Restructuring Charges

Summary

Charges incurred in the nine months ended November 2, 2013, and November 3, 2012, for our restructuring activities were as follows ($ in millions):



	Nine Months Ended
	November 2, 2013			November 3, 2012
Continuing operations
Renew Blue	$	52		$	—
Fiscal 2013 U.S. restructuring	(8		)	258
Fiscal 2012 restructuring	—			6
Fiscal 2011 restructuring	—			(12		)
Total	44			252
Discontinued operations
Fiscal 2013 Europe restructuring	95			2
Fiscal 2012 restructuring	5			(5		)
Fiscal 2011 restructuring	—			2
Total (Note 2)	100			(1		)
Total	$	144		$	251

Renew Blue

In the fourth quarter of fiscal 2013, we began implementing initiatives intended to reduce costs and improve operating performance. These initiatives included focusing on core business activities, reducing headcount and optimizing our real estate portfolio. These cost reduction initiatives represent one of the six Renew Blue priorities for fiscal 2014. We incurred $52 million of restructuring charges related to Renew Blue initiatives during the first nine months of fiscal 2014, primarily comprised of employee termination benefits, investment impairments, facility closure costs, and property and equipment impairments. 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 nine months ended November 2, 2013, as well as the cumulative amount incurred through November 2, 2013, was as follows ($ in millions):



	Domestic				International				Total
	Nine Months Ended November 2, 2013		Cumulative Amount through November 2, 2013		Nine Months Ended November 2, 2013		Cumulative Amount through November 2, 2013		Nine Months Ended November 2, 2013		Cumulative Amount through November 2, 2013
Continuing operations
Inventory write-downs	$	—	$	1	$	—	$	—	$	—	$	1
Property and equipment impairments	2		9		2		25		4		34
Termination benefits	16		62		10		19		26		81
Investment impairments	16		43		—		—		16		43
Facility closure and other costs	—		3		6		61		6		64
Total	$	34	$	118	$	18	$	105	$	52	$	223

The following table summarizes our restructuring accrual activity during the nine months ended November 2, 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	25			14			39
Cash payments	(65		)	(16		)	(81		)
Adjustments	(7		)	8			1
Changes in foreign currency exchange rates	1			(1		)	—
Balance at November 2, 2013	$	8		$	59		$	67

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 reported within gain (loss) from discontinued operations in our Consolidated Statements of Earnings as a result of the sale of our 50% ownership interest in Best Buy Europe. Refer to Note 2, Discontinued Operations. We incurred $95 million of restructuring charges in the first nine months of fiscal 2014, consisting primarily of property and equipment impairments and employee termination benefits. In the first nine months of fiscal 2013, we incurred $2 million of restructuring charges related to employee termination benefits. Given the sale of Best Buy Europe, we do not expect to incur additional restructuring charges related to this program.

The composition of the restructuring charges we incurred for this program in the nine months ended November 2, 2013 and November 3, 2012, as well as the cumulative amount incurred through November 2, 2013, was as follows ($ in millions):



	Nine Months Ended November 2, 2013		Nine Months Ended November 3, 2012		Cumulative Amount through November 2, 2013
Discontinued operations
Inventory write-downs	$	7	$	—	$	7
Property and equipment impairments	45		—		57
Termination benefits	36		2		55
Tradename impairment	4		—		4
Facility closure and other costs	3		—		8
Total	$	95	$	2	$	131

The following table summarizes our restructuring accrual activity during the nine months ended November 2, 2013, and the eight months ended November 3, 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	$	—		$	5		$	5
Charges	36			2			38
Cash payments	(2		)	(7		)	(9		)
Adjustments⁽¹⁾	(34		)	—			(34		)
Balance at November 2, 2013	$	—		$	—		$	—


⁽¹⁾	Represents the remaining liability written off as a result of the sale of Best Buy Europe, as described in Note 2, Discontinued Operations.



	Termination Benefits
Balance at March 3, 2012	$	—
Charges	2
Cash payments	(2		)
Balance at November 3, 2012	$	—

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 included 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 are primarily comprised of facility closure costs, employee termination benefits, and property and equipment (primarily store fixtures) impairments. We recognized a reduction to restructuring charges of $8 million in the nine months ended November 2, 2013, as a result of the buyout of a lease for less than the remaining vacant space liability. In the nine months ended November 3, 2012, we incurred $258 million of charges consisting primarily of facility closure and other costs, termination benefits, and property and equipment impairments. 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 U.S. 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 nine months ended November 2, 2013, and November 3, 2012, as well as the cumulative amount incurred through November 2, 2013, was as follows ($ in millions):



	Nine Months Ended					Cumulative Amount through November 2, 2013
	November 2, 2013			November 3, 2012		Cumulative Amount through November 2, 2013
Continuing operations
Property and equipment impairments	$	—		$	28	$	29
Termination benefits	—			83		77
Facility closure and other costs, net	(8		)	147		143
Total	$	(8	)	$	258	$	249



	Termination Benefits			Facility Closure and Other Costs			Total
Balance at February 2, 2013	$	4		$	113		$	117
Charges	—			3			3
Cash payments	(2		)	(39		)	(41		)
Adjustments	(2		)	(13		)	(15		)
Balance at November 2, 2013	$	—		$	64		$	64



	Termination Benefits			Facility Closure and Other Costs			Total
Balance at March 3, 2012	$	—		$	—		$	—
Charges	109			145			254
Cash payments	(65		)	(18		)	(83		)
Adjustments	(31		)	(3		)	(34		)
Balance at November 3, 2012	$	13		$	124		$	137

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 gain (loss) from discontinued operations in our Consolidated Statements of Earnings. Refer to Note 2, Discontinued Operations. All other restructuring charges related to this program are from continuing operations and are presented in restructuring charges in our Consolidated Statements of Earnings.

We incurred $5 million of charges related to this program in the first nine months of fiscal 2014, representing a change in sublease assumptions. In the first nine months of fiscal 2013, we incurred $1 million of charges, comprised primarily of facility closure and other costs. 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.

The composition of the restructuring charges we incurred for this program in the nine months ended November 2, 2013, and November 3, 2012, as well as the cumulative amount incurred through November 2, 2013, was as follows ($ in millions):



	Domestic						International							Total
	Nine Months Ended				Cumulative Amount through November 2, 2013		Nine Months Ended					Cumulative Amount through November 2, 2013		Nine Months Ended					Cumulative Amount through November 2, 2013
	Nov. 2, 2013		Nov. 3, 2012		Cumulative Amount through November 2, 2013		Nov. 2, 2013		Nov. 3, 2012			Cumulative Amount through November 2, 2013		Nov. 2, 2013		Nov. 3, 2012			Cumulative Amount through November 2, 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	—		—		—		5		(6		)	84		5		(6		)	84
Total	—		—		—		5		(5		)	208		5		(5		)	208
Total	$	—	$	6	$	23	$	5	$	(5	)	$	223	$	5	$	1		$	246



	Facility Closure and Other Costs
Balance at February 2, 2013	$	36
Cash payments	(33		)
Adjustments⁽¹⁾	(1		)
Changes in foreign currency exchange rates	(2		)
Balance at November 2, 2013	$	—


⁽¹⁾	Included within the adjustments is a $5 million charge related to a change in sublease assumptions, offset by a $(6) million adjustment to write off the remaining liability as a result of the sale of Best Buy Europe, as described in Note 2, Discontinued Operations.



	Termination Benefits			Facility Closure and Other Costs⁽¹⁾			Total
Balance at March 3, 2012	$	17		$	85		$	102
Charges	1			2			3
Cash payments	(17		)	(81		)	(98		)
Adjustments	—			25			25
Changes in foreign currency exchange rates	—			3			3
Balance at November 3, 2012	$	1		$	34		$	35


⁽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 nine months of fiscal 2013, we recorded a net reduction to restructuring charges of $10 million, which related primarily 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.