Restructuring Charges

Summary

Restructuring charges incurred in fiscal 2014, 2013 (11-month) and 2012 were as follows ($ in millions):



	12-Month			11-Month			12-Month
	2014			2013			2012
Continuing operations
Renew Blue	$	165		$	171		$	—
Fiscal 2013 U.S. restructuring	(6		)	257			—
Fiscal 2012 restructuring	—			(1		)	28
Fiscal 2011 restructuring	—			(12		)	20
Total	159			415			48
Discontinued operations
Fiscal 2013 Europe restructuring	95			36			—
Fiscal 2012 restructuring	5			(1		)	215
Fiscal 2011 restructuring	—			(1		)	24
Total (Note 4)	100			34			239
Total	$	259		$	449		$	287

Renew Blue Plan

In the fourth quarter of fiscal 2013 (11-month), we began implementing 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 represent one of the key Renew Blue priorities for fiscal 2014 and cost reductions will continue to be a priority in fiscal 2015. We incurred $165 million of charges related to Renew Blue initiatives during fiscal 2014. Of the total charges, $129 million related to our Domestic segment, which consisted of employee termination benefits, investment impairments, and property and equipment impairments. The remaining $36 million of charges related to our International segment and consisted of employee termination benefits, facility closure and other costs, and property and equipment impairments. We expect to continue to implement cost reduction initiatives throughout fiscal 2015, as we further analyze our operations and strategies.

We incurred $171 million of charges related to Renew Blue initiatives during fiscal 2013 (11-month). Of the total charges, $84 million related to our Domestic segment, which consisted primarily of employee termination benefits, investment impairments, and property and equipment impairments. The remaining $87 million of charges related to our International segment and consisted of facility closure and other costs, property and equipment impairments, and employee termination benefits.

All restructuring charges related to this plan are from continuing operations. Inventory write-downs are presented in restructuring charges - cost of goods sold in our Consolidated Statements of Earnings, and the remainder of restructuring charges are presented in restructuring charges in our Consolidated Statements of Earnings.

The composition of the restructuring charges we incurred for this program in fiscal 2014 and 2013 (11-month), as well as the cumulative amount incurred through the end of fiscal 2014, was as follows ($ in millions):



	Domestic						International						Total
	12-Month 2014		11-Month 2013		Cumulative Amount		12-Month 2014		11-Month 2013		Cumulative Amount		12-Month 2014		11-Month 2013		Cumulative Amount
Continuing operations
Inventory write-downs	$	—	$	1	$	1	$	—	$	—	$	—	$	—	$	1	$	1
Property and equipment impairments	7		7		14		2		23		25		9		30		39
Termination benefits	106		46		152		28		9		37		134		55		189
Investment impairments	16		27		43		—		—		—		16		27		43
Facility closure and other costs	—		3		3		6		55		61		6		58		64
Total	$	129	$	84	$	213	$	36	$	87	$	123	$	165	$	171	$	336

The following table summarizes our restructuring accrual activity during fiscal 2014 and 2013 (11-month) 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 March 3, 2012	$	—		$	—		$	—
Charges	55			54			109
Cash payments	(1		)	—			(1		)
Balance at February 2, 2013	54			54			108
Charges	133			16			149
Cash payments	(68		)	(23		)	(91		)
Adjustments	(8		)	4			(4		)
Balance at February 1, 2014	$	111		$	51		$	162

Fiscal 2013 Europe Restructuring

In the third quarter of fiscal 2013 (11-month), we also 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 4, Discontinued Operations. We incurred $95 million of restructuring charges in fiscal 2014, consisting primarily of property and equipment impairments, and employee termination benefits. In fiscal 2013 (11-month), we incurred $36 million of charges related to employee termination benefits, property and equipment impairments, and facility closure and other costs. Given the sale of Best Buy Europe, we do not expect to incur additional restructuring charges related to this program.



	International
	12-Month 2014		11-Month 2013		Cumulative Amount
Discontinued operations
Inventory write-downs	$	7	$	—	$	7
Property and equipment impairments	45		12		57
Termination benefits	36		19		55
Tradename impairments	4		—		4
Facility closure and other costs	3		5		8
Total	$	95	$	36	$	131



	Termination Benefits			Facility Closure and Other Costs			Total
Balance at March 3, 2012	$	—		$	—		$	—
Charges	19			5			24
Cash payments	(19		)	—			(19		)
Balance at February 2, 2013	—			5			5
Charges	36			2			38
Cash payments	(2		)	(7		)	(9		)
Adjustments⁽¹⁾	(34		)	—			(34		)
Balance at February 1, 2014	$	—		$	—		$	—


(1)	Represents the remaining liability written off as a result of the sale of Best Buy Europe, as described in Note 4, Discontinued Operations.

Fiscal 2013 U.S. Restructuring

In the first quarter of fiscal 2013 (11-month), 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 primarily consisted of facility closure costs, employee termination benefits, and property and equipment (primarily store fixtures) impairments. We recognized a reduction to restructuring charges of $6 million in fiscal 2014 as a result of the buyout of a lease for less than the remaining vacant space liability. In fiscal 2013 (11-month), we incurred $257 million of charges, primarily consisting of facility closure and other costs, employee 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 the lease expires or we otherwise terminate the lease.

The 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 fiscal 2014 and 2013 (11-month), as well as the cumulative amount incurred through the end of fiscal 2014, was as follows ($ in millions):



	Domestic
	12-Month 2014			11-Month 2013		Cumulative Amount
Continuing operations
Property and equipment impairments	$	—		$	29	$	29
Termination benefits	—			77		77
Facility closure and other costs	(6		)	151		145
Total	$	(6	)	$	257	$	251



	Termination Benefits			Facility Closure and Other Costs			Total
Balance at March 3, 2012	$	—		$	—		$	—
Charges	109			152			261
Cash payments	(65		)	(33		)	(98		)
Adjustments	(40		)	(6		)	(46		)
Balance at February 2, 2013	4			113			117
Charges	—			4			4
Cash payments	(2		)	(46		)	(48		)
Adjustments	(2		)	(13		)	(15		)
Balance at February 1, 2014	$	—		$	58		$	58

Fiscal 2012 Restructuring Plan

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 related to Best Buy Europe, including the charges 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 4, 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 fiscal 2014, representing a change in sublease assumptions. During fiscal 2013 (11-month), we recorded a gain of $2 million related to this program, primarily related to our International segment from adjustments to estimated facility closures costs associated with the closure of our Best Buy branded stores in the U.K.

We incurred $243 million of charges related to this program during fiscal 2012. Of the total charges, $23 million related to our Domestic segment and consisted primarily of IT asset impairments and other related costs. The remaining $220 million of charges related to our International segment and consisted primarily of property and equipment impairments, facility closure and other costs, employee termination benefits and inventory write-downs. 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 fiscal 2014, 2013 (11-month) and 2012, as well as the cumulative amount incurred through the end of fiscal 2014, was as follows ($ in millions):



	Domestic									International									Total
	12-Month 2014		11-Month 2013			12-Month 2012		Cumulative Amount		12-Month 2014		11-Month 2013			12-Month 2012		Cumulative Amount		12-Month 2014		11-Month 2013			12-Month 2012		Cumulative Amount
Continuing operations
Property and equipment impairments	$	—	$	—		$	17	$	17	$	—	$	—		$	5	$	5	$	—	$	—		$	22	$	22
Termination benefits	—		—			1		1		—		—			—		—		—		—			1		1
Facility closure and other costs	—		(1		)	5		4		—		—			—		—		—		(1		)	5		4
Total	—		(1		)	23		22		—		—			5		5		—		(1		)	28		27
Discontinued operations
Inventory write-downs	—		—			—		—		—		—			11		11		—		—			11		11
Property and equipment impairments	—		—			—		—		—		—			106		106		—		—			106		106
Termination benefits	—		—			—		—		—		1			16		17		—		1			16		17
Facility closure and other costs	—		—			—		—		5		(2		)	82		85		5		(2		)	82		85
Total	—		—			—		—		5		(1		)	215		219		5		(1		)	215		219
Total	$	—	$	(1	)	$	23	$	22	$	5	$	(1	)	$	220	$	224	$	5	$	(2	)	$	243	$	246



	Termination Benefits			Facility Closure and Other Costs			Total
Balance at March 3, 2012	$	17		$	85		$	102
Charges	1			2			3
Cash payments	(18		)	(83		)	(101		)
Adjustments⁽¹⁾	—			28			28
Changes in foreign currency exchange rates	—			4			4
Balance at February 2, 2013	—			36			36
Cash payments	—			(33		)	(33		)
Adjustments⁽²⁾	—			(1		)	(1		)
Changes in foreign currency exchange rates	—			(2		)	(2		)
Balance at February 1, 2014	$	—		$	—		$	—


(1)	Included within adjustments to facility closure and other costs is $34 million from the first quarter of fiscal 2013 (11-month), representing an adjustment to exclude non-cash charges or benefits, which had no impact on our Consolidated Statements of Earnings in fiscal 2013 (11-month).


(2)	Included within adjustments to facility closure and other costs 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 4, Discontinued Operations.

Fiscal 2011 Restructuring Plan

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 fiscal 2013 (11-month), we recorded a net reduction to restructuring charges of $13 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 (11-month) (previously impaired through restructuring charges), partially offset by charges associated with the exit from certain digital delivery services within our entertainment product category.

In fiscal 2012, we incurred $44 million of charges related to this program, which related primarily to our Domestic segment consisting primarily of property and equipment impairments (notably IT assets), employee termination benefits, intangible asset impairments and other costs associated with the exit from certain digital delivery services within our entertainment product category. Within our Domestic segment, we also incurred additional inventory write-downs as we completed the exit from certain distribution facilities associated with our entertainment product category at the end of fiscal 2012. We have completed activities under this program.