Derivative Instruments

3 Months Ended

May 04, 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 six 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 May 4, 2013, the notional amount of these instruments was $51 million and the effect of these instruments on our Consolidated Statements of Earnings for the three months ended May 4, 2013 was a gain recognized in Selling, general and administrative expenses of $1 million.

In conjunction with our agreement to sell our 50% interest in Best Buy Europe as described in Note 2, Assets and Liabilities Held for Sale andDiscontinued Operations, we entered into a deal-contingent foreign currency forward contract to hedge £455 million of the total £471 million of net proceeds. The notional amount of this instrument was $708 million based on the exchange rates in effect at May 4, 2013, and the effect of this instrument on our Consolidated Statements of Earnings for the three months ended May 4, 2013 was a loss recognized in Loss from discontinued operations of $4 million, due to foreign currency exchange rate fluctuations. In accordance with the agreement, if the sale of Best Buy Europe is not consummated, the forward contract will be canceled at no cost to us, in which case we would reverse accumulated gain or loss on the contract recorded in our Consolidated Statements of Earnings.

Summary of Derivative Balances

The following table presents the notional amounts of our foreign currency exchange contracts at May 4, 2013, February 2, 2013 and May 5, 2012 ($ in millions): 

	Notional Amount
Contract Type	May 4, 2013		February 2, 2013		May 5, 2012
Derivatives not designated as hedging instruments	$	759	$	173	$	240