Restructuring Charges

Summary

Restructuring charges incurred in the three months ended May 4, 2013 and May 5, 2012 for our restructuring activities were as follows ($ in millions):



	Three Months Ended
	May 4, 2013		May 5, 2012
Continuing operations
Renew Blue	$	6	$	—
Fiscal 2013 U.S. restructuring	—		133
Fiscal 2012 restructuring	—		6
Fiscal 2011 restructuring	—		(12		)
Total	6		127
Discontinued operations
Fiscal 2013 Europe restructuring	53		—
Fiscal 2012 restructuring	—		3
Fiscal 2011 restructuring	—		3
Total (Note 2)	53		6
Total	$	59	$	133

Renew Blue

In the fourth quarter of fiscal 2013, we initiated our Renew Blue strategy, which includes six key priorities. Activities and initiatives intended to reduce costs and improve operating performance by focusing on core business activities, reducing headcount and optimizing our real estate portfolio represent a component of our Renew Blue priorities. We incurred $6 million of restructuring charges related to Renew Blue initiatives during the first quarter of fiscal 2014. We expect to continue to implement Renew Blue initiatives throughout fiscal 2014, as we further analyze our operations and strategies.

All restructuring charges related to this program are from continuing operations and are presented in Restructuring charges in our Consolidated Statements of Earnings. The composition of the restructuring charges we incurred for this program in the three months ended May 4, 2013, as well as the cumulative amount incurred through May 4, 2013, was as follows ($ in millions):



	Domestic				International				Total
	Three Months Ended May 4, 2013		Cumulative Amount through May 4, 2013		Three Months Ended May 4, 2013		Cumulative Amount through May 4, 2013		Three Months Ended May 4, 2013		Cumulative Amount through May 4, 2013
Continuing operations
Inventory write-downs	$	—	$	1	$	—	$	—	$	—	$	1
Property and equipment impairments	1		8		—		23		1		31
Termination benefits	—		46		4		13		4		59
Investment impairments	—		27		—		—		—		27
Facility closure and other costs	—		3		1		56		1		59
Total	$	1	$	85	$	5	$	92	$	6	$	177

The following table summarizes our restructuring accrual activity during the three months ended May 4, 2013 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 February 2, 2013	$	54		$	54		$	108
Charges	4			4			8
Cash payments	(35		)	(3		)	(38		)
Adjustments	(2		)	8			6
Changes in foreign currency exchange rates	—			(1		)	(1		)
Balance at May 4, 2013	$	21		$	62		$	83

Fiscal 2013 Europe Restructuring

In the third quarter of fiscal 2013, we initiated a series of actions to restructure our Best Buy Europe operations in our International segment intended to improve operating performance. All restructuring charges related to this program are presented in discontinued operations as a result of our agreement to sell our 50% ownership interest in Best Buy Europe, as described in Note 2, Assets and Liabilities Held for Sale and Discontinued Operations. We expect to incur additional restructuring charges under this program until the completion of the sale of Best Buy Europe, which is expected to occur in the second quarter of fiscal 2014.

The composition of the restructuring charges we incurred for this program in the three months ended May 4, 2013, as well as the cumulative amount incurred through May 4, 2013, was as follows ($ in millions):



	Three Months Ended May 4, 2013		Cumulative Amount through May 4, 2013
Discontinued operations
Property and equipment impairments	$	45	$	57
Termination benefits	2		21
Tradename impairment	4		4
Facility closure and other costs	2		7
Total	$	53	$	89



	Termination Benefits			Facility Closure and Other Costs			Total
Balance at February 2, 2013	$	—		$	5		$	5
Charges	2			2			4
Cash payments	(1		)	(4		)	(5		)
Adjustments	—			—			—
Balance at May 4, 2013	$	1		$	3		$	4

Fiscal 2013 U.S. 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 49 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 comprised facility closure costs, employee termination benefits and property and equipment (primarily store fixtures) impairments. We did not incur any significant charges related to this program in the first quarter of fiscal 2014. We incurred $133 million of charges related to the fiscal 2013 U.S. restructuring in the first quarter of fiscal 2013. We do not expect to incur further material restructuring charges related to this program, with the exception of lease payments for vacated stores which will continue until leases expire or are terminated.

The restructuring charges related to our fiscal 2013 restructuring activities are from continuing operations and are presented in Restructuring charges in our Consolidated Statements of Earnings. The composition of the restructuring charges we incurred for this program in the three months ended May 4, 2013 and May 5, 2012, as well as the cumulative amount incurred through May 4, 2013, was as follows ($ in millions):



	Three Months Ended				Cumulative Amount through May 4, 2013
	May 4, 2013		May 5, 2012		Cumulative Amount through May 4, 2013
Continuing operations
Property and equipment impairments	$	—	$	25	$	29
Termination benefits	—		107		77
Facility closure and other costs, net	—		1		151
Total	$	—	$	133	$	257

The following table summarizes our restructuring accrual activity during the three months ended May 4, 2013, and the two months ended May 5, 2012, 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 February 2, 2013	$	4		$	113		$	117
Charges	—			2			2
Cash payments	(2		)	(9		)	(11		)
Adjustments	(2		)	(4		)	(6		)
Balance at May 4, 2013	$	—		$	102		$	102



	Termination Benefits		Facility Closure and Other Costs		Total
Balance at March 3, 2012	$	—	$	—	$	—
Charges	103		1		104
Cash payments	—		—		—
Adjustments	—		—		—
Balance at May 5, 2012	$	103	$	1	$	104

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. 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 directly related to the large-format Best Buy branded stores in the U.K. are reported within Loss from discontinued operations in our Consolidated Statements of Earnings. Refer to Note 2, Assets and Liabilities Held for Sale and Discontinued Operations.

We did not incur any charges related to the fiscal 2012 restructuring in the first quarter of fiscal 2014. In the first quarter of fiscal 2013, we incurred $9 million of charges related to the fiscal 2012 restructuring. We do not expect to incur further material restructuring charges related to this program in either our Domestic or International segments, as we have substantially completed these restructuring activities.

All restructuring charges from continuing operations related to this program are presented in Restructuring charges in our Consolidated Statements of Earnings, whereas all restructuring charges from discontinued operations related to our fiscal 2012 restructuring activities are presented in Loss from discontinued operations in our Consolidated Statements of Earnings. The composition of the restructuring charges we incurred for this program in the three months ended May 5, 2012, as well as the cumulative amount incurred through May 4, 2013, was as follows ($ in millions):



	Domestic				International				Total
	Three Months Ended May 5, 2012		Cumulative Amount through May 4, 2013		Three Months Ended May 5, 2012		Cumulative Amount through May 4, 2013		Three Months Ended May 5, 2012		Cumulative Amount through May 4, 2013
	Three Months Ended May 5, 2012		Cumulative Amount through May 4, 2013		Three Months Ended May 5, 2012		Cumulative Amount through May 4, 2013		Three Months Ended May 5, 2012		Cumulative Amount through May 4, 2013
Continuing operations
Property and equipment impairments	$	1	$	17	$	—	$	15	$	1	$	32
Termination benefits	—		1		—		—		—		1
Facility closure and other costs	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	—		—		2		79		2		79
Total	—		—		3		203		3		203
Total	$	6	$	23	$	3	$	218	$	9	$	241



	Termination Benefits		Facility Closure and Other Costs⁽¹⁾			Total
Balance at February 2, 2013	$	—	$	36		$	36
Charges	—		—			—
Cash payments	—		(29		)	(29		)
Adjustments	—		—			—
Changes in foreign currency exchange rates	—		(2		)	(2		)
Balance at May 4, 2013	$	—	$	5		$	5



	Termination Benefits			Facility Closure and Other Costs⁽¹⁾			Total
Balance at March 3, 2012	$	17		$	85		$	102
Charges	1			2			3
Cash payments	(14		)	(43		)	(57		)
Adjustments	—			34			34
Changes in foreign currency exchange rates	—			3			3
Balance at May 5, 2012	$	4		$	81		$	85


⁽¹⁾	Included within the adjustments to facility closure and other costs is $34 million from the first quarter of fiscal 2013, representing an adjustment to exclude non-cash charges or benefits, which had no impact on our Consolidated Statements of Earnings in the first quarter of fiscal 2013.

Fiscal 2011 Restructuring

In the fourth quarter of fiscal 2011, we implemented a series of actions to restructure operations in our Domestic and International segments in order to improve performance and enhance customer service. The restructuring actions included plans to improve supply chain and operational efficiencies in our Domestic segment's operations, primarily focused on modifications to our distribution channels and exit from certain digital delivery services within our entertainment product category. During the first quarter of fiscal 2013, we recorded a net reduction to restructuring charges of $9 million, all of which related to our Domestic segment. The net reduction was largely the result of a gain recorded on the sale of a previously impaired distribution facility and equipment during the first quarter of fiscal 2013 (previously impaired through restructuring charges), partially offset by charges associated with the exit from certain digital delivery services within our entertainment product category. We have completed activities under this plan.