10-Q 1 bby841210q.htm 10-Q BBY 8/4/12 10Q
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
FORM 10-Q 
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 4, 2012 

OR 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to             

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
(Address of principal executive offices)
 
(Zip Code)
(612) 291-1000
(Registrant’s telephone number, including area code) 
N/A
(Former name, former address and former fiscal year, if changed since last report) 
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 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 x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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 x No ¨
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.
Large accelerated filer x
 
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 Exchange Act). Yes ¨ No x
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  Yes ¨ No ¨
APPLICABLE ONLY TO CORPORATE ISSUERS: 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common Stock, $.10 Par Value — 336,667,475 shares outstanding as of August 31, 2012.




BEST BUY CO., INC.
FORM 10-Q FOR THE QUARTER ENDED AUGUST 4, 2012 
INDEX
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2


PART I — FINANCIAL INFORMATION
 
ITEM 1.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
BEST BUY CO., INC. 
CONDENSED CONSOLIDATED BALANCE SHEETS 
ASSETS 
($ in millions)
(Unaudited)
 
August 4, 2012
 
March 3, 2012
 
July 30, 2011
 
 
 
 
 
(recast)
CURRENT ASSETS
 

 
 

 
 
Cash and cash equivalents
$
680

 
$
1,199

 
$
2,079

Short-term investments

 

 
80

Receivables
2,135

 
2,288

 
1,868

Merchandise inventories
6,299

 
5,731

 
6,784

Other current assets
1,070

 
1,079

 
1,080

Total current assets
10,184

 
10,297

 
11,891

 
 
 
 
 
 
PROPERTY AND EQUIPMENT, NET
3,407

 
3,471

 
3,781

 
 
 
 
 
 
GOODWILL
1,342

 
1,335

 
2,507

 
 
 
 
 
 
TRADENAMES, NET
130

 
130

 
136

 
 
 
 
 
 
CUSTOMER RELATIONSHIPS, NET
221

 
229

 
179

 
 
 
 
 
 
EQUITY AND OTHER INVESTMENTS
91

 
140

 
316

 
 
 
 
 
 
OTHER ASSETS
474

 
403

 
486

 
 
 
 
 
 
TOTAL ASSETS
$
15,849

 
$
16,005

 
$
19,296

 
NOTE:  The Consolidated Balance Sheet as of March 3, 2012, has been condensed from the audited consolidated financial statements.
 
See Notes to Condensed Consolidated Financial Statements.

3


BEST BUY CO., INC. 
CONDENSED CONSOLIDATED BALANCE SHEETS 
LIABILITIES AND EQUITY 
($ in millions)
(Unaudited)
 
August 4, 2012
 
March 3, 2012
 
July 30, 2011
 
 
 
 
 
(recast)
CURRENT LIABILITIES
 

 
 

 
 

Accounts payable
$
6,055

 
$
5,364

 
$
6,178

Unredeemed gift card liabilities
385

 
456

 
426

Accrued compensation and related expenses
464

 
539

 
507

Accrued liabilities
1,476

 
1,685

 
1,556

Accrued income taxes
7

 
288

 
37

Short-term debt
519

 
480

 
392

Current portion of long-term debt
542

 
43

 
444

Total current liabilities
9,448

 
8,855

 
9,540

 
 
 
 
 
 
LONG-TERM LIABILITIES
1,125

 
1,099

 
1,168

 
 
 
 
 
 
LONG-TERM DEBT
1,165

 
1,685

 
1,701

 
 
 
 
 
 
EQUITY
 

 
 

 
 

Best Buy Co., Inc. shareholders’ equity
 

 
 

 
 

Preferred stock, $1.00 par value: Authorized — 400,000 shares; Issued and outstanding — none

 

 

Common stock, $0.10 par value: Authorized — 1.0 billion shares; Issued and outstanding — 336,530,000, 341,400,000 and 370,102,000 shares, respectively
34

 
34

 
37

Additional paid-in capital

 

 

Retained earnings
3,395

 
3,621

 
5,846

Accumulated other comprehensive income
86

 
90

 
281

Total Best Buy Co., Inc. shareholders’ equity
3,515

 
3,745

 
6,164

Noncontrolling interests
596

 
621

 
723

Total equity
4,111

 
4,366

 
6,887

 
 
 
 
 
 
TOTAL LIABILITIES AND EQUITY
$
15,849

 
$
16,005

 
$
19,296

 
NOTE:  The Consolidated Balance Sheet as of March 3, 2012, has been condensed from the audited consolidated financial statements.
 
See Notes to Condensed Consolidated Financial Statements.

4


BEST BUY CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
($ in millions, except per share amounts)
(Unaudited)
 
Three Months Ended
 
Six Months Ended
 
August 4, 2012
 
July 30, 2011
 
August 4, 2012
 
July 30, 2011
 
 
 
(recast)
 
 
 
(recast)
Revenue
$
10,547

 
$
10,856

 
$
22,157

 
$
22,225

Cost of goods sold
7,983

 
8,094

 
16,686

 
16,542

Gross profit
2,564

 
2,762

 
5,471

 
5,683

Selling, general and administrative expenses
2,440

 
2,502

 
4,958

 
4,959

Restructuring charges
91

 

 
218

 
4

Operating income
33

 
260

 
295

 
720

Other income (expense)
 

 
 

 
 
 
 
Investment income and other
6

 
8

 
12

 
25

Interest expense
(30
)
 
(33
)
 
(63
)
 
(61
)
Earnings from continuing operations before income tax expense and equity in loss of affiliates
9

 
235

 
244

 
684

Income tax expense
14

 
87

 
86

 
242

Equity in loss of affiliates
(2
)
 

 
(4
)
 
(1
)
Net (loss) earnings from continuing operations
(7
)
 
148

 
154

 
441

Loss from discontinued operations (Note 3), net of tax (expense) benefit of ($3), $12, $3 and $32

 
(37
)
 
(9
)
 
(91
)
Net (loss) earnings including noncontrolling interests
(7
)
 
111

 
145

 
350

Net loss (earnings) from continuing operations attributable to noncontrolling interests
19

 
2

 
19

 
(36
)
Net loss from discontinued operations attributable to noncontrolling interests

 
15

 
6

 
26

Net earnings attributable to Best Buy Co., Inc.
$
12

 
$
128

 
$
170

 
$
340

 
 
 
 
 
 
 
 
Basic earnings (loss) per share attributable to Best Buy Co., Inc.
 

 
 

 
 
 
 
Continuing operations
$
0.04

 
$
0.40

 
$
0.51

 
$
1.06

Discontinued operations

 
(0.06
)
 
(0.01
)
 
(0.17
)
Basic earnings per share
$
0.04

 
$
0.34

 
$
0.50

 
$
0.89

 
 
 
 
 
 
 
 
Diluted earnings (loss) per share attributable to Best Buy Co., Inc.
 
 
 
 
 
 
 
Continuing operations
$
0.04

 
$
0.39

 
$
0.51

 
$
1.04

Discontinued operations

 
(0.05
)
 
(0.01
)
 
(0.17
)
Diluted earnings per share
$
0.04

 
$
0.34

 
$
0.50

 
$
0.87

 
 
 
 
 
 
 
 
Dividends declared per common share
$
0.16

 
$
0.15

 
$
0.32

 
$
0.30

 
 
 
 
 
 
 
 
Weighted-average common shares outstanding (in millions)
 

 
 

 
 
 
 
Basic
338.2

 
376.0

 
340.3

 
383.6

Diluted
338.6

 
385.6

 
341.0

 
393.3

 
 
 
 
 
 
 
 
Comprehensive (loss) income including noncontrolling interests
$
(39
)
 
$
123

 
$
157

 
$
505

Comprehensive loss (income) attributable to noncontrolling interests
39

 
12

 
25

 
(37
)
Comprehensive income attributable to Best Buy Co., Inc.
$

 
$
135

 
$
182

 
$
468

 
See Notes to Condensed Consolidated Financial Statements. 

5


BEST BUY CO., INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY 
FOR THE SIX MONTHS ENDED AUGUST 4, 2012, AND JULY 30, 2011 
($ and shares in millions) 
(Unaudited)
 
Best Buy Co., Inc.
 
 
 
 
 
Common
Shares
 
Common
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total 
Best Buy
Co., Inc.
 
Non-
controlling
Interests
 
Total
Balances at March 3, 2012
341

 
$
34

 
$

 
$
3,621

 
$
90

 
$
3,745

 
$
621

 
$
4,366

Adjustment for fiscal year-end change (Note 2)
5

 

 

 
(108
)
 
(16
)
 
(124
)
 

 
(124
)
Balances at January 28, 2012
346

 
34

 

 
3,513

 
74

 
3,621

 
621

 
4,242

Net earnings, six months ended August 4, 2012

 

 

 
170

 


 
170

 
(25
)
 
145

Foreign currency translation adjustments

 

 

 

 
9

 
9

 

 
9

Unrealized gains on available-for-sale investments

 

 

 

 
3

 
3

 

 
3

Stock-based compensation

 

 
64

 

 

 
64

 

 
64

Stock options exercised
1

 

 
1

 

 

 
1

 

 
1

Issuance of common stock under employee stock purchase plan
1

 

 
14

 

 

 
14

 

 
14

Tax deficit from stock options exercised, restricted stock vesting and employee stock purchase plan

 

 
(15
)
 
(8
)
 

 
(23
)
 

 
(23
)
Common stock dividends, $0.32 per share

 

 

 
(107
)
 

 
(107
)
 

 
(107
)
Repurchase and retirement of common stock
(11
)
 

 
(64
)
 
(173
)
 

 
(237
)
 

 
(237
)
Balances at August 4, 2012
337

 
$
34

 
$

 
$
3,395

 
$
86

 
$
3,515

 
$
596

 
$
4,111

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances at February 26, 2011
393

 
$
39

 
$
18

 
$
6,372

 
$
173

 
$
6,602

 
$
690

 
$
7,292

Adjustment for fiscal year-end change (Note 2)

 

 
(18
)
 
(115
)
 
(20
)
 
(153
)
 

 
(153
)
Balances at January 29, 2011
393

 
39

 

 
6,257

 
153

 
6,449

 
690

 
7,139

Net earnings, six months ended July 30, 2011

 

 

 
340

 

 
340

 
10

 
350

Foreign currency translation adjustments

 

 

 

 
127

 
127

 
25

 
152

Unrealized gains on available-for-sale investments

 

 

 

 
1

 
1

 

 
1

Cash flow hedging instruments – unrealized losses

 

 

 

 

 

 
2

 
2

Dividend distribution

 

 

 

 

 

 
(4
)
 
(4
)
Stock-based compensation

 

 
67

 

 

 
67

 

 
67

Stock options exercised
1

 

 
28

 

 

 
28

 

 
28

Issuance of common stock under employee stock purchase plan
1

 

 
23

 

 

 
23

 

 
23

Tax benefit from stock options exercised, restricted stock vesting and employee stock purchase plan

 

 
(8
)
 

 

 
(8
)
 

 
(8
)
Common stock dividends, $0.30 per share

 

 

 
(113
)
 

 
(113
)
 

 
(113
)
Repurchase and retirement of common stock
(25
)
 
(2
)
 
(110
)
 
(638
)
 

 
(750
)
 

 
(750
)
Balances at July 30, 2011 (recast)
370

 
$
37

 
$

 
$
5,846

 
$
281

 
$
6,164

 
$
723

 
$
6,887


See Notes to Condensed Consolidated Financial Statements.

6


BEST BUY CO., INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions) 
(Unaudited)
 
Six Months Ended
 
August 4, 2012
 
July 30, 2011
 
 
 
(recast)
OPERATING ACTIVITIES
 
 
 
Net earnings including noncontrolling interests
$
145

 
$
350

Adjustments to reconcile net earnings including noncontrolling interests to total cash (used in) provided by operating activities
 
 
 
Depreciation
445

 
448

Amortization of definite-lived intangible assets
20

 
30

Restructuring charges
223

 
33

Stock-based compensation
64

 
67

Deferred income taxes
(88
)
 
(54
)
Other, net
21

 
4

Changes in operating assets and liabilities
 
 
 
Receivables
300

 
476

Merchandise inventories
512

 
659

Other assets
(139
)
 
(46
)
Accounts payable
(834
)
 
(501
)
Other liabilities
(575
)
 
(119
)
Income taxes
(316
)
 
(178
)
Total cash (used in) provided by operating activities
(222
)
 
1,169

 
 
 
 
INVESTING ACTIVITIES
 

 
 

Additions to property and equipment
(316
)
 
(377
)
Purchases of investments
(11
)
 
(107
)
Sales of investments
64

 
73

Change in restricted assets
73

 
(31
)
Other, net
(5
)
 

Total cash used in investing activities
(195
)
 
(442
)
 
 
 
 
FINANCING ACTIVITIES
 

 
 

Repurchase of common stock
(255
)
 
(737
)
Borrowings of debt
592

 
2,027

Repayments of debt
(569
)
 
(1,218
)
Dividends paid
(109
)
 
(115
)
Issuance of common stock under employee stock purchase plan and for the exercise of stock options
15

 
51

Other, net
(8
)
 
(12
)
Total cash used in financing activities
(334
)
 
(4
)
 
 
 
 
EFFECT OF EXCHANGE RATE CHANGES ON CASH
30

 
18

 
 
 
 
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS BEFORE ADJUSTMENT
(721
)
 
741

 
 
 
 
ADJUSTMENT FOR FISCAL YEAR-END CHANGE (NOTE 2)
202

 
235

 
 
 
 
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AFTER ADJUSTMENT
(519
)
 
976

 
 
 
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
1,199

 
1,103

 
 
 
 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
680

 
$
2,079


See Notes to Condensed Consolidated Financial Statements.

7


BEST BUY CO., INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in millions, except per share amounts)
(Unaudited)
1.
Basis of Presentation
 
Unless the context otherwise requires, the use of the terms “Best Buy,” “we,” “us,” and “our” in these Notes to Condensed Consolidated Financial Statements refers to Best Buy Co., Inc. and its consolidated subsidiaries.
 
In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments necessary for a fair presentation as prescribed by accounting principles generally accepted in the United States (“GAAP”). All adjustments were comprised of normal recurring adjustments, except as noted in these Notes to Condensed Consolidated Financial Statements.
 
Historically, we have realized more of our revenue and earnings in the fiscal fourth quarter, which includes the majority of the holiday shopping season in the U.S., Europe and Canada than in any other fiscal quarter. Due to the seasonal nature of our business, interim results are not necessarily indicative of results for the entire fiscal year. The interim financial statements and the related notes in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended March 3, 2012.
 
Beginning in the first quarter of fiscal 2013, we changed our fiscal year-end. As a result of the change in our fiscal year-end, the comparable prior year financial statements have been recast to conform to the new fiscal calendar. The second quarter of fiscal 2013 included 13 weeks and the recast second quarter of 2012 included 13 weeks. The first six months of fiscal 2013 included 27 weeks and the recast six months of 2012 included 26 weeks. See Note 2, Fiscal Year-end Change, for further information.
 
In order to align our fiscal reporting periods and comply with statutory filing requirements in certain foreign jurisdictions, we consolidate the financial results of our Europe, China, and Mexico operations ("lag entities") on a one-month lag. Our policy is to accelerate recording the effect of events occurring in the lag period that significantly affect our consolidated financial statements. There were no significant intervening events which would have materially affected our financial condition, results of operations or liquidity had they been recorded during the three months ended August 4, 2012.
 
In preparing the accompanying condensed consolidated financial statements, we evaluated the period from August 5, 2012 through the date the financial statements were issued, for material subsequent events requiring recognition or disclosure. Other than the appointment of a new President and Chief Executive Officer, as described in Note 15, Subsequent Event, no such events were identified for this period.

New Accounting Standards
 
Goodwill Impairment — In September 2011, the Financial Accounting Standards Board (“FASB”) issued new guidance on the testing of goodwill for impairment. Under the new guidance, entities may make a qualitative assessment of the likelihood of goodwill impairment in order to determine whether a detailed quantitative analysis is required. This new guidance is effective for fiscal years and interim periods beginning after December 15, 2011. Accordingly, we adopted the new guidance on March 4, 2012, and determined that it did not have an impact on our consolidated financial position, results of operations, or cash flows.

Comprehensive Income — In June 2011, the FASB issued new guidance on the presentation of comprehensive income. Specifically, the new guidance requires an entity to present components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate but consecutive statements. The new guidance eliminated the previous option to report other comprehensive income and its components in the statement of changes in equity. While the new guidance changed the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance. This new guidance is effective for fiscal years and interim periods beginning after December 15, 2011. Accordingly, we adopted the new guidance on March 4, 2012, and have presented total comprehensive income in our Condensed Consolidated Statements of Earnings and Comprehensive Income.

Fair Value Measurement — In April 2011, the FASB issued new guidance to converge fair value measurement and disclosure guidance with International Financial Reporting Standards. This new guidance amended current fair value measurement and disclosure guidance to include increased transparency around valuation inputs and investment categorization. This new

8


guidance is effective for fiscal years and interim periods beginning after December 15, 2011. Accordingly, we adopted the new guidance on March 4, 2012, and determined that it did not have an impact on our consolidated financial position, results of operations, or cash flows.

2.
Fiscal Year-end Change

Beginning in the first quarter of fiscal 2013, we changed our fiscal year-end from the Saturday nearest the end of February to the Saturday nearest the end of January. As a result of this change, our fiscal year 2013 is an 11-month transition period ending on February 2, 2013. As a result of this change, in the first quarter of fiscal 2013, 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.

In order to allow an immediate transition to our new fiscal calendar and to maintain transparency and comparability of financial information included in our quarterly Form 10-Q filings, we are presenting such quarterly information on a three- and six-month basis for both the current and prior fiscal years, in both instances based on the new fiscal calendar. Following the change to our fiscal calendar, the second quarter of fiscal 2013 is the three months ended August 4, 2012. Therefore, the Condensed Consolidated Statements of Earnings and Comprehensive Income, Consolidated Statements of Changes in Shareholders' Equity, and Consolidated Statements of Cash Flows reflect results for the three and six month periods ended August 4, 2012. The results for the six months ended August 4, 2012 include our fiscal month ended March 3, 2012 (“February 2012”) for operations that are not reported on a lag (primarily our Domestic segment and Canadian operations), which were also included in our results for the fiscal year ended March 3, 2012, included in our fiscal 2012 Form 10-K. The change in fiscal calendar does not impact our quarterly financial statements for our lag entities because the reduction in the lag period from two months to one month occurred concurrent with the change in our fiscal calendar.

The following table shows the fiscal months included in the second quarters of fiscal 2013 and 2012 under our new fiscal calendar, as well as the fiscal months included in the second quarter of fiscal 2012 under our previous fiscal calendar:
New Fiscal Calendar(1)
 
Previous Fiscal Calendar(1)
2013
 
2012
 
2012
May 2012 - July 2012
 
May 2011 - July 2011
 
June 2011 - August 2011
(1) 
For entities reported on a lag, the fiscal months included in the second quarters of fiscal 2013 and 2012 were April through June under both the new and previous fiscal calendars.

The Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Earnings and Comprehensive Income, Consolidated Statements of Changes in Shareholders' Equity, Consolidated Statements of Cash Flows, and corresponding Notes are presented based on the new fiscal calendar (August 4, 2012 for fiscal 2013 and July 30, 2011 for fiscal 2012) and the most recent audited fiscal year (March 3, 2012).

Results for February 2012 and February 2011

As a result of the overlap of February 2012 between the fourth quarter of fiscal 2012 (previous fiscal calendar) and the first quarter of fiscal 2013 (new fiscal calendar), $3,908 of revenue from February 2012 is included in our Condensed Consolidated Statements of Earnings and Comprehensive Income for the six months ended August 4, 2012, which was also included in our results for the fiscal year ended March 3, 2012, included in our fiscal 2012 Form 10-K.

The following table provides a summary of the adjustment to Retained earnings within the Consolidated Statements of Changes in Shareholders' Equity as a result of the overlap of February 2012 between the fourth quarter of fiscal 2012 (previous fiscal calendar) and the first quarter of fiscal 2013 (new fiscal calendar), as well as the equivalent overlap in the prior-year period. The primary components of the net reconciling item to Retained earnings include the net earnings from the Domestic segment and Canadian operations, offset by the impact of share repurchases which reduced Retained earnings upon their retirement.
 
February 2012
 
February 2011
Net earnings
$
206

 
$
115

Impact of share repurchases(1)
(98
)
 

Net reconciling item to Retained earnings
$
108

 
$
115

(1)
Share repurchases reduced Retained earnings after the Additional paid-in capital balance was reduced to zero during February 2012.


9


In addition, the Consolidated Statements of Cash Flows includes a net reconciling item (adjustment) for the cash flows as a result of the overlap described above. The total adjustment for the overlap of February 2012 was $202, primarily due to $135 of cash used in financing activities and $46 of cash used in investing activities. The total adjustment for February 2011 was $235, due almost entirely to $228 of cash used in operating activities. The adjustments for both periods included the effect of exchange rate changes on our cash balances.

3.
Discontinued Operations

Discontinued operations comprise: (i) Napster operations within our Domestic segment; (ii) large-format Best Buy branded store operations in China, Turkey, and the United Kingdom ("U.K.") within our International segment; and (iii) The Phone House stores in Belgium within our International Segment. The presentation of discontinued operations has been retrospectively applied to all prior periods presented.

The financial results of discontinued operations for the three and six months ended August 4, 2012 and July 30, 2011, were as follows:
 
Three Months Ended
 
Six Months Ended
 
August 4, 2012
 
July 30, 2011
 
August 4, 2012
 
July 30, 2011
 
 
 
(recast)
 
 
 
(recast)
Revenue
$

 
$
89

 
$
8

 
$
217

 
 
 
 
 
 
 
 
Restructuring charges(1)
(1
)
 
1

 
5

 
29

 
 
 
 
 
 
 
 
Earnings (loss) from discontinued operations before income tax benefit
3

 
(53
)
 
(12
)
 
(127
)
Income tax (expense) benefit
(3
)
 
12

 
3

 
32

Gain on sale of discontinued operations

 
4

 

 
4

Net loss from discontinued operations, including noncontrolling interests

 
(37
)
 
(9
)
 
(91
)
Net loss from discontinued operations attributable to noncontrolling interests

 
15

 
6

 
26

Net loss from discontinued operations attributable to Best Buy Co., Inc.
$

 
$
(22
)
 
$
(3
)
 
$
(65
)
 
(1)  
See Note 7, Restructuring Charges, for further discussion of the restructuring charges associated with discontinued operations.

4.
Investments
 
Investments were comprised of the following:
 
August 4, 2012
 
March 3, 2012
 
July 30, 2011
 
 
 
 
 
(recast)
Short-term investments
 

 
 

 
 

U.S. Treasury bills
$

 
$

 
$
80

 
 
 
 
 
 
Equity and other investments
 

 
 

 
 

Debt securities (auction rate securities)
22

 
82

 
91

Marketable equity securities
3

 
3

 
150

Other investments
66

 
55

 
75

Total equity and other investments
$
91

 
$
140

 
$
316

Debt Securities
 
Our debt securities are comprised of auction rate securities (“ARS”). ARS were intended to behave like short-term debt instruments because their interest rates reset periodically through an auction process, most commonly at intervals of 7, 28, and 35 days. The auction process had historically provided a means by which we could roll over the investment or sell these securities at par in order to provide us with liquidity, as needed. As a result, we classify our investments in ARS as available-

10


for-sale and carry them at fair value.

In February 2008, auctions began to fail due to insufficient buyers, as the amount of securities submitted for sale in auctions exceeded the aggregate amount of the bids. For each failed auction, the interest rate on the security moves to a maximum rate specified for each security, and generally resets at a level higher than specified short-term interest rate benchmarks. To date, we have collected all interest due on our ARS and expect to continue to do so in the future. Due to persistent failed auctions and the uncertainty of when these investments could be liquidated at par, we have classified all of our investments in ARS as non-current assets within Equity and Other Investments in our Condensed Consolidated Balance Sheet as of August 4, 2012.
 
We sold $47 of ARS at par during the second quarter of fiscal 2013. However, at August 4, 2012, our entire remaining ARS portfolio, consisting of seven investments in ARS with an aggregate value at par of $24, was subject to failed auctions.
 
Our ARS portfolio consisted of the following, at fair value:
Description
 
Nature of collateral or guarantee
 
August 4, 2012
 
March 3, 2012
 
July 30, 2011
 
 
 
 
 
 
 
 
(recast)
Student loan bonds
 
Student loans guaranteed 95% to 100% by the U.S. government
 
$
20

 
$
80

 
$
89

Municipal revenue bonds
 
100% insured by AA/Aa-rated bond insurers at August 4, 2012
 
2

 
2

 
2

Total fair value plus accrued interest(1)
 
 
 
$
22

 
$
82

 
$
91

 
(1) 
The par value and weighted-average interest rates (taxable equivalent) of our ARS were $24, $88 and $93, and 0.69%, 0.50% and 0.32%, respectively, at August 4, 2012, March 3, 2012 and July 30, 2011, respectively.
 
At August 4, 2012, our ARS portfolio was 39% AAA/Aaa-rated, 29% AA/Aa-rated, and 32% A/A-rated.
 
The investment principal associated with failed auctions will not be accessible until successful auctions occur, a buyer is found outside of the auction process, the issuers establish a different form of financing to replace these securities, or final payments are due according to the contractual maturities of the debt issuances, which range from 4 to 29 years. We do not intend to sell our remaining ARS until we can recover the full principal amount through one of the means described above. In addition, we do not believe it is more likely than not that we would be required to sell our remaining ARS until we can recover the full principal amount based on our other sources of liquidity.

We evaluated our entire ARS portfolio of $24 (par value) for impairment at August 4, 2012, based primarily on the methodology described in Note 5, Fair Value Measurements. As a result of this review, we determined that the fair value of our ARS portfolio at August 4, 2012 was $22. Accordingly, a $2 pre-tax unrealized loss is recognized in accumulated other comprehensive income. This unrealized loss reflects a temporary impairment on all of our investments in ARS. The estimated fair value of our ARS portfolio could change significantly based on future market conditions. We will continue to assess the fair value of our ARS portfolio for substantive changes in relevant market conditions, changes in our financial condition, or other changes that may alter our estimates described above.

We may be required to record an additional unrealized holding loss or an impairment charge to earnings if we determine that our ARS portfolio has incurred a further decline in fair value that is temporary or other-than-temporary, respectively. Factors that we consider when assessing our ARS portfolio for other-than-temporary impairment include the duration and severity of the impairment, the reason for the decline in value, the potential recovery period, the nature of the collateral or guarantees in place, and our intent and ability to hold an investment.
 
We had $(1), $(3) and $(1) of unrealized loss, net of tax, recorded in accumulated other comprehensive income at August 4, 2012, March 3, 2012 and July 30, 2011, respectively, related to our investments in debt securities.
 
Marketable Equity Securities
 
We invest in marketable equity securities and classify them as available-for-sale. Investments in marketable equity securities are classified as non-current assets within Equity and Other Investments in our Condensed Consolidated Balance Sheets and are reported at fair value based on quoted market prices.
 

11


Our investments in marketable equity securities were as follows:
 
August 4, 2012
 
March 3, 2012
 
July 30, 2011
 
 
 
 
 
(recast)
Common stock of TalkTalk Telecom Group PLC
$

 
$

 
$
88

Common stock of Carphone Warehouse Group plc

 

 
61

Other
3

 
3

 
1

Total
$
3

 
$
3

 
$
150

 
We review all investments for other-than-temporary impairment at least quarterly or as indicators of impairment exist. Indicators of impairment include the duration and severity of the decline in fair value, as well as the intent and ability to hold the investment to allow for a recovery in the market value of the investment. In addition, we consider qualitative factors that include, but are not limited to: (i) the financial condition and business plans of the investee, including its future earnings potential, (ii) the investee’s credit rating, and (iii) the current and expected market and industry conditions in which the investee operates. If a decline in the fair value of an investment is deemed by management to be other-than-temporary, the cost basis of the investment is written down to fair value, and the amount of the write-down is included in net earnings.

All unrealized holding gains or losses related to our investments in marketable equity securities are reflected net of tax in accumulated other comprehensive income in shareholders’ equity. The total unrealized gain, net of tax, included in accumulated other comprehensive income was $1, $0 and $77 at August 4, 2012, March 3, 2012 and July 30, 2011, respectively.
 
Other Investments
 
The aggregate carrying values of investments accounted for using either the cost method or the equity method at August 4, 2012, March 3, 2012 and July 30, 2011, were $66, $55 and $75, respectively.

5.
Fair Value Measurements
 
Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. To measure fair value, we use a three-tier valuation hierarchy based upon observable and non-observable inputs:
 
Level 1 — Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date.
 
Level 2 — Significant other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including:
 
Quoted prices for similar assets or liabilities in active markets;
Quoted prices for identical or similar assets in non-active markets;
Inputs other than quoted prices that are observable for the asset or liability; and
Inputs that are derived principally from or corroborated by other observable market data.
 
Level 3 — Significant unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.
 
Assets and Liabilities Measured at Fair Value on a Recurring Basis
 
The fair value hierarchy requires the use of observable market data when available. In instances where the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability. The following tables set forth by level within the fair value hierarchy, our financial assets and liabilities that were accounted for at fair value on a recurring basis at August 4, 2012, March 3, 2012 and July 30, 2011, according to the valuation techniques we used to determine their fair values.

12


 
 
 
Fair Value Measurements
Using Inputs Considered as
 
Fair Value at
August 4, 2012
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
ASSETS
 

 
 

 
 

 
 

Other current assets
 

 
 

 
 

 
 

Money market funds (restricted cash)
$
62

 
$
62

 
$

 
$

U.S. Treasury bills (restricted cash)
30

 
30

 

 

Equity and other investments
 

 
 

 
 

 
 

Auction rate securities
22

 

 

 
22

Marketable equity securities
3

 
3

 

 

 
 
 
 
 
 
 
 
LIABILITIES
 

 
 

 
 

 
 

Accrued liabilities
 
 
 
 
 
 
 
Foreign currency derivative instruments
2

 

 
2

 


 
 
 
Fair Value Measurements
Using Inputs Considered as
 
Fair Value at
March 3, 2012
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
ASSETS
 

 
 

 
 

 
 

Cash and cash equivalents
 

 
 

 
 

 
 

Money market funds
$
272

 
$
272

 
$

 
$

Other current assets
 

 
 

 
 

 
 

Money market funds (restricted cash)
119

 
119

 

 

U.S. Treasury bills (restricted cash)
30

 
30

 

 

Foreign currency derivative instruments
1

 

 
1

 

Equity and other investments
 

 
 

 
 

 
 

Auction rate securities
82

 

 

 
82

Marketable equity securities
3

 
3

 

 

 
 
 
 
 
 
 
 
LIABILITIES
 

 
 

 
 

 
 

Accrued liabilities
 

 
 

 
 

 
 

Foreign currency derivative instruments
2

 

 
2

 

 

13


 
 
 
Fair Value Measurements
Using Inputs Considered as
 
Fair Value at
July 30, 2011
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 
(recast)
 
(recast)
 
(recast)
 
(recast)
ASSETS
 

 
 

 
 

 
 

Cash and cash equivalents
 
 
 
 
 
 
 
Money market funds
$
605

 
$
605

 
$

 
$

Commercial paper
165

 

 
165

 

Short-term investments
 

 
 

 
 

 
 

U.S. Treasury bills
80

 
80

 

 

Other current assets
 

 
 

 
 

 
 

Money market funds (restricted assets)
133

 
133

 

 

U.S. Treasury bills (restricted assets)
45

 
45

 

 

Foreign currency derivative instruments
5

 

 
5

 

Equity and other investments
 

 
 

 
 

 
 

Auction rate securities
91

 

 

 
91

Marketable equity securities
150

 
150

 

 

Other assets
 
 
 
 
 
 
 
Foreign currency derivative instruments
1

 

 
1

 

 
 
 
 
 
 
 
 
LIABILITIES
 
 
 
 
 
 
 
Accrued liabilities
 

 
 

 
 

 
 

Foreign currency derivative instruments
1

 

 
1

 


The following tables provide a reconciliation between the beginning and ending balances of items measured at fair value on a recurring basis in the tables above that used significant unobservable inputs (Level 3) for the three and five months ended August 4, 2012 and July 30, 2011.
 
Debt securities-
Auction rate securities only
 
Student loan
bonds
 
Municipal
revenue bonds
 
Total
Balances at May 5, 2012
$
64

 
$
2

 
$
66

Changes in unrealized losses included in other comprehensive income
3

 

 
3

Sales
(47
)
 

 
(47
)
Balances at August 4, 2012
$
20

 
$
2

 
$
22

  
 
Debt securities-
Auction rate securities only
 
Student loan
bonds
 
Municipal
revenue bonds
 
Total
Balances at March 3, 2012
$
80

 
$
2

 
$
82

Changes in unrealized losses included in other comprehensive income
4

 

 
4

Sales
(64
)
 

 
(64
)
Balances at August 4, 2012
$
20

 
$
2

 
$
22



14


 
Debt securities-
Auction rate securities only
 
Student loan
bonds
 
Municipal
revenue bonds
 
Total
Balances at April 30, 2011
$
95

 
$
2

 
$
97

Changes in unrealized losses included in other comprehensive income
2

 

 
2

Sales
(8
)
 

 
(8
)
Balances at July 30, 2011 (recast)
$
89

 
$
2

 
$
91

 
 
Debt securities-
Auction rate securities only
 
Student loan
bonds
 
Municipal
revenue bonds
 
Total
Balances at February 26, 2011
$
108

 
$
2

 
$
110

Changes in unrealized losses included in other comprehensive income
3

 

 
3

Sales
(22
)
 

 
(22
)
Balances at July 30, 2011 (recast)
$
89

 
$
2

 
$
91


The following methods and assumptions were used to estimate the fair value of each class of financial instrument:
 
Money Market Funds.  Our money market fund investments that are traded in an active market were measured at fair value using quoted market prices and, therefore, were classified as Level 1.

U.S. Treasury Bills.  Our U.S. Treasury bills were classified as Level 1 as they trade with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis.
 
Commercial Paper.  Our investments in commercial paper were measured using inputs based upon quoted prices for similar instruments in active markets and, therefore, were classified as Level 2.
 
Foreign Currency Derivative Instruments.  Comprised primarily of foreign currency forward contracts and foreign currency swap contracts, our foreign currency derivative instruments were measured at fair value using readily observable market inputs, such as quotations on forward foreign exchange points and foreign interest rates. Our foreign currency derivative instruments were classified as Level 2 as these instruments are custom, over-the-counter contracts with various bank counterparties that are not traded in active markets.
 
Auction Rate Securities.  Our investments in ARS were classified as Level 3 as quoted prices were unavailable due to events described in Note 4, Investments. Due to limited market information, we utilized a discounted cash flow (“DCF”) model to derive an estimate of fair value. The unobservable inputs and assumptions we used in preparing the DCF model included estimates with respect to the amount and timing of future interest and principal payments, forward projections of the interest rate benchmarks, the probability of full repayment of the principal considering the credit quality and guarantees in place, and the rate of return required by investors to own such securities given the current liquidity risk associated with ARS. Changes in these unobservable inputs are not likely to have a significant impact on the fair value measurement of our ARS.
 
Marketable Equity Securities.  Our marketable equity securities were measured at fair value using quoted market prices. They were classified as Level 1 as they trade in active markets for which closing stock prices are readily available.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
 
Assets and liabilities that are measured at fair value on a nonrecurring basis relate primarily to our tangible fixed assets, goodwill and other intangible assets, which are remeasured when the derived fair value is below carrying value on our Condensed Consolidated Balance Sheets. For these assets, we do not periodically adjust carrying value to fair value except in the event of impairment. When we determine that impairment has occurred, the carrying value of the asset is reduced to fair value and the difference is recorded within Operating Income in our Condensed Consolidated Statements of Earnings and Comprehensive Income.


15


With the exception of fixed asset impairments associated with our restructuring activities described in Note 7, Restructuring Charges, we had no significant remeasurements of such assets or liabilities to fair value during the six months ended August 4, 2012 and July 30, 2011. The following table summarizes the fair value remeasurements recorded during the six months ended August 4, 2012 and July 30, 2011:
 
Six Months Ended
 
Six Months Ended
 
August 4, 2012
 
July 30, 2011
 
Impairments
 
Remaining Net Carrying Value
 
Impairments
 
Remaining Net Carrying Value
 
 
 
 
 
(recast)
 
(recast)
Continuing operations
 
 
 
 
 
 
 
Property and equipment
$
29

 
$

 
$
1

 
$


The fair value remeasurements included in the table above were based on significant unobservable inputs (Level 3). 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 inputs to the DCF model generally included our forecasts of net cash generated from revenue, expenses and other significant cash outflows, such as capital expenditures, as well as an appropriate discount rate. In the case of these specific assets, for which their impairment was the result of restructuring activities, no future cash flows have been assumed as the assets will cease to be used and expected sale values are nominal.

Fair Value of Financial Instruments
 
Our financial instruments, other than those presented in the disclosures above, include cash, receivables, other investments, accounts payable, other payables, and short- and long-term debt. The fair values of cash, receivables, accounts payable, other payables, and short-term debt approximated carrying values because of the short-term nature of these instruments. If these instruments were measured at fair value in the financial statements, they would be classified as Level 1 in the fair value hierarchy. Fair values for other investments held at cost are not readily available, but we estimate that the carrying values for these investments approximate fair value. See Note 8, Debt, for information about the fair value of our long-term debt.

6.
Goodwill and Intangible Assets
 
The changes in the carrying values of goodwill and indefinite-lived tradenames by segment were as follows in the five months ended August 4, 2012 and July 30, 2011:
 
Goodwill
 
Indefinite-lived Tradenames
 
Domestic
 
International
 
Total
 
Domestic
 
International
 
Total
Balances at March 3, 2012
$
516

 
$
819

 
$
1,335

 
$
19

 
$
111

 
$
130

Changes in foreign currency exchange rates

 
(7
)
 
(7
)
 

 

 

Acquisitions
14

 

 
14

 

 

 

Balances at August 4, 2012
$
530

 
$
812

 
$
1,342

 
$
19

 
$
111

 
$
130

 

 
Goodwill
 
Indefinite-lived Tradenames
 
Domestic
 
International
 
Total
 
Domestic
 
International
 
Total
Balances at February 26, 2011
$
422

 
$
2,032

 
$
2,454

 
$
21

 
$
84

 
$
105

Changes in foreign currency exchange rates

 
53

 
53

 

 
3

 
3

Other(1)

 

 

 

 
28

 
28

Balances at July 30, 2011 (recast)
$
422

 
$
2,085

 
$
2,507

 
$
21

 
$
115

 
$
136

(1) 
Represents the transfer of certain definite-lived tradenames (at their net book value) to indefinite-lived tradenames following our decision not to phase out certain tradenames. We believe these tradenames will continue to contribute to our future cash flows indefinitely.


16


The following table provides the gross carrying amount of goodwill and cumulative goodwill impairment losses:
 
August 4, 2012
 
March 3, 2012
 
July 30, 2011
 
Gross
Carrying
Amount
 
Cumulative
Impairment
 
Gross
Carrying
Amount
 
Cumulative
Impairment
 
Gross
Carrying
Amount
 
Cumulative
Impairment
 
 
 
 
 
 
 
 
 
(recast)
 
(recast)
Goodwill
$
2,603

 
$
(1,261
)
 
$
2,596

 
$
(1,261
)
 
$
2,571

 
$
(64
)
 
The following table provides the gross carrying values and related accumulated amortization of definite-lived intangible assets:
 
August 4, 2012
 
March 3, 2012
 
July 30, 2011
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
 
 
 
 
 
 
 
 
(recast)
 
(recast)
Customer relationships
$
465

 
$
(244
)
 
$
453

 
$
(224
)
 
$
393

 
$
(214
)

Total amortization expense for the three months ended August 4, 2012 and July 30, 2011, was $10 and $15, respectively, and was $20 and $30 for the six months then ended, respectively. The estimated future amortization expense for identifiable intangible assets is as follows:
Fiscal Year
 
Remainder of fiscal 2013
$
21

2014
41

2015
41

2016
41

2017
24

Thereafter
53


7.
Restructuring Charges
 
Summary

Restructuring charges incurred in the six months ended August 4, 2012 and July 30, 2011, for our fiscal 2013, fiscal 2012 and fiscal 2011 restructuring activities were as follows:
 
Six Months Ended
 
August 4, 2012
 
July 30, 2011
 
 
 
(recast)
Continuing operations
 
 
 
Fiscal 2013 restructuring
$
224

 
$

Fiscal 2012 restructuring
6

 

Fiscal 2011 restructuring
(12
)
 
4

Total
218

 
4

Discontinued operations
 
 
 
Fiscal 2013 restructuring

 

Fiscal 2012 restructuring
3

 

Fiscal 2011 restructuring
2

 
29

Total (Note 3)
5

 
29

Total
$
223

 
$
33


Fiscal 2013 Restructuring

In the first quarter of fiscal 2013, we initiated a series of actions to restructure operations in our Domestic segment intended to improve operating performance. The actions include closure of approximately 50 large-format Best Buy branded stores in the U.S. and changes to the store and corporate operating models. The costs of implementing the changes primarily consist of

17


facility closure costs, employee termination benefits and property and equipment (primarily store fixtures) impairments.

We incurred $91 of charges related to the fiscal 2013 restructuring in the second quarter of fiscal 2013, consisting primarily of facility closure and other costs related to our closure of 41 stores, partially offset by an adjustment to reduce our expected termination benefits due to a greater number of employees finding new positions within Best Buy than originally planned. In the first six months of fiscal 2013, we incurred $224 of restructuring charges related to the fiscal 2013 restructuring consisting primarily of facility closure and other costs, termination benefits and property and equipment impairments.

We expect to incur additional pre-tax restructuring charges (primarily facility closure costs) of between $25 and $75 related to our fiscal 2013 restructuring activities. The estimated facility closure costs associated with lease commitments on vacated stores will be recognized when stores are closed. We expect to substantially complete these restructuring activities in fiscal 2013, with the exception of lease payments for vacated stores which will continue until the lease expires or we otherwise terminate the lease.

All restructuring charges related to our fiscal 2013 restructuring activities are from continuing operations and are presented in Restructuring charges in our Condensed Consolidated Statements of Earnings and Comprehensive Income. The composition of the restructuring charges we incurred in the six months ended August 4, 2012 for our fiscal 2013 restructuring activities in the Domestic segment was as follows:
 
Six Months Ended
August 4, 2012
Continuing operations
 
Property and equipment impairments
$
27

Termination benefits
81

Facility closure and other costs, net
116

Total
$
224


The following table summarizes our restructuring accrual activity during the five months ended August 4, 2012 related to termination benefits and facility closure and other costs associated with our 2013 restructuring activities:
 
Termination
Benefits
 
Facility
Closure and
Other Costs
 
Total
Balance at March 3, 2012
$

 
$

 
$

Charges
107

 
116

 
223

Cash payments
(35
)
 
(2
)
 
(37
)
Adjustments
(27
)
 
(6
)
 
(33
)
Balance at August 4, 2012
$
45

 
$
108

 
$
153


Fiscal 2012 Restructuring

In the third quarter of fiscal 2012, we implemented a series of actions to restructure operations in our Domestic and International segments. The actions within our Domestic segment included a decision to modify 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 the restructured activities in our International segment. We view these restructuring activities as necessary to meet our long-term financial performance objectives by refocusing our investments on areas that provide profitable growth opportunities and meet our overall return expectations. All restructuring charges directly related to the large-format Best Buy branded stores in the U.K. are reported within Loss from discontinued operations in our Condensed Consolidated Statements of Earnings and Comprehensive Income. Refer to Note 3, Discontinued Operations.

We incurred $9 of charges related to the fiscal 2012 restructuring in the first six months of fiscal 2013. Of the total charges, $6 related to our Domestic segment and consisted primarily of other costs resulting from the modified strategy for certain mobile broadband offerings. The remaining $3 of charges related to our International segment and were directly associated with the closure of our Best Buy branded stores in the U.K.

We do not expect to incur further material restructuring charges related to our fiscal 2012 restructuring activities in either our Domestic or International segments, as we have substantially completed these restructuring activities.

18



All restructuring charges from continuing operations related to our fiscal 2012 restructuring activities are presented in Restructuring charges in our Condensed Consolidated Statements of Earnings and Comprehensive Income, whereas all restructuring charges from discontinued operations related to our fiscal 2012 restructuring activities are presented in Loss from discontinued operations in our Condensed Consolidated Statements of Earnings and Comprehensive Income. The composition of the restructuring charges we incurred in the six months ended August 4, 2012, as well as the cumulative amount incurred through August 4, 2012, for our fiscal 2012 restructuring activities for both the Domestic and International segments was as follows:
 
Domestic
 
International
 
Total
 
Six Months
Ended
August 4, 2012
 
Cumulative
Amount
through
August 4, 2012
 
Six Months
Ended
August 4, 2012
 
Cumulative
Amount
through
August 4, 2012
 
Six Months
Ended
August 4, 2012
 
Cumulative
Amount
through
August 4, 2012
Continuing operations
 
 
 
 
 
 
 
 
 
 
 
Property and equipment impairments
$
1

 
$
17

 
$

 
$
15

 
$
1

 
$
32

Termination benefits

 
1

 

 

 

 
1

Facility closure and other costs, net
5

 
5

 

 

 
5

 
5

Total
6

 
23

 

 
15

 
6

 
38

 
 
 
 
 
 
 
 
 
 
 
 
Discontinued operations
 
 
 
 
 
 
 
 
 
 
 
Inventory write-downs

 

 

 
11

 

 
11

Property and equipment impairments

 

 

 
96

 

 
96

Termination benefits

 

 
1

 
17

 
1

 
17

Facility closure and other costs, net