Best Buy 2011 Annual Report Download - page 85

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$ in millions, except per share amounts or as otherwise noted
In addition to our private-label and co-branded credit cards, we also accept Visa, MasterCard, Discover, JCBand
American Expresscredit cards, as well as debit cards from all major international networks.
Sales Incentives
We frequently offer sales incentives that entitle our customers to receive a reduction in the price of a product or service.
Sales incentives include discounts, coupons and other offers that entitle a customer to receive a reduction in the price of a
product or service either at the point of sale or by submitting a claim for a refund or rebate. For sales incentives issued to
a customer in conjunction with a sale of merchandise or services, for which we are the obligor, the reduction in revenue is
recognized at the time of sale, based on the retail value of the incentive expected to be redeemed.
Customer Loyalty Programs
We have customer loyalty programs which allow members to earn points for each qualifying purchase. Points earned
enable members to receive a certificate that may be redeemed on future purchases at our Best Buy branded stores. There
are two ways that members may participate and earn loyalty points.
First, we have customer loyalty programs where members earn points for each purchase completed at our Best Buy
branded stores or through our related Web sites in the U.S. and Canada. Depending on the customer’s membership level
within our loyalty program, certificates expire either three or six months from the date of issuance. The retail value of
points earned by our loyalty program members is included in accrued liabilities and recorded as a reduction of revenue at
the time the points are earned, based on the percentage of points that are projected to be redeemed.
Second, under our co-branded credit card agreements with banks, we have a customer loyalty credit card bearing the
Best Buy brand. Cardholders earn points for purchases made at our Best Buy branded stores and related Web sites in the
U.S. and Canada, as well as purchases at other merchants. Points earned enable cardholders to receive certificates that
may be redeemed on future purchases at our Best Buy branded stores and related Web sites. Certificates expire six months
from the date of issuance. The retail value of points earned by our cardholders is included in accrued liabilities and
recorded as a reduction of revenue at the time the points are earned, based on the percentage of points that are
projected to be redeemed.
We recognize revenue when: (i) a certificate is redeemed by the customer, (ii) a certificate expires or (iii) the likelihood of a
certificate being redeemed by a customer is remote (‘‘certificate breakage’’). We determine our certificate breakage rate
based upon historical redemption patterns.
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