Restructuring Charges

Charges incurred in the nine months ended October 31, 2015, and November 1, 2014, for our restructuring activities were as follows ($ in millions):



	Nine Months Ended
	October 31, 2015			November 1, 2014
Continuing operations
Canadian brand consolidation	$	189		$	—
Renew Blue	(2		)	18
Other restructuring activities⁽¹⁾	2			(6		)
Total continuing operations	189			12
Discontinued operations
Renew Blue	—			5
Total restructuring charges	$	189		$	17

(1)

Represents activity related to our remaining vacant space liability for U.S. large-format store closures in fiscal 2013. We may continue to incur immaterial adjustments to the liability for changes in sublease assumptions or potential lease buyouts. In addition, lease payments for vacated stores will continue until leases expire or are terminated. The remaining vacant space liability was $18 million at October 31, 2015.

Canadian Brand Consolidation

In the first quarter of fiscal 2016, we consolidated the Future Shop and Best Buy stores and websites in Canada under the Best Buy brand. This resulted in the permanent closure of 66 Future Shop stores and the conversion of the remaining 65 Future Shop stores to the Best Buy brand. In the first nine months of fiscal 2016, we incurred $189 million of restructuring charges related to implementing these changes, which primarily consisted of lease exit costs, a tradename impairment, property and equipment impairments, employee termination benefits and inventory write-downs. In addition, in the first nine months of fiscal 2016, we incurred $9 million of non-restructuring charges related to the changes. We expect to incur total pre-tax charges in the range of $210 million to $250 million related to this action, which includes restructuring charges and other non-restructuring charges. While we expect the majority of these costs to be borne in fiscal 2016, we expect to continue transformation of our Canadian operations throughout fiscal 2017 and fiscal 2018. The total expected charges include approximately $140 million to $180 million of cash charges.

The inventory write-downs related to our Canadian brand consolidation are presented in restructuring charges – cost of goods sold in our Consolidated Statements of Earnings, and the remainder of the restructuring charges are presented in restructuring charges in our Consolidated Statements of Earnings. The composition of total restructuring charges we incurred for the Canadian brand consolidation in the first nine months of fiscal 2016 was as follows ($ in millions):



	International
Continuing operations
Inventory write-downs	$	4
Property and equipment impairments	30
Tradename impairment	40
Termination benefits	26
Facility closure and other costs	89
Total continuing operations	$	189

The following tables summarize our restructuring accrual activity during the nine months ended October 31, 2015, related to termination benefits and facility closure and other costs associated with Canadian brand consolidation ($ in millions):



	Termination Benefits			Facility Closure and Other Costs			Total
Balances at January 31, 2015	$	—		$	—		$	—
Charges	28			113			141
Cash payments	(22		)	(28		)	(50		)
Adjustments⁽¹⁾	(2		)	(9		)	(11		)
Changes in foreign currency exchange rates	—			(3		)	(3		)
Balances at October 31, 2015	$	4		$	73		$	77

(1) The adjustments related to termination benefits relate to higher-than-expected employee retention. Adjustments to facility closure and other costs represent changes in sublease assumptions.

Renew Blue

In the fourth quarter of fiscal 2013, we launched the Renew Blue strategy, which included initiatives intended to reduce costs and improve operating performance. These initiatives included focusing on core business activities, reducing headcount, updating our store operating model and optimizing our real estate portfolio. These cost reduction initiatives represented one of the key Renew Blue priorities. We recognized a $2 million benefit and incurred $18 million of restructuring charges related to Renew Blue in the first nine months of fiscal 2016 and 2015, respectively. The charges in the first nine months of fiscal 2015 were primarily comprised of employee termination benefits. We expect to continue to implement cost reduction initiatives throughout the remainder of fiscal 2016 and into fiscal 2017, as we further analyze our operations and strategies.

For continuing operations, the inventory write-downs related to our Renew Blue restructuring activities are presented in restructuring charges - cost of goods sold in our Consolidated Statements of Earnings and the remainder of the restructuring charges are presented in restructuring charges. The restructuring charges from discontinued operations related to this plan are presented in discontinued operations, net of tax.

The composition of the restructuring charges we incurred for this program in the nine months ended October 31, 2015, and November 1, 2014, as well as the cumulative amount incurred from fiscal 2013 through October 31, 2015, was as follows ($ in millions):



	Domestic							International							Total
	Nine Months Ended					Cumulative Amount		Nine Months Ended					Cumulative Amount		Nine Months Ended					Cumulative Amount
	October 31, 2015			November 1, 2014		Cumulative Amount		October 31, 2015			November 1, 2014		Cumulative Amount		October 31, 2015			November 1, 2014		Cumulative Amount
Continuing operations
Inventory write-downs	$	—		$	—	$	1	$	—		$	—	$	—	$	—		$	—	$	1
Property and equipment impairments	—			—		14		—			1		25		—			1		39
Termination benefits	(2		)	11		159		—			3		38		(2		)	14		197
Investment impairments	—			—		43		—			—		—		—			—		43
Facility closure and other costs	1			1		5		(1		)	2		50		—			3		55
Total continuing operations	(1		)	12		222		(1		)	6		113		(2		)	18		335
Discontinued operations
Property and equipment impairments	—			—		—		—			—		1		—			—		1
Termination benefits	—			—		—		—			2		16		—			2		16
Facility closure and other costs	—			—		—		—			3		11		—			3		11
Total Discontinued Operations	—			—		—		—			5		28		—			5		28
Total	$	(1	)	$	12	$	222	$	(1	)	$	11	$	141	$	(2	)	$	23	$	363

The following tables summarize our restructuring accrual activity during the nine months ended October 31, 2015, and November 1, 2014, related to termination benefits and facility closure and other costs associated with this program ($ in millions):



	Termination Benefits			Facility Closure and Other Costs			Total
Balances at January 31, 2015	$	16		$	23		$	39
Charges	—			—			—
Cash payments	(7		)	(8		)	(15		)
Adjustments⁽¹⁾	(8		)	(5		)	(13		)
Changes in foreign currency exchange rates	—			—			—
Balances at October 31, 2015	$	1		$	10		$	11


(1)	Adjustments to termination benefits were due to higher-than-expected employee retention. In addition, adjustments include the remaining liabilities eliminated as a result of the sale of Five Star, as described in Note 2, Discontinued Operations.



	Termination Benefits			Facility Closure and Other Costs			Total
Balances at February 1, 2014	$	111		$	51		$	162
Charges	35			12			47
Cash payments	(117		)	(16		)	(133		)
Adjustments⁽¹⁾	(19		)	(5		)	(24		)
Changes in foreign currency exchange rates	—			(6		)	(6		)
Balances at November 1, 2014	$	10		$	36		$	46


(1)	Adjustments to termination benefits were due to higher-than-expected employee retention. Adjustments to facility closure and other costs represent changes in sublease assumptions.