Best Buy 2015 Annual Report Download - page 76

Table of Contents
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SG&A
• Payroll and benefit costs for retail and corporate employees;
• Occupancy and maintenance costs of retail, services and corporate facilities;
• Depreciation and amortization related to retail, services and corporate assets;
• Advertising costs;
• Vendor allowances that are a reimbursement of specific, incremental and identifiable costs to promote a vendor's
products;
• Tender costs, including bank charges and costs associated with credit and debit card interchange fees;
• Charitable contributions;
• Outside and outsourced service fees;
• Long-lived asset impairment charges; and
• Other administrative costs, such as supplies, and travel and lodging.
Vendor Allowances
We receive allowances from certain vendors through a variety of programs and arrangements intended to offset our costs of
promoting and selling merchandise inventories. Vendor allowances are primarily in the form of receipt-based funds or sell-
through credits. Receipt-based funds are generally determined at an agreed percentage of purchases and are initially deferred
and recorded as a reduction of merchandise inventories. The deferred amounts are then included as a reduction of cost of goods
sold when the related product is sold. Sell-through credits are generally determined at an agreed percentage of sales and are
recognized when the related product is sold. Vendor allowances provided as a reimbursement of specific, incremental and
identifiable costs, such as specialized store labor or training costs, are included in SG&A as an expense reduction when the cost
is incurred.
Advertising Costs
Advertising costs, which are included in SG&A, are expensed the first time the advertisement runs. Advertising costs consist
primarily of digital, print and television advertisements, as well as promotional events. Advertising expenses were $711
million, $757 million and $703 million in fiscal 2015, 2014 and 2013 (11-month), respectively.
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 expense for the fair value of our stock-based compensation awards. We recognize compensation
expense on a straight-line basis over the requisite service period of the award (or to an employee's eligible retirement date, if
earlier).
2. Discontinued Operations
Discontinued operations comprise the following:
Domestic Segment
mindSHIFT – During the fourth quarter of fiscal 2014, we completed the sale of mindSHIFT to Ricoh Americas Corporation, at
which time we recorded an $18 million pre-tax loss.
International Segment
Five Star – During the fourth quarter of fiscal 2015, we entered into a definitive agreement to sell our Five Star business to
Yingtan City Xiangyuan Investment Limited Partnership and Zhejiang Jiayuan Real Estate Group Co. The assets and liabilities
of our Five Star business are classified as held for sale in the Consolidated Balance Sheets and the results of Five Star are
presented as discontinued operations in the Consolidated Statements of Earnings.