Best Buy 2014 Annual Report Download - page 100

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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 November 2011, the respective lawsuits of Salvatore M. Talluto and
Daniel Himmel were consolidated into a new action captioned, In Re: Best Buy Co., Inc. Shareholder Derivative Litigation,
and a stay ordered 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. As stated above, 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.
Trade Secrets Action
In February 2011, a lawsuit captioned Techforward, Inc. v. Best Buy Co., Inc., et. al. was filed against us in the U.S. District
Court, Central District of California. The case alleges that we implemented our “Buy Back Plan” in February 2011 using trade
secrets misappropriated from 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 enriched through misappropriation of trade
secrets and awarded plaintiff $22 million. The jury also found that although we breached the subject contracts, plaintiff suffered
no resulting damage. In December 2012, the court further awarded the plaintiff $5 million in exemplary damages and granted
plaintiff's motion for $6 million in attorney fees and costs. We believe that the jury verdict and court awards are inconsistent
with the law and the evidence offered at trial or otherwise in error. Accordingly, we appealed the resulting judgment and awards
in February 2013 and intend to vigorously contest these decisions.
LCD Action
On October 8, 2010, we filed a lawsuit captioned Best Buy Co., Inc., et al. v. AU Optronics Corp., et al. in the United States
District Court for the Northern 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 of the settlement agreements, we will
receive specified payments in accordance with specified schedules, and there are no performance obligations or other
contingencies associated with our right to receive the specified payments. Settlement proceeds of $264 million were recognized
during the second quarter in cost of goods sold. In addition, associated legal expenses of $35 million were recorded in SG&A.
As of February 1, 2014, $176 million of the gross settlement proceeds had been received, with the remaining $88 million
recorded as short-term or long-term receivables.
On July 22, 2013, trial commenced against the remaining named defendants. On September 3, 2013, a jury found that HannStar
Display, Co. knowingly participated in a conspiracy to fix prices for TFT-LCD panels and found damages in the amount of $7.5
million. In addition, the jury found that Toshiba Corp. did not knowingly participate in the alleged conspiracy. We are
considering all options in regard to the verdict, but we currently do not expect to receive amounts in addition to the settlements
reached in the current and prior fiscal years.
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.