readers should review Item 1A, Risk Factors, of this Transition Report on Form 10-K for a description of important factors that could cause our future results to differ materially from those contemplated by the...

  • Page 3
    ... With Accountants on Accounting and Financial Disclosure. Controls and Procedures. Other Information. Directors, Executive Officers and Corporate Governance. Executive Compensation. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Certain Relationships...

  • Page 4
    ..., we acquired Geek Squad Inc. to further our plans of providing technology support services to customers. Geek Squad service is available in all U.S. Best Buy branded stores. In fiscal 2007, we acquired California-based Pacific Sales Kitchen and Bath Centers, Inc. ("Pacific Sales"). Pacific Sales...

  • Page 5
    ... strategy in Canada by introducing the Best Buy brand, which allows us to retain Future Shop's brand equity and attract more customers by offering a choice of distinct store experiences. In fiscal 2007, we acquired a 75% interest in Jiangsu Five Star Appliance Co., Ltd. ("Five Star"), one of China...

  • Page 6
    ... in our U.S. Best Buy Mobile stores. Our Five Star stores primarily utilize vendor employees and full-time sales associates to sell our products. Corporate retail management generally controls advertising, merchandise purchasing and pricing, and inventory policies, although management for individual...

  • Page 7
    ... Future Shop's service offerings branded as Connect Pro. Best Buy Mobile offerings in Canada are similar to those offered in our U.S. Best Buy Mobile stores. In China, our Five Star stores have offerings in four revenue categories: Appliances, Consumer Electronics, Computing and Mobile Phones and...

  • Page 8
    ... primarily driven by Future Shop and Best Buy branded stores in Canada. Store openings were primarily driven by Best Buy Mobile Canada and Five Star. We offer Geek Squad support services in all Best Buy branded stores and within select The Carphone Warehouse and The Phone House stores in the U.K and...

  • Page 9
    ... quality customer experience offers us a key competitive advantage. We believe our dedicated and knowledgeable people, integrated online and store channels, broad product assortment, range of focused service and support offerings, distinct store formats and brand marketing strategies are important...

  • Page 10
    Table of Contents Available Information We are subject to the reporting requirements of the Exchange Act and its rules and regulations. The Exchange Act requires us to file reports, proxy statements and other information with the U.S. Securities and Exchange Commission ("SEC"). Copies of these ...

  • Page 11
    ...such as consumer confidence, employment levels, interest rates, tax rates, availability of consumer financing, housing market conditions, and costs for items such as fuel, energy and food, can adversely affect consumers' demand for the products and services that we offer. Our future results could be...

  • Page 12
    ... terms and/or impose credit limits. If our sources of liquidity do not satisfy our requirements, we may need to seek additional financing. The future availability of financing will depend on a variety of factors, such as economic and market conditions, the availability of credit and our credit...

  • Page 13
    ... adequate financing, including via trade payables with our vendors. Customers' inclination to shop with us or purchase gift cards or extended warranties may also be affected by the publicity associated with deterioration of our credit ratings. Failure to effectively manage existing and initiate new...

  • Page 14
    ... of pandemics and other factors relating to foreign trade are beyond our control. These and other issues affecting our vendors could materially adversely affect our revenue and gross profit. Our exclusive brands products are subject to several additional product, supply chain and legal risks that...

  • Page 15
    ... by third party banks that manage and directly extend credit to our customers. The cardholders can receive low- or no-interest promotional financing on qualifying purchases. Promotional financing credit card sales account for approximately 19% of our revenue in fiscal 2013 (11-month). We view these...

  • Page 16
    ...our management information systems. We rely heavily on our management information systems to manage all key aspects of our business, including demand forecasting, purchasing, supply chain management, point-of-sale processing, staff planning and deployment, website offerings, financial management and...

  • Page 17
    ...the demand for products and services we have traditionally offered. It is possible that these and similar changes could materially affect our revenues and profitability. Failure to meet the financial performance guidance or other forward-looking statements we have provided to the public could result...

  • Page 18
    Table of Contents Item 2. Properties. Stores, Distribution Centers and Corporate Facilities Domestic Segment The following table summarizes the location of our Domestic segment stores at the end of fiscal 2013 (11-month): U.S. Best Buy Stores Alabama Alaska Arizona Arkansas California Colorado ...

  • Page 19
    ...704 U.S. Best Buy Mobile StandAlone Stores - - 409 597 Pacific Sales Stores - - 34 876 Magnolia Audio Video Stores - - 4 55 The following table summarizes the location, ownership status and total square footage of space utilized for distribution centers, service centers and corporate offices of our...

  • Page 20
    ...The Phone House Stores Canada Best Buy Mobile Stand-Alone Stores China Mexico Best Buy Express Stores Future Shop Stores Best Buy Stores Five Star Stores Best Buy Stores The following table summarizes the ownership status and total square footage of our International segment store locations at...

  • Page 21
    ... table summarizes the location, ownership status and total square footage of space utilized for distribution centers and corporate offices of our International segment at the end of fiscal 2013 (11-month): Square Footage (in thousands) Distribution Centers Europe Canada Five Star Throughout six...

  • Page 22
    ...plaintiff's buyback plan that were disclosed to us during business relationship discussions and also breached both an agreement for a limited marketing test of plaintiff's buyback plan and a non-disclosure agreement related to the business discussions. In November 2012, a jury found we were unjustly...

  • Page 23
    ...the long-term strategic planning activities of the company and oversaw multiple key functions, including global finance, treasury, investor relations, information technology, real estate, store development, corporate operations and human resources. Ms. McCollam also held various executive leadership...

  • Page 24
    ... she worked in finance and accounting positions with The Pillsbury Company and Pitney Bowes, Inc. Ms. Grafton is a member of Financial Executives International's Committee on Corporate Reporting and the Finance Leaders Council for the Retail Industry Leaders Association. She also serves on the board...

  • Page 25
    ...authorized by our Board in June 2011 was available for future share repurchases. We consider several factors in determining whether to make share repurchases including, among other things, our cash needs, the availability of funding, our future business plans and the market price of our stock. If we...

  • Page 26
    ... stock that may be issued under our equity compensation plans as of February 2, 2013. Securities to Be Issued Upon Exercise of Outstanding Options and Rights (a) Weighted Average Exercise Price per Share of Outstanding Options and Rights(1) (b) (3) Plan Category Securities Available for Future...

  • Page 27
    ... Transition Report on Form 10-K. Five-Year Financial Highlights $ in millions, except per share amounts 11-Month Fiscal Year 2013 (1)(2) 12-Month 2012 (1)(3) 2011 (4) 2010(5) 2009(6)(7) Consolidated Statements of Earnings Data Revenue $ 45,085 Operating income (loss) (125) Net earnings (loss...

  • Page 28
    ... net of tax goodwill impairment, and excludes $1.3 billion in noncontrolling interest related to the agreement to buy out Carphone Warehouse Group plc's interest in the profit share-based management fee paid to Best Buy Europe pursuant to the 2007 Best Buy Mobile agreement (which represents earnings...

  • Page 29
    ... mobile phones, tablets and computers, large and small appliances, televisions, digital imaging, entertainment products and related accessories. We also offer consumers technology services - including support, repair, troubleshooting and installation - under the Geek Squad brand. Best Buy operates...

  • Page 30
    ... seamless access to Reward Zone points management and redemption capabilities; (5) creating an easy process for customers to add additional products and services, such as extended warranties and Geek Squad support; and (6) increasing our product assortment and enhancing product information. We...

  • Page 31
    ..., such as mobile phones, appliances and accessories. To support these expanded categories, we plan to: (1) deepen product assortments; (2) increase store employee training; and (3) reprioritize marketing investments. Drive down cost of goods sold through supply chain efficiencies. In conjunction...

  • Page 32
    ... The results of our large-format Best Buy branded stores in China, Turkey, and the United Kingdom ("U.K."), The Phone House retail stores in Belgium, Napster and Speakeasy are presented as discontinued operations in our Consolidated Statements of Earnings. Unless otherwise stated, financial results...

  • Page 33
    ... increased field incentive compensation and executive retention and transition costs. The components of the 2.1% revenue decrease in fiscal 2013 (11-month) were as follows: Comparable store sales impact Net store changes Non-comparable store sales channels(1) Impact of foreign currency exchange...

  • Page 34
    ... notebook computers, gaming and music. These factors have impacted many of the geographic markets in which we operate. However, we have seen growth in several key product categories. For example, increased consumer demand for tablets, e-Readers, and associated accessories and services led to revenue...

  • Page 35
    ...: Fiscal 2011 Total Stores at End of Fiscal Year Stores Opened Fiscal 2012 Stores Closed Total Stores at End of Fiscal Year Stores Opened Fiscal 2013 (11-Month) Stores Closed Total Stores at End of Fiscal Year Best Buy Best Buy Mobile stand-alone Pacific Sales Magnolia Audio Video Total Domestic...

  • Page 36
    ... (11-month) and 2012 (11-month recast): Revenue Mix Summary 11 Months Ended February 2, 2013 January 28, 2012 Comparable Store Sales Summary 11 Months Ended February 2, 2013 January 28, 2012 Consumer Electronics Computing and Mobile Phones Entertainment Appliances Services Other Total 33% 44% 10...

  • Page 37
    ...incentive compensation and executive retention and transition costs, costs related to the addition of 104 net new Best Buy Mobile stand-alone stores and the addition of the mindSHIFT business, and increased investments in advertising and other costs to drive online sales. This increase was partially...

  • Page 38
    ... Best Buy branded stores contributed the majority of the total change in revenue associated with net new stores. The addition of small-format Best Buy Mobile stand-alone stores contributed a smaller portion of the revenue increase due to the following factors: (1) their smaller square footage...

  • Page 39
    ... and gaming; an increased sales mix of promotional items; a shift from one-time computer repair services to ongoing support contracts; and an increased sales mix of lower-margin mobile computing products; partially offset by increased sales of higher-margin service products for mobile phones. Our...

  • Page 40
    ... Stores Opened Fiscal 2012 Stores Closed Total Stores at End of Fiscal Year Fiscal 2013 (11-Month)(1) Stores Opened Stores Closed Total Stores at End of Fiscal Year Best Buy Europe(2) Canada Future Shop Best Buy Best Buy Mobile stand-alone China Five Star Mexico Best Buy Express Total International...

  • Page 41
    ...(11-month) and 2012 (11-month recast): Revenue Mix Summary 11 Months Ended February 2, 2013 January 28, 2012 Comparable Store Sales Summary 11 Months Ended February 2, 2013 January 28, 2012 Consumer Electronics Computing and Mobile Phones Entertainment Appliances Services Other Total 18% 61% 4% 10...

  • Page 42
    ... within key product categories in Canada, and the decrease in restructuring charges in fiscal 2012 compared to fiscal 2011. The components of the International segment's 3.3% revenue increase in fiscal 2012 were as follows: Impact of foreign currency exchange rate fluctuations Net new stores Extra...

  • Page 43
    ... changes by revenue category in fiscal 2012 and 2011: Revenue Mix Summary 12 Months Ended March 3, 2012 February 26, 2011 Comparable Store Sales Summary 12 Months Ended March 3, 2012 February 26, 2011 Consumer Electronics Computing and Mobile Phones Entertainment Appliances Services Other Total 20...

  • Page 44
    ... income in Canada and lower ongoing support costs due to previous restructuring activities. The goodwill write-off more than offset the increase in revenue and improvement in the gross profit rate in fiscal 2012. For further information on the Mobile buy-out, see Additional Consolidated Results...

  • Page 45
    ... of key technology products limited our ability to increase our gross profit rate. Liquidity and Capital Resources Summary We closely manage our liquidity and capital resources. Key variables we use to manage our liquidity requirements include the level of investment to support our growth strategies...

  • Page 46
    ... inventory reduction plan and other working capital and cash flow management initiatives implemented towards the end of fiscal 2013 (11-month). The increase in cash provided by operating activities in fiscal 2012 compared to fiscal 2011 was primarily related to the normalization of accounts payable...

  • Page 47
    ... retail and consumer electronics industries, our financial position, and changes in our business strategy. If further changes in our credit ratings were to occur, they could impact, among other things, our future borrowing costs, access to capital markets, vendor financing terms and future new-store...

  • Page 48
    ... systems and capabilities. The following table presents our capital expenditures for each of the past three fiscal years and fiscal 2012 (11-month recast) ($ in millions): 11-Month 2013 2012 (recast) 2012 12-Month 2011 New stores Store-related projects(1) Information technology Other Total capital...

  • Page 49
    ... under financing lease obligations. Share Repurchases and Dividends From time to time, we repurchase our common stock in the open market pursuant to programs approved by our Board. We may repurchase our common stock for a variety of reasons, such as acquiring shares to offset dilution related to...

  • Page 50
    ...information about our ability to service our long-term debt and other fixed obligations and to fund our future growth. We also believe our adjusted debt to EBITDAR ratio is relevant because it enables investors to compare our indebtedness to that of retailers who own, rather than lease, their stores...

  • Page 51
    ... such, net earnings and related cash flows attributable to noncontrolling interests are available to service our debt and operating lease commitments. Depreciation and amortization expense includes impairments of fixed assets, investments and intangible assets (including impairments associated with...

  • Page 52
    ..., would have affected net earnings by approximately $7 million in fiscal 2013 (11-month). Vendor Allowances We receive funds from vendors for various programs, primarily as reimbursements for costs such as markdowns, margin protection, advertising and sales incentives. Vendor allowances provided as...

  • Page 53
    .... For long-lived assets deployed at store locations, we review for impairment at the individual store level. These reviews involve comparing the carrying value of all land, buildings, leasehold improvements, fixtures and equipment located at each store to the net cash flow projections for each store...

  • Page 54
    ... Recognition The following accounting estimates relating to revenue recognition contain uncertainty because they require management to make assumptions and to apply judgment regarding the effects of future events. We sell gift cards to customers in our retail stores, through our websites and through...

  • Page 55
    ... in our deferred revenue balance related to service contracts at February 2, 2013, would have affected net earnings by approximately $13 million in fiscal 2013 (11-month). Costs Associated with Vacant Leased Property From time-to-time we vacate stores and other locations prior to the expiration...

  • Page 56
    ... market risk arising from changes in foreign currency exchange rates related to our International segment operations. On a limited basis, we use forward foreign exchange contracts to hedge the impact of fluctuations in foreign currency exchange rates. Our Canada, Europe and China businesses enter...

  • Page 57
    .... A hypothetical 100-basis-point change in the interest rates on the outstanding balance of our credit facilities at February 2, 2013, and March 3, 2012, would change our annual pre-tax earnings by $6 million and $5 million, respectively. There is no interest rate risk associated with our 2016 Notes...

  • Page 58
    ... adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is designed under the supervision of our principal executive officer and principal financial officer, and effected by our Board, management and...

  • Page 59
    ..., Minnesota We have audited the accompanying consolidated balance sheets of Best Buy Co., Inc. and subsidiaries (the "Company") as of February 2, 2013 and March 3, 2012 and the related consolidated statements of earnings, comprehensive income, cash flows, and changes in shareholders' equity for...

  • Page 60
    ... OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of Best Buy Co., Inc.: Richfield, Minnesota We have audited the internal control over financial reporting of Best Buy Co., Inc. and subsidiaries (the "Company"), as of February 2, 2013, based on criteria...

  • Page 61
    ...of Contents Consolidated Balance Sheets $ in millions, except per share and share amounts February 2, 2013 March 3, 2012 Assets Current Assets Cash and cash equivalents Receivables Merchandise inventories Other current assets Total current assets Property and Equipment Land and buildings Leasehold...

  • Page 62
    ... Consolidated Statements of Earnings $ in millions, except per share amounts 11 Months Ended Fiscal Years Ended February 2, 2013 January 28, 2012 (Unaudited recast) 12 Months Ended March 3, 2012 February 26, 2011 Revenue Cost of goods sold Restructuring charges - cost of goods sold Gross profit...

  • Page 63
    ... February 2, 2013 12 Months Ended March 3, 2012 February 26, 2011 Net earnings (loss) including noncontrolling interests Foreign currency translation adjustments Unrealized gain (loss) on available-for-sale investments Unrealized loss on cash flow hedging instruments Reclassification adjustment...

  • Page 64
    ... net of cash acquired Proceeds from sale of business, net of cash transferred Change in restricted assets Settlement of net investment hedges Other, net Total cash used in investing activities Financing Activities Repurchase of common stock Issuance of common stock under employee stock purchase plan...

  • Page 65
    ... Common Shares Common Stock Retained Earnings Total Equity Balances at February 27, 2010 Net earnings Other comprehensive income (loss), net of tax: Foreign currency translation adjustments Unrealized gains on available-for-sale investments Cash flow hedging instruments - unrealized loss Stock...

  • Page 66
    ...brand names Best Buy, Best Buy Mobile, Geek Squad, Magnolia Audio Video and Pacific Sales. The International segment is comprised of: (i) all Canada store, call center and online operations, operating under the brand names Best Buy, Best Buy Mobile, Cell Shop, Connect Pro, Future Shop and Geek Squad...

  • Page 67
    ... within Accounts payable in our Consolidated Balance Sheets. Receivables Receivables consist principally of amounts due from mobile phone network operators for commissions earned; banks for customer credit card, certain debit card and electronic benefits transfer (EBT) transactions; and vendors for...

  • Page 68
    ... net cash flow projections for each store. In addition, we conduct separate impairment reviews at other levels as appropriate, for example to evaluate potential impairment of assets shared by several areas of operations, such as information technology systems. The present value of costs associated...

  • Page 69
    ... financial information is available and is regularly reviewed by segment management. No components were aggregated in arriving at our reporting units. Our reporting units with goodwill balances at the beginning of fiscal 2013 (11-month) were Best Buy Domestic, Best Buy Canada, and Five Star. As...

  • Page 70
    ... tradenames related to Future Shop, Five Star, The Carphone Warehouse and The Phone House included within our International segment. We have definite-lived intangible assets related to customer relationships acquired as part of our acquisition of mindSHIFT within our Domestic segment, and Best Buy...

  • Page 71
    ... in fiscal 2013 (11month), 2012 and 2011 ($ in millions): Goodwill Domestic International Total Indefinite-Lived Tradenames Domestic International Total Balances at February 27, 2010 Acquisitions Impairments(1) Sale of business(2) Changes in foreign currency exchange rates Balances at February...

  • Page 72
    ... Amortization Customer relationships $ 475 $ (272) $ 453 $ (224) Total amortization expense was $38 million, $48 million, and $82 million in fiscal 2013 (11-month), 2012, and 2011, respectively. At February 2, 2013, future amortization expense for identifiable intangible assets for...

  • Page 73
    ... Long-term liabilities on our Consolidated Balance Sheets and in Income tax expense in our Consolidated Statements of Earnings. Accrued Liabilities The major components of accrued liabilities at February 2, 2013, and March 3, 2012, were deferred revenue, state and local tax liabilities, rent-related...

  • Page 74
    ... and the related product costs for shipments that are in-transit to the customer, and recognize revenue at the time the customer receives the product. Online customers typically receive goods within a few days of shipment. Revenue from merchandise sales and services is reported net of sales returns...

  • Page 75
    ... Best Buy brand. Under the agreements, the banks manage and directly extend credit to our customers. Cardholders who choose a private-label credit card can receive low- or zero-interest promotional financing on qualifying purchases. The banks are the sole owner of the accounts receivable generated...

  • Page 76
    ...to promote a vendor's products; and - Cash discounts on payments to merchandise vendors; Cost of services provided including: - Payroll and benefits costs for services employees; and - Cost of replacement parts and related freight expenses; Physical inventory losses; Markdowns; Customer shipping and...

  • Page 77
    Table of Contents Pre-Opening Costs Non-capital expenditures associated with opening new stores are expensed as incurred. Stock-Based Compensation We apply the fair value recognition provisions of accounting guidance as they relate to our stock-based compensation, which require us to recognize ...

  • Page 78
    ... to the profit share agreement. In the Consolidated Statements of Cash Flows, the payment to Carphone Warehouse is included within Payment to noncontrolling interest, as part of cash flows from Financing Activities. Goodwill Impairment - Best Buy Europe The Best Buy Europe reporting unit comprises...

  • Page 79
    ... Best Buy branded stores in the U.K. We completed the exit activities associated with these stores during the fourth quarter of fiscal 2012. Belgium - During the fourth quarter of fiscal 2012, Best Buy Europe sold its retail business in Belgium, consisting of 82 smallformat The Phone House stores...

  • Page 80
    ... 2013 (11-month), 2012 and 2011 were as follows ($ in millions): 11-Month 2013 2012 12-Month 2011 Revenue Restructuring charges(1) Gain (loss) from discontinued operations before income tax benefit Income tax benefit (expense) Gain on sale of discontinued operations Income tax benefit on sale Net...

  • Page 81
    ...non-current assets within Equity and Other Investments in our Consolidated Balance Sheets, and are reported at fair value based on quoted market prices. Our investments in marketable equity securities were $27 million and $3 million at February 2, 2013, and March 3, 2012, respectively. We review all...

  • Page 82
    ... Inputs (Level 2) Significant Unobservable Inputs (Level 3) Fair Value at February 2, 2013 Assets Cash and cash equivalents Money market funds Other current assets Foreign currency derivative instruments Equity and other investments Auction rate securities Marketable equity securities $ 520...

  • Page 83
    ... (Level 3) Fair Value at March 3, 2012 Assets Cash and cash equivalents Money market funds Other current assets Money market funds (restricted assets) U.S. Treasury bills (restricted assets) Foreign currency derivative instruments Equity and other investments Auction rate securities Marketable...

  • Page 84
    ... Accounting Policies, as well as Note 3, Profit Share Buy-Out, for further information associated with the goodwill impairments. Fixed asset fair values were derived using a DCF model to estimate the present value of net cash flows that the asset or asset group was expected to generate. The key...

  • Page 85
    ... and other costs, property and equipment impairments and employee termination benefits. All restructuring charges related to this plan are from continuing operations. Inventory write-downs are presented in Restructuring charges - cost of goods sold in our Consolidated Statements of Earnings, and the...

  • Page 86
    ... 2013 (11-month) related to termination benefits and facility closure and other costs associated with Phase One of the Renew Blue plan ($ in millions): Termination Benefits Facility Closure and Other Costs Total Balance at March 3, 2012 Charges Cash payments Balance at February 2, 2013 Fiscal 2013...

  • Page 87
    ... our strategy for certain mobile broadband offerings, and in our International segment we closed our large-format Best Buy branded stores in the U.K. to refocus our Best Buy Europe strategy on our small-format stores. In addition, we impaired certain information technology ("IT") assets supporting...

  • Page 88
    ... 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...

  • Page 89
    ... 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...

  • Page 90
    ... associated with our fiscal 2011 restructuring activities ($ in millions): Termination Benefits Facility Closure and Other Costs(1) Total Balance at February 26, 2011 Charges Cash payments Adjustments Balance at March 3, 2012 Charges Cash payments Adjustments Changes in foreign currency exchange...

  • Page 91
    ... in July 2012. The RCF also replaced Best Buy Europe's previous £125 million revolving credit facility (the "Old RCF") with one of Best Buy Co., Inc.'s subsidiaries and Carphone Warehouse as lenders. The Old RCF was originally scheduled to expire in March 2013. Canada Revolving Demand Facility...

  • Page 92
    ... the related credit agreements, are made available at the sole discretion of the respective lenders and are payable on demand. Certain of these facilities are secured by a guarantee of Best Buy Co., Inc. Long-Term Debt Long-term debt consisted of the following ($ in millions): February 2, 2013 March...

  • Page 93
    ... 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 Consolidated Balance Sheets at fair value and...

  • Page 94
    ...our employees, officers, advisors, consultants and directors. Awards issued under the Omnibus Plan vest as determined by the Compensation and Human Resources Committee of our Board of Directors at the time of grant. At February 2, 2013, a total of 19.4 million shares were available for future grants...

  • Page 95
    ...-based compensation expense was as follows in fiscal 2013 (11-month), 2012 and 2011 ($ in millions): 11-Month 2013 2012 12-Month 2011 Stock options Share awards Market-based Performance-based Time-based Employee stock purchase plans Total Stock Options Stock option activity was as follows in fiscal...

  • Page 96
    ... market price of our stock on the date of grant. A summary of the status of our nonvested market-based share awards at February 2, 2013, and changes during fiscal 2013 (11-month), is as follows: WeightedAverage Fair Value per Share Market-Based Share Awards Shares Outstanding at March 3, 2012...

  • Page 97
    ... from exchange-traded options on our stock. Based on semi-annual purchase period. In fiscal 2013 (11-month), 2012 and 2011, 1.0 million, 1.4 million and 1.3 million shares, respectively, were purchased through our employee stock purchase plans. The weighted-average fair values of shares purchased...

  • Page 98
    ...) and 2012 does not include potentially dilutive securities because their inclusion would be anti-dilutive (i.e., reduce the net loss per share). Repurchase of Common Stock In June 2011, our Board of Directors authorized a $5.0 billion share repurchase program. The June 2011 program replaced our...

  • Page 99
    ...11-month), 2012 and 2011 under the June 2011 program and the June 2007 program ($ and shares in millions): 11-Month 2013 2012 12-Month 2011 June 2011 Program Total number of shares repurchased Total cost of shares repurchased June 2007 Program Total number of shares repurchased Total cost of shares...

  • Page 100
    ... including a fund comprised of our company stock. Participants can contribute up to 50% of their eligible compensation annually as defined by the plan document, subject to Internal Revenue Service ("IRS") limitations. We match 100% of the first 3% of participating employees' contributions and 50% of...

  • Page 101
    ... 2, 2013 March 3, 2012 Accrued property expenses Other accrued expenses Deferred revenue Compensation and benefits Stock-based compensation Loss and credit carryforwards Other Total deferred tax assets Valuation allowance Total deferred tax assets after valuation allowance Property and equipment...

  • Page 102
    ...in our Consolidated Balance Sheets were as follows ($ in millions): February 2, 2013 March 3, 2012 Other current assets Other assets Other current liabilities Other long-term liabilities Net deferred tax assets $ 228 $ 66 (5) (10) 279 $ 226 53 - (16) 263 $ At February 2, 2013, we had total net...

  • Page 103
    ... information in fiscal 2013 (11-month), 2012 and 2011 ($ in millions): 11-Month 2013 2012 12-Month 2011 Revenue Domestic International Total revenue Percentage of revenue, by revenue category Domestic: Consumer Electronics Computing and Mobile Phones Entertainment Appliances Services Other Total...

  • Page 104
    ... our geographic information in fiscal 2013 (11-month), 2012 and 2011 ($ in millions): 11-Month 2013 2012 12-Month 2011 Net sales to customers United States Europe Canada China Other Total revenue Long-lived assets United States Europe Canada China Other Total long-lived assets $ $ $ 33,343...

  • Page 105
    ... 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...

  • Page 106
    ... 2013 (11-month), 2012 and 2011 ($ in millions): 11-Month 2013 2012 12-Month 2011 Payment made to Carphone Warehouse for its share of the profit share agreement buy-out (see Note 3, Profit Share Buy-Out) $ Revenue earned (primarily commission revenue and fees for information technology services...

  • Page 107
    ... 4th 12-Month 2012 Revenue Comparable store sales % change(2) Gross profit Operating income(5) Net earnings (loss) from continuing operations Loss from discontinued operations, net of tax Net earnings (loss) including noncontrolling interests Net earnings (loss) attributable to Best Buy Co., Inc...

  • Page 108
    ... 2, 2013, is a $822 million goodwill impairment charge related to our Canada, Five Star, and U.S. reporting units. The sum of our quarterly diluted earnings per share does not equal our annual diluted earnings per share due to the impact of the timing of the repurchases of common stock and stock...

  • Page 109
    ...the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (principal executive...

  • Page 110
    ...that applies to our directors and all of our employees, including our principal executive officer, our principal financial officer and our principal accounting officer. Our Code of Business Ethics is available on our website, www.investors.bestbuy.com - select the "Corporate Governance" link. A copy...

  • Page 111
    ... Report on Form 10-K. Security Ownership of Certain Beneficial Owners and Management The information provided under the caption "Security Ownership of Certain Beneficial Owners and Management" in the Proxy Statement is incorporated herein by reference. Item 13. Certain Relationships and Related...

  • Page 112
    ... Carphone Warehouse Group PLC, CPW Retail Holdings Limited; Best Buy Co., Inc. and Best Buy Distributions Limited Agreement and Plan of Merger, dated November 2, 2011, by and among Best Buy Co., Inc., Mars Acquisition Corporation, mindSHIFT Technologies, Inc., and Shareholder Representative Services...

  • Page 113
    ...2000 Restricted Stock Award Plan, as amended Best Buy Co., Inc. 2004 Omnibus Stock and Incentive Plan, as amended Best Buy Co., Inc. Short Term Incentive Plan, as approved by the Board of Directors 2010 Long-Term Incentive Program Award Agreement, as approved by the Board of Directors Best Buy Fifth...

  • Page 114
    ...financial information from our Transition Report on Form 10-K for fiscal 2013, filed with the SEC on March 27, 2013, formatted in Extensible Business Reporting Language (XBRL): (i) the consolidated balance sheets at February 2, 2013 and March 3, 2012, (ii) the consolidated statements of earnings for...

  • Page 115
    ... by the undersigned, thereunto duly authorized. Best Buy Co., Inc. (Registrant) By: /s/ Hubert Joly Hubert Joly President and Chief Executive Officer March 27, 2013 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on...

  • Page 116
    ... Period Charged to Expenses or Other Accounts Balance at End of Period Other (1) Year ended February 2, 2013 Allowance for doubtful accounts Year ended March 3, 2012 Allowance for doubtful accounts Year ended February 26, 2011 Allowance for doubtful accounts (1) $ $ $ 72 107 101 $ $ $ 34 8 46...