Best Buy 2014 Annual Report Download

Download and view the complete annual report

Please find the complete 2014 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 112

  • 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

FISCAL 2014
ANNUAL REPORT
RENEW BLUE

Table of contents

  • Page 1
    FISCAL 2014 ANNUAL REPORT RENEW BLUE

  • Page 2
    ...in pursuit of our long- term objectives. Let me elaborate on these two points. Back in November 2012, we articulated our diagnosis of our situation, including our company's unique assets and the two problems we had to solve, i.e., declining comparable store sales and shrinking profit margins. At the...

  • Page 3
    ...for technology products and services. Behind this strategy lies a clear mission for Best Buy: enrich and empower people's lives through technology. The way we do this is by helping customers discover, choose, purchase, pay for, finance, activate, use, enjoy and eventually recycle technology products...

  • Page 4
    ... Geek Squad will complement the products we offer and cement its proud history as the first, largest and best consumer electronics services organization in the nation. We will deliver on another key opportunity by further leveraging our supply chain to provide our customers with increased inventory...

  • Page 5
    ... our new field and store operating model; strengthening our talent in the critical areas of ecommerce and targeted, personalized marketing; enhancing our talent and performance management processes; and redefining key business processes to better support a seamless, multi-channel customer experience...

  • Page 6
    ... Richfield, Minnesota (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 Common Stock, par value $.10 per share Name of each exchange on which registered New York...

  • Page 7
    ... filed pursuant to Regulation 14A within 120 days after the registrant's fiscal year-end of February 1, 2014), for the regular meeting of shareholders to be held on June 10, 2014 ("Proxy Statement"), are incorporated by reference into Part III. CAUTIONARY STATEMENT PURSUANT TO THE PRIVATE SECURITIES...

  • Page 8
    ... 13. Item 14. PART IV Item 15. Business. Risk Factors. FORM 10-K 4 4 8 15 16 18 18 21 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Selected Financial Data. Management's Discussion and Analysis of Financial Condition and Results of...

  • Page 9
    ..., entertainment products, digital imaging and related accessories. We also offer technology services - including technical support, repair and installation - under the Geek Squad brand. We operate e-commerce operations, retail stores and call centers and conduct operations under a variety of names...

  • Page 10
    ...management performs support capabilities. Similar to our U.S. Best Buy stores, all Canada stores use a standardized operating system that includes procedures for inventory management, transaction processing, customer relations, store administration, staff training and merchandise display. The retail...

  • Page 11
    ...opened 13 new stores and closed 27 stores in fiscal 2014. Store openings were primarily driven by Best Buy Mobile stores in Canada and Best Buy stores in Mexico. Store closures were primarily driven by Five Star stores in China. In fiscal 2015, we expect to continue to review our portfolio of stores...

  • Page 12
    ... centers more sustainable and to increase efficiency within our supply chain. In calendar 2010, we set a goal of reducing our absolute carbon emissions in North America by 20% by the year 2020 (over a 2009 baseline). During fiscal 2014, our retail stores, distribution centers and corporate offices...

  • Page 13
    ...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"). We make available, free of charge on our website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports...

  • Page 14
    ... strategies. Our current strategy includes transformational change to many areas of our business, including our online and in-store customer experience, expanding our distribution system by shipping to customers from our stores, employee training and engagement, partnership with our vendors, retail...

  • Page 15
    ... addition, downgrades may impact our ability to obtain 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. 10

  • Page 16
    ...Likewise, our failure to integrate and manage acquired companies successfully may lead to impairment of the associated goodwill and intangible asset balances. Failure to protect the integrity, security and confidentiality of our customers' data, including payment card information, could expose us to...

  • Page 17
    ... or international jurisdictions; The impact of new or changing statutes and regulations including, but not limited to, financial reform, environmental requirements, National Labor Relations Board rule changes, health care reform, data privacy and cyber-security rules, corporate governance matters...

  • Page 18
    ... financing on qualifying purchases. Promotional financing credit card sales account for approximately 19% of our revenue in fiscal 2014. We view these arrangements as a way to generate incremental sales of products and services from customers who prefer the financing terms to other available forms...

  • Page 19
    ... We engage key third-party business partners to manage various functions of our business, including but not limited to, information technology, human resource operations, customer loyalty programs, promotional financing and customer loyalty credit cards, customer warranty and insurance programs. Any...

  • Page 20
    ... in our stock price. We may provide public guidance on our expected financial results for future periods. Although we believe that this guidance provides investors and analysts with a better understanding of management's expectations for the future and is useful to our stockholders and potential...

  • Page 21
    ... 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 2014: U.S. Best Buy Stores Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia...

  • Page 22
    ...640 U.S. Best Buy Mobile StandAlone Stores - - 406 588 Pacific Sales Stores - - 30 772 Magnolia Audio Video Stores - - 4 51 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 23
    ...293 Best Buy Mobile Stand-Alone Stores - 56 52 China Five Star Stores 7 182 6,236 Best Buy Stores - 17 678 Mexico Best Buy Express Stores - 2 4 The following table summarizes the location, ownership status and total square footage of space utilized for distribution centers and corporate offices of...

  • Page 24
    ..., she was responsible for 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...

  • Page 25
    ..., Inc., a provider of leisure equipment products. Mr. Nelsen began his career in 1989 as a practicing attorney with Best and Flanagan, LLP, a law firm located in Minneapolis, Minnesota. Mr. Nelsen is a member of the board of directors of NuShoe, Inc., a privately held shoe repair facility in San...

  • Page 26
    ..., Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information and Dividends Our common stock is traded on the New York Stock Exchange under the ticker symbol BBY. In fiscal 2004, our Board initiated the payment of a regular quarterly cash dividend with respect to shares...

  • Page 27
    ... Securities Act or the Exchange Act. The graph below compares the cumulative total shareholder return on our common stock for the last five fiscal years with the cumulative total return on the Standard & Poor's 500 Index ("S&P 500"), of which we are a component, and the Standard & Poor's Retailing...

  • Page 28
    ...Comparable store sales gain (decline)(7) Gross profit rate Selling, general and administrative expenses rate Operating income (loss) rate Year-End Data Current ratio(8) Total assets Debt, including current portion Total equity Number of stores Domestic International Total Retail square footage (000s...

  • Page 29
    ... 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 attributable to the noncontrolling interest). Included within our operating income (loss) and net earnings (loss...

  • Page 30
    ... impact of sales from new stores opened or closed stores. Our comparable store sales is comprised of revenue from stores operating for at least 14 full months, as well as revenue related to website and online sales, call centers and our other comparable sales channels. Revenue we earn from sales of...

  • Page 31
    ... Domestic segment comparable store sales, we increased our Domestic online revenue by nearly 20 percent, we increased our Net Promoter Score by 300 basis points and, in one year, we exceeded our multi-year Renew Blue cost reduction target of $725 million. Beyond these successes, we made additional...

  • Page 32
    ... long-term non-GAAP targets of a 5% to 6% operating income rate and a 13% to 15% return on invested capital. Fiscal 2015 Trends In the U.S., we have an agreement with Citibank for the issuance of promotional financing and customer loyalty credit cards bearing the Best Buy brand (the "Citibank credit...

  • Page 33
    ... ended on February 2, 2013, and we began consolidating the results of our Europe, China and Mexico operations on a one-month lag, compared to a two-month lag in fiscal year 2012, to continue aligning our fiscal reporting periods with statutory filing requirements in certain foreign jurisdictions. As...

  • Page 34
    ....4 billion in fiscal 2014 (12-month). The increase from fiscal 2013 (11-month) was driven by an extra month of revenue, partially offset by store closures in the Domestic and International segments and a comparable store sales decline of 0.8%. Our gross profit rate decreased by 0.5% of revenue to 22...

  • Page 35
    ... the 11-month transition period ended February 2, 2013. The components of the 6.5% revenue increase in fiscal 2014 (12-month) were as follows: Extra month of revenue(1) Net store changes Comparable store sales impact Impact of foreign currency exchange rate fluctuations Total revenue increase...

  • Page 36
    ... impact of revenue streams not included within our comparable store sales calculation, such as certain credit card revenue, gift card breakage and sales of merchandise to wholesalers and dealers, as applicable. Our gross profit rate decreased 0.7% of revenue in fiscal 2013 (11-month). Our Domestic...

  • Page 37
    ... Annual Report on Form 10-K for further information. The decrease in revenue from net store changes was primarily due to the closure of 47 large-format Best Buy branded stores in the second and third quarter of fiscal 2013 (11-month). The opening and closing of small-format Best Buy Mobile stores...

  • Page 38
    ... comparable store sales gain was primarily due to growth in mobile phone repair services, offset by a decline in warranty services due to the prior-year benefit from a periodic profit sharing payment that was earned based on the long-term performance of our externally managed extended service plan...

  • Page 39
    ...11 months, as well as stores opened in the prior year that are not included in comparable store sales due to the timing of their opening. The decrease in large-format Best Buy branded stores contributed to the majority of the total decrease in revenue associated with net store changes in fiscal 2013...

  • Page 40
    ... Services: The 0.8% comparable store sales gain was primarily due to the benefit from a periodic profit sharing payment that was earned based on the long-term performance of the our externally managed extended service plan portfolio, partially offset by a decrease in the sales of notebook computers...

  • Page 41
    ...expense management in Canada, and the elimination of expenses associated with previously closed stores in Canada and China. The components of the International segment's 0.4% revenue decrease in fiscal 2014 (12-month) were as follows: Extra month of revenue(1) Comparable store sales impact Net store...

  • Page 42
    ... (11-month): Revenue Mix Summary 12 Months Ended February 1, 2014 11 Months Ended February 2, 2013 Comparable Store Sales Summary 12 Months Ended February 1, 2014 11 Months Ended February 2, 2013 Consumer Electronics(1) Computing and Mobile Phones(1) Entertainment Appliances Services Other Total...

  • Page 43
    ... store sales calculation, such as certain credit card revenue, gift card breakage and sales of merchandise to wholesalers and dealers, as applicable. The addition of 20 large-format stores throughout the International segment in fiscal 2013 (11-month) (Five Star, Best Buy Mexico and Best Buy Canada...

  • Page 44
    ... 10.0% comparable store sales decline was primarily due to a decrease in services in Canada. Our International segment experienced a gross profit decline of $172 million, or 10.2%, in fiscal 2013 (11-month), driven primarily by revenue declines in Canada and China and a gross profit rate decline in...

  • Page 45
    ...a benefit from positive adjustments to estimated facility closure costs associated with the closure of our Best Buy branded stores in the U.K. in fiscal 2013 (11-month). Net Earnings (Loss) from Discontinued Operations Attributable to Noncontrolling Interests The decrease in net earnings (loss) from...

  • Page 46
    ... presented ($ in millions, except per share amounts). 12-Month(1) 2014 2013 (recast) 2012 (recast) Operating income Restructuring charges - cost of goods sold Net LCD settlements(2) Best Buy Europe transaction costs Non-restructuring asset impairments Restructuring charges Goodwill impairments...

  • Page 47
    ... 2013 (11-month). The increase in cash and cash equivalents was due primarily to cash provided by operations and cash from the sale of Best Buy Europe and mindSHIFT, partially offset by cash used for capital expenditures and the payment of dividends. Working capital, the excess of current assets...

  • Page 48
    ... by an aggressive inventory reduction plan and other working capital and cash flow management initiatives implemented towards the end of fiscal 2013 (11-month). Investing Activities The decrease in cash used in investing activities in fiscal 2014 (12-month) compared to fiscal 2013 (11-month) was...

  • Page 49
    ... our capital expenditures for each of the past three fiscal years and fiscal 2012 (11-month recast) ($ in millions): 12-Month 2014 11-Month 2013 2012 (recast) 12-Month 2012 New stores Store-related projects(1) Information technology(2) Other Total capital expenditures(3)(4) (1) (2) (3) (4) Includes...

  • Page 50
    ... and our employee stock purchase plan, and optimizing our capital structure. 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 51
    ... to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, we sold our interest in Best Buy Europe on June 26, 2013. The multiple of eight times annual rental expense in the calculation of our capitalized operating lease obligations is the multiple used...

  • Page 52
    ... and common area maintenance. These charges, if included, would increase total operating lease obligations by $1.5 billion at February 1, 2014. Purchase obligations include agreements to purchase goods or services that are enforceable, are legally binding and specify all significant terms, including...

  • Page 53
    ... all land, buildings, leasehold improvements, fixtures and equipment located at each store to the net cash flow projections for each store. In addition, we conduct separate impairment reviews at other levels as appropriate. For example, a shared asset such as a distribution center would be evaluated...

  • Page 54
    ... store sales growth, store count, gross profit rates, SG&A rates, working capital fluctuations, capital expenditures, discount rates and terminal growth rates. We determine discount rates separately for each reporting unit using the capital asset pricing model. We also use comparable market earnings...

  • Page 55
    ... after 24 months, we can determine the portion of the liability for which redemption is remote. We have customer loyalty programs which allow members to earn points for each purchase completed or when using our cobranded credit cards in the U.S. and Canada. Points earned enable members to receive...

  • Page 56
    ... limited basis, we utilize foreign exchange forward contracts to manage foreign currency exposure to certain forecast inventory purchases and recognized receivable and payable balances. Our primary objective in holding derivatives is to reduce the volatility of net earnings and cash flows associated...

  • Page 57
    ... by a positive impact from the appreciation of the Chinese yuan and Mexican peso. We estimate that foreign currency exchange rate fluctuations had a net unfavorable impact on our revenue in fiscal 2014 (12-month) of approximately $159 million and a net unfavorable impact on earnings of $6 million...

  • Page 58
    ... Oversight Board (U.S.). The independent registered public accounting firm's responsibility is to express an opinion as to the fairness with which such financial statements present our financial position, results of operations and cash flows in accordance with GAAP. Management's Report on Internal...

  • Page 59
    ... PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of Best Buy Co., Inc.: Richfield, Minnesota We have audited the accompanying consolidated balance sheets of Best Buy Co., Inc. and subsidiaries (the "Company") as of February 1, 2014 and February 2, 2013 and the related consolidated...

  • 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 1, 2014, based on criteria...

  • Page 61
    ...; Issued and outstanding - none Common stock, $0.10 par value: Authorized - 1.0 billion shares; Issued and outstanding - 346,751,000 and 338,276,000 shares, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive income Total Best Buy Co., Inc. shareholders' equity...

  • Page 62
    ... per share amounts 12 Months Ended February 1, 2014 11 Months Ended February 2, 2013 January 28, 2012 (Unaudited recast) 12 Months Ended March 3, 2012 Fiscal Years Ended Revenue Cost of goods sold Restructuring charges - cost of goods sold Gross profit Selling, general and administrative expenses...

  • Page 63
    ... millions 12 Months Ended February 1, 2014 11 Months Ended February 2, 2013 12 Months Ended March 3, 2012 Fiscal Years Ended Net earnings (loss) including noncontrolling interests Foreign currency translation adjustments Unrealized gain (loss) on available-for-sale investments Reclassification of...

  • Page 64
    ...property and equipment, net of $13, $29, $13 and $18 non-cash capital expenditures Purchases of investments Sales of investments Acquisition of businesses, net of cash acquired Proceeds from sale of business, net of cash transferred Change in restricted assets Other, net Total cash used in investing...

  • Page 65
    ...-In Capital Accumulated Other Comprehensive Income (Loss) Total Best Buy Co., Inc. Shareholders' Equity Non controlling Interests Common Shares Common Stock Retained Earnings Total Equity Balances at February 26, 2011 Net earnings (loss) Other comprehensive loss, net of tax: Foreign currency...

  • Page 66
    ...districts and territories of the U.S., operating under the 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, online and call center operations, operating under the brand names Best Buy, Best Buy...

  • Page 67
    ... and are reflected 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...

  • Page 68
    ... Consolidated Statements of Earnings during fiscal 2014 and 2013 (11-month), respectively, related to these instruments. In conjunction with our agreement to sell our 50% ownership interest in Best Buy Europe as described in Note 4, Discontinued Operations, we entered into a deal-contingent foreign...

  • Page 69
    ... and equipment located at each store to the 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...

  • Page 70
    ... to the Best Buy Europe reporting unit recorded in the fourth quarter of fiscal 2012. Tradenames and Customer Relationships Beginning in fiscal 2014, we have presented our tradenames and customer relationships within intangibles, net in our Consolidated Balance Sheets. All prior-year periods have...

  • Page 71
    ... 2014, 2013 (11-month) and 2012 ($ in millions): Goodwill Domestic International Total Indefinite-Lived Tradenames Domestic International Total Balances at February 26, 2011 Acquisitions(1) Impairments(2) Sale of business Changes in foreign currency exchange rates Other(3) Balances at March 3, 2012...

  • Page 72
    ... of sales. Our sales returns reserve was $13 million and $14 million at February 1, 2014, and February 2, 2013, respectively. We sell service contracts and extended warranties that typically have terms ranging from three months to four years. We also receive commissions for customer subscriptions...

  • Page 73
    ... 1, 2014, and February 2, 2013, deferred revenue included within long-term liabilities in our Consolidated Balance Sheets was $50 million and $62 million, respectively. For additional information related to our credit card arrangements and customer loyalty programs, see Credit Services and Financing...

  • Page 74
    ...of revenue at the time the points are earned, based on the percentage of points that are projected to be redeemed. Second, under our credit card agreement, we have a customer loyalty credit card bearing the Best Buy brand. Cardholders earn points for purchases made at our stores and related websites...

  • Page 75
    ... first quarter of fiscal 2013 (11-month), we also began consolidating the results of our Europe, China and Mexico operations on a one-month lag, compared to a two-month lag in fiscal year 2012, to continue to align our fiscal reporting periods with statutory filing requirements. The following table...

  • Page 76
    ..."profit share agreement"). Under the terms of this agreement, CPW provided expertise and certain other resources to enhance our mobile telephone retail business ("Best Buy Mobile") in return for a share of incremental profits generated in excess of defined thresholds. During fiscal 2009, we acquired...

  • Page 77
    ...was recorded in fiscal 2012. During the second quarter of fiscal 2014, we completed the sale of our 50% ownership interest in Best Buy Europe to CPW in return for the following consideration upon closing: net cash of £341 million ($526 million); £80 million ($123 million) of ordinary shares of CPW...

  • Page 78
    ...2013, as a result of the sale of Best Buy Europe was as follows ($ in millions): June 26, 2013 Cash and cash equivalents Receivables Merchandise inventories Other current assets Net property and equipment Other assets Total assets Accounts payable Short-term debt Other current liabilities Long-term...

  • Page 79
    ... at February 1, 2014 Assets Cash and cash equivalents Money market funds Commercial paper Treasury bills Short-term investments Commercial paper Other current assets Foreign currency derivative instruments Other assets Auction rate securities Marketable securities that fund deferred compensation...

  • Page 80
    ... Auction rate securities only Student loan bonds Municipal revenue bonds Total Balances at March 3, 2012 Changes in unrealized losses in other comprehensive income Sales Balances at February 2, 2013 Changes in unrealized losses in other comprehensive income Sales Balances at February 1, 2014 $ 80...

  • Page 81
    ... 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 82
    ...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 remainder...

  • Page 83
    ... of property and equipment impairments, and employee termination benefits. In fiscal 2013 (11-month), we incurred $36 million of charges related to employee termination benefits, property and equipment impairments, and facility closure and other costs. Given the sale of Best Buy Europe, we do not...

  • Page 84
    ... fiscal 2014 and 2013 (11-month) related to termination benefits and facility closure and other costs associated with this program ($ in millions): Termination Benefits Facility Closure and Other Costs Total Balance at March 3, 2012 Charges Cash payments Balance at February 2, 2013 Charges Cash...

  • Page 85
    ...our strategy for certain mobile broadband offerings. In our International segment, we closed our large-format Best Buy branded stores in the U.K. and impaired certain information technology assets supporting the restructured operations. All restructuring charges related to Best Buy Europe, including...

  • Page 86
    ... 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...

  • Page 87
    ...to our China operations, of which no borrowings were outstanding at February 1, 2014, or February 2, 2013. The facilities are renewed annually with the respective banks. All borrowings under these facilities bear interest at rates specified in the related credit agreements, are made available at the...

  • Page 88
    ...they matured on July 15, 2013, using available cash. 2018 Notes On July 16, 2013, we completed the sale of $500 million principal amount of notes due August 1, 2018 (the "2018 Notes"). The 2018 Notes bear interest at a fixed rate of 5.00% per year, payable semi-annually on February 1 and August 1 of...

  • Page 89
    ... thereafter, and time-based share awards to directors vest one year from the grant date. During fiscal 2014, our Employee Stock Purchase Plan was amended. The Plan permits employees to purchase our common stock at a 5% discount from the market price at the end of semi-annual purchase periods and is...

  • Page 90
    ... fiscal 2014, 2013 (11-month) and 2012 ($ in millions): 12-Month 2014 11-Month 2013 12-Month 2012 Stock options Share awards Market-based Time-based Employee stock purchase plans Total Stock Options Stock option activity was as follows in fiscal 2014: WeightedAverage Exercise Price per Share $ 25...

  • Page 91
    ... based on the closing market price of our stock on the date of grant. This value is reduced by the present value of expected dividends during vesting when the employee is not entitled to dividends. A summary of the status of our nonvested time-based share awards at February 1, 2014, and changes...

  • Page 92
    ... 2013 (11-month) does not include potentially dilutive securities because their inclusion would be antidilutive (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...

  • Page 93
    ... income, net of tax, attributable to Best Buy Co., Inc. shareholders for fiscal 2014, 2013 (11-month) and 2012, respectively ($ in millions): Foreign Currency Translation Available-For-Sale Investments Total Balances at February 26, 2011 Foreign currency translation adjustments Unrealized losses on...

  • Page 94
    ... may choose from various investment options 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...

  • Page 95
    ... expense and equity in income (loss) of affiliates $ 687 400 1,087 $ 279 $ (477) (198) $ 1,644 522 2,166 $ $ Income tax expense was comprised of the following in fiscal 2014, 2013 (11-month) and 2012 ($ in millions): 12-Month 2014 11-Month 2013 12-Month 2012 Current: Federal State Foreign...

  • Page 96
    ...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 Goodwill and intangibles Inventory Other Total deferred tax liabilities Net...

  • Page 97
    ... tax benefits for fiscal 2014, 2013 (11-month) and 2012 ($ in millions): 12-Month 2014 11-Month 2013 12-Month 2012 Balance at beginning of period Gross increases related to prior period tax positions Gross decreases related to prior period tax positions Gross increases related to current period...

  • Page 98
    ... 2014, 2013 (11-month) and 2012 ($ in millions): 12-Month 2014 11-Month 2013 12-Month 2012 Revenue Domestic International Total revenue Percentage of revenue, by revenue category Domestic: Consumer Electronics Computing and Mobile Phones Entertainment Appliances Services Other Total International...

  • Page 99
    ...): 12-Month 2014 11-Month 2013 12-Month 2012 Net sales to customers United States Canada China Other Total revenue Long-lived assets United States Europe Canada China Other Total long-lived assets 13. Contingencies and Commitments Contingencies We are involved in a number of legal proceedings...

  • Page 100
    ...District of California. We allege that the defendants engaged in price fixing in violation of antitrust regulations and conspired to control the supply of TFT-LCD panels. During the second quarter of fiscal 2014, we entered into binding settlement agreements with multiple defendants. Under the terms...

  • Page 101
    ...3rd 4th 12-Month 2014 Revenue $ (1) Comparable store sales % change Gross profit $ (2) Operating income Net earnings from continuing operations Gain (loss) from discontinued operations, net of tax Net earnings (loss) including noncontrolling interests Net earnings (loss) attributable to Best Buy Co...

  • Page 102
    ... 14 full months, as well as revenue related to call centers, websites and our other comparable sales channels. Revenue we earn from sales of merchandise to wholesalers or dealers is generally not included within our comparable store sales calculation. Relocated, remodeled and expanded stores are...

  • Page 103
    ... disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in 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...

  • Page 104
    ... accounting officer. Our Code of Business Ethics is available on our website, www.investors.bestbuy.com - select the "Corporate Governance" link. A copy of our Code of Business Ethics may also be obtained, without charge, upon written request to Best Buy Co., Inc. Investor Relations Department...

  • Page 105
    ... Under Equity Compensation Plans" included in Part II of this Annual 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...

  • Page 106
    ..., dated as of June 25, 2013, to the Five-Year Credit Agreement, dated as of October 7, 2011, among Best Buy Co. Inc., The Subsidiary Guarantors, the Lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent 1994 Full-Time Employee Non-Qualified Stock Option Plan, as amended 1997...

  • Page 107
    ... Reference Form Exhibit Filing Date Filed Herewith *10.8 *10.9 *10.10 *10.11 *10.12 *10.13 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...

  • Page 108
    ... in shareholders' equity for the years ended February 1, 2014, February 2, 2013 and March 3, 2012 and (vi) the Notes to Consolidated Financial Statements. * Management contracts or compensatory plans or arrangements required to be filed as exhibits pursuant to Item 15(b) of Form 10-K. Pursuant...

  • Page 109
    ... by the undersigned, thereunto duly authorized. Best Buy Co., Inc. (Registrant) By: /s/ Hubert Joly Hubert Joly President and Chief Executive Officer March 28, 2014 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on...

  • Page 110
    ... of Period Charged to Expenses or Other Accounts Other(1) Balance at End of Period Year ended February 1, 2014 Allowance for doubtful accounts Year ended February 2, 2013 Allowance for doubtful accounts Year ended March 3, 2012 Allowance for doubtful accounts (1) $ $ $ 92 72 107 $ $ $ 76...

  • Page 111

  • Page 112
    Best Buy Co., Inc. 7601 Penn Avenue S. Richfield, MN 55423 www.bestbuy.com (866) 758-1457 ©2014 Best Buy. All rights reserved.