Restructuring Charges

Summary

Restructuring charges incurred in fiscal 2015, 2014 and 2013 (11-month) were as follows ($ in millions):



	12-Month			12-Month			11-Month
	2015			2014			2013
Continuing operations
Renew Blue	$	11		$	155		$	171
Other restructuring activities	(6		)	(6		)	244
Total	5			149			415
Discontinued operations
Renew Blue	18			10			—
Other restructuring activities	—			100			34
Total (Note 2)	18			110			34
Total	$	23		$	259		$	449

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 represented one of the key Renew Blue priorities for fiscal 2014 and 2015 and cost reductions will continue to be a priority in fiscal 2016. We incurred $29 million of charges related to Renew Blue initiatives during fiscal 2015. Of the total charges, $10 million related to our Domestic segment, which consisted of employee termination benefits. The remaining $19 million of charges related to our International segment and consisted of employee termination benefits, property and equipment impairments and facility closure and other costs. We expect to continue to implement cost reduction initiatives throughout fiscal 2016, as we further analyze our operations and strategies.

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 primarily 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.

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 in our Consolidated Statements of Earnings. The restructuring charges from discontinued operations related to this plan are presented in loss from discontinued operations, net of tax.

The composition of the restructuring charges we incurred for this program in fiscal 2015, 2014 and 2013 (11-month), as well as the cumulative amount incurred through the end of fiscal 2015, was as follows ($ in millions):



	Domestic								International									Total
	12-Month 2015		12-Month 2014		11-Month 2013		Cumulative Amount		12-Month 2015			12-Month 2014		11-Month 2013		Cumulative Amount		12-Month 2015			12-Month 2014		11-Month 2013		Cumulative Amount
Continuing operations
Inventory write-downs	$	—	$	—	$	1	$	1	$	—		$	—	$	—	$	—	$	—		$	—	$	1	$	1
Property and equipment impairments	—		7		7		14		1			1		23		25		1			8		30		39
Termination benefits	9		106		46		161		5			24		9		38		14			130		55		199
Investment impairments	—		16		27		43		—			—		—		—		—			16		27		43
Facility closure and other costs	1		—		3		4		(5		)	1		55		51		(4		)	1		58		55
Total continuing operations	10		129		84		223		1			26		87		114		11			155		171		337
Discontinued Operations
Inventory write-downs	—		—		—		—		—			—		—		—		—			—		—		—
Property and equipment impairments	—		—		—		—		—			1		—		1		—			1		—		1
Termination benefits	—		—		—		—		12			4		—		16		12			4		—		16
Facility closure and other costs	—		—		—		—		6			5		—		11		6			5		—		11
Total discontinued operations	—		—		—		—		18			10		—		28		18			10		—		28
Total	$	10	$	129	$	84	$	223	$	19		$	36	$	87	$	142	$	29		$	165	$	171	$	365

The following table summarizes our restructuring accrual activity during fiscal 2015 and 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
Balance at February 2, 2013	$	54		$	54		$	108
Charges	133			16			149
Cash payments	(68		)	(23		)	(91		)
Adjustments⁽¹⁾	(8		)	4			(4		)
Balance at February 1, 2014	111			51			162
Charges	47			16			63
Cash payments	(121		)	(22		)	(143		)
Adjustments⁽¹⁾	(21		)	(14		)	(35		)
Changes in foreign currency exchange rates	—			(8		)	(8		)
Balance at January 31, 2015	$	16		$	23		$	39


(1)	Adjustments to termination benefits were due to higher-than-expected employee retention. Adjustments to facility closure and other costs represent change in sublease assumptions and reductions in our remaining lease obligations.

Other Restructuring Activities

Over the last few fiscal years, we have initiated multiple restructuring programs in an effort to focus on our core business and reduce costs. These initiatives were comprised of the following:


•	Fiscal 2013 Europe Restructuring: In the third quarter of fiscal 2013 (11-month), we initiated a series of actions to restructure our Best Buy Europe operations in our International segment intended to improve operating performance. The costs incurred under this action consisted primarily of property and equipment impairments and employee termination benefits.

•

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.

•

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 that resulted in charges primarily related to property and equipment impairments and employee termination benefits. 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.

•

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.

For continuing operations, the inventory write-downs related to these 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 in our Consolidated Statements of Earnings. The restructuring charges from discontinued operations related to these plan are presented in loss from discontinued operations, net of tax.

The composition of the restructuring charges we incurred for these programs in fiscal 2015, 2014 and 2013 (11-month), as well as the cumulative amount incurred through the end of fiscal 2015, were as follows ($ in millions):



	Domestic										International								Total
	12-Month 2015			12-Month 2014			11-Month 2013		Cumulative Amount		12-Month 2015		12-Month 2014		11-Month 2013		Cumulative Amount		12-Month 2015			12-Month 2014			11-Month 2013		Cumulative Amount
Continuing operations
Inventory write-downs	$	—		$	—		$	—	$	28	$	—	$	—	$	—	$	—	$	—		$	—		$	—	$	28
Property and equipment impairments	—			—			17		49		—		—		—		112		—			—			17		161
Termination benefits	—			—			77		91		—		—		—		—		—			—			77		91
Facility closure and other costs	(6		)	(6		)	150		147		—		—		—		—		(6		)	(6		)	150		147
Total	(6		)	(6		)	244		315		—		—		—		112		(6		)	(6		)	244		427
Discontinued operations
Inventory write-downs	—			—			—		—		—		7		—		33		—			7			—		33
Property and equipment impairments	—			—			—		15		—		45		12		188		—			45			12		203
Termination benefits	—			—			—		4		—		36		20		91		—			36			20		95
Tradename impairment	—			—			—		13		—		4		—		4		—			4			—		17
Facility closure and other costs	—			—			—		3		—		8		2		97		—			8			2		100
Total	—			—			—		35		—		100		34		413		—			100			34		448
Total	$	(6	)	$	(6	)	$	244	$	350	$	—	$	100	$	34	$	525	$	(6	)	$	94		$	278	$	875



	Termination Benefits			Facility Closure and Other Costs			Total
Balance at February 2, 2013	$	4		$	154		$	158
Charges	36			6			42
Cash payments	(4		)	(86		)	(90		)
Adjustments⁽¹⁾	(36		)	(14		)	(50		)
Changes in foreign currency exchange rates	—			(2		)	(2		)
Balance at February 1, 2014	—			58			58
Charges	—			3			3
Cash payments	—			(21		)	(21		)
Adjustments⁽¹⁾	—			(6		)	(6		)
Balance at January 31, 2015	$	—		$	34		$	34


(1)	Adjustments to termination benefits in fiscal 2014 were primarily due to the write-off of the remaining liability as a result of the sale of Best Buy Europe. Adjustments to facility closure and other costs represent change in sublease assumptions and reductions in our remaining lease obligations.