Derivative Instruments

9 Months Ended

Nov. 02, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

We manage our transaction exposure to certain market-based risks through the use of foreign currency derivative instruments. Our objective in holding derivatives is to reduce the volatility of net earnings and cash flows associated with changes in foreign currency exchange rates. We do not hold or issue derivative financial instruments for trading or speculative purposes. In addition, we have no derivatives that have credit risk-related contingent features, and we mitigate our credit risk by engaging with major financial institutions as our counterparties.

Derivatives Not Designated as Hedging Instruments

Derivatives not designated as hedging instruments include foreign currency forward contracts used to manage the impact of fluctuations in foreign currency exchange rates relative to recognized receivable and payable balances denominated in non-functional currencies, and on certain forecast inventory purchases denominated in non-functional currencies. The contracts generally have terms of up to 12 months. These derivative instruments are not designated in hedging relationships and, therefore, we record gains and losses on these contracts directly to net earnings. At November 2, 2013, the notional amount of these instruments was $138 million and the effect of these instruments on our Consolidated Statements of Earnings for the three and nine months ended November 2, 2013, recognized in selling, general and administrative expenses was a $3 million loss and $3 million gain, respectively.

In conjunction with our agreement to sell our 50% ownership interest in Best Buy Europe as described in Note 2, Discontinued Operations, we entered into a deal-contingent foreign currency forward contract to hedge £455 million of the total £471 million of net proceeds. The contract was settled in cash following the completion of the sale on June 26, 2013. This instrument had no effect on the Consolidated Statements of Earnings in the three months ended November 2, 2013, and a $2 million loss recognized in gain (loss) from discontinued operations in the nine months ended November 2, 2013.

Summary of Derivative Balances

The following table presents the notional amounts of our foreign currency exchange contracts at November 2, 2013, February 2, 2013, and November 3, 2012 ($ in millions): 

	Notional Amount
Contract Type	November 2, 2013		February 2, 2013		November 3, 2012
Derivatives not designated as hedging instruments	$	138	$	173	$	323