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Shareholders' Equity
12 Months Ended
Jan. 31, 2015
Equity [Abstract]  
Shareholders Equity Including Stock Compensation Plans, Earnings Per Share, Repurchase of Common Stock, Comprehensive Income
Shareholders' Equity

Stock Compensation Plans

Our 2014 Omnibus Incentive Plan (the "Omnibus Plan") authorizes us to grant or issue non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units and other equity awards up to a total of 22.5 million shares. We have not granted incentive stock options under the Omnibus Plan. Under the terms of the Omnibus Plan, awards may be granted to our employees, officers, advisers, consultants and directors. Awards issued under the Omnibus Plan vest as determined by the Compensation and Human Resources Committee of our Board of Directors at the time of grant. Awards granted, forfeited or canceled under the previous plan, the 2004 Omnibus Stock and Incentive Plan, after February 1, 2014 adjust the amount available under the Omnibus Plan. At January 31, 2015, a total of 22.7 million shares were available for future grants under the Omnibus Plan.

Upon adoption and approval of the Omnibus Plan, all of our previous equity incentive compensation plans were terminated. However, existing awards under those plans continued to vest in accordance with the original vesting schedule and will expire at the end of their original term.

Our outstanding stock options have a 10-year term. Outstanding stock options issued to employees generally vest over a three or four-year period, and outstanding stock options issued to directors vest immediately upon grant. Share awards vest based either upon attainment of specified goals or upon continued employment. Outstanding share awards that are not time-based vest at the end of a three-year incentive period based upon our total shareholder return ("TSR") compared to the TSR of companies that comprise Standard & Poor's 500 Index ("market-based"). We have time-based share awards that vest in their entirety at the end of three- and four-year periods, time-based share awards where 25% of the award vests on the date of grant and 25% vests on each of the three anniversary dates thereafter, and time-based share awards to directors vest one year from the grant date.

During fiscal 2014, our Employee Stock Purchase Plan was amended. The Plan permits employees to purchase our common stock at a 5% discount from the market price at the end of semi-annual purchase periods and is non-compensatory. During fiscal 2013 (11-month), the Plan permitted our employees to purchase our common stock at a 15% discount from the market price of the stock at the beginning or at the end of a semi-annual purchase period, whichever is less, and was considered compensatory. Employees are required to hold the common stock purchased for 12 months. In fiscal 2015, 2014 and 2013 (11-month), 0.3 million, 0.6 million and 1.0 million shares, respectively, were purchased through our employee stock purchase plans. At January 31, 2015, and February 1, 2014, plan participants had accumulated $1 million and $2 million, respectively, to purchase our common stock pursuant to these plans.

Stock-based compensation expense was as follows in fiscal 2015, 2014 and 2013 (11-month) ($ in millions):
 
12-Month
 
12-Month
 
11-Month
 
2015
 
2014
 
2013
Stock options
$
17

 
$
25

 
$
43

Share awards
 
 
 
 
 
Market-based
10

 
9

 
2

Time-based
60

 
62

 
62

Employee stock purchase plans

 
1

 
5

Total
$
87

 
$
97

 
$
112


 
Stock Options
 
Stock option activity was as follows in fiscal 2015:
 
Stock
Options
 
Weighted-
Average
Exercise Price
per Share
 
Weighted-Average
Remaining
Contractual
Term (in years)
 
Aggregate
Intrinsic Value (in millions)
Outstanding at February 1, 2014
22,101,000

 
$
36.38

 
 
 
 

Granted
1,524,000

 
$
29.90

 
 
 
 

Exercised
(1,679,000
)
 
$
25.31

 
 
 
 

Forfeited/Canceled
(4,604,000
)
 
$
36.62

 
 
 
 

Outstanding at January 31, 2015
17,342,000

 
$
36.81

 
4.9
 
$
67

Vested or expected to vest at January 31, 2015
17,095,000

 
$
36.91

 
4.8
 
$
66

Exercisable at January 31, 2015
13,995,000

 
$
39.37

 
4.0
 
$
36


 
The weighted-average grant-date fair value of stock options granted during fiscal 2015, 2014 and 2013 (11-month) was $9.09, $7.77 and $5.11, respectively, per share. The aggregate intrinsic value of our stock options (the amount by which the market price of the stock on the date of exercise exceeded the exercise price of the option) exercised during fiscal 2015, 2014 and 2013 (11-month), was $13 million, $39 million and $0 million, respectively. At January 31, 2015, there was $19 million of unrecognized compensation expense related to stock options that is expected to be recognized over a weighted-average period of 1.2 years.
 
Net cash proceeds from the exercise of stock options were $42 million, $158 million and $1 million in fiscal 2015, 2014 and 2013 (11-month), respectively.

There was $5 million, $13 million and $0 million of income tax benefits realized from stock option exercises in fiscal 2015, 2014 and 2013 (11-month), respectively.

In fiscal 2015, 2014 and 2013 (11-month), we estimated the fair value of each stock option on the date of grant using a lattice or Black Scholes valuation model (for certain individuals) with the following assumptions:
 
 
12-Month
 
12-Month
 
11-Month
Valuation Assumptions(1)
 
2015
 
2014
 
2013
Risk-free interest rate(2)
 
0.1% – 2.4%

 
0.1% – 1.8%

 
0.1% – 2.0%

Expected dividend yield
 
2.5
%
 
2.0
%
 
2.2
%
Expected stock price volatility(3)
 
40
%
 
46
%
 
44
%
Expected life of stock options (in years)(4)
 
6.0

 
5.9

 
5.9


(1)
Forfeitures are estimated using historical experience and projected employee turnover.
(2)
Based on the U.S. Treasury constant maturity interest rate whose term is consistent with the expected life of our stock options.
(3)
In projecting expected stock price volatility, we consider both the historical volatility of our stock price as well as implied volatilities from exchange-traded options on our stock.
(4)
We estimate the expected life of stock options based upon historical experience.

Market-Based Share Awards

The fair value of market-based share awards is determined based on generally accepted valuation techniques and the closing market price of our stock on the date of grant. A summary of the status of our nonvested market-based share awards at January 31, 2015, and changes during fiscal 2015, is as follows:
Market-Based Share Awards
 
Shares
 
Weighted-Average Fair Value per Share
Outstanding at February 1, 2014
 
1,636,000

 
$
20.91

Granted
 
564,000

 
$
29.22

Vested
 
(127,000
)
 
$
19.16

Forfeited/Canceled
 
(369,000
)
 
$
19.23

Outstanding at January 31, 2015
 
1,704,000

 
$
24.16



At January 31, 2015, there was $20 million of unrecognized compensation expense related to nonvested market-based share awards that we expect to recognize over a weighted-average period of 1.9 years.

Time-Based Share Awards

The fair value of time-based share awards is determined based on the closing market price of our stock on the date of grant. This value is reduced by the present value of expected dividends during vesting when the employee is not entitled to dividends.

A summary of the status of our nonvested time-based share awards at January 31, 2015, and changes during fiscal 2015, is as follows:
Time-Based Share Awards
 
Shares
 
Weighted-Average Fair Value per Share
Outstanding at February 1, 2014
 
7,065,000

 
$
21.49

Granted
 
2,609,000

 
$
28.49

Vested
 
(2,657,000
)
 
$
22.77

Forfeited/Canceled
 
(1,474,000
)
 
$
20.68

Outstanding at January 31, 2015
 
5,543,000

 
$
24.40



At January 31, 2015, there was $84 million of unrecognized compensation expense related to nonvested time-based share awards that we expect to recognize over a weighted-average period of 1.9 years.

Earnings per Share

We compute our basic earnings per share based on the weighted-average number of common shares outstanding, and our diluted earnings per share based on the weighted-average number of common shares outstanding adjusted by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued. Potentially dilutive securities include stock options, nonvested share awards and shares issuable under our employee stock purchase plan. Nonvested market-based share awards and nonvested performance-based share awards are included in the average diluted shares outstanding each period if established market or performance criteria have been met at the end of the respective periods.

At January 31, 2015, options to purchase 17.3 million shares of common stock were outstanding as follows (shares in millions):
 
Exercisable
 
Unexercisable
 
Total
 
Shares
 
%
 
Weighted-
Average Price
per Share
 
Shares
 
%
 
Weighted-
Average Price
per Share
 
Shares
 
%
 
Weighted-
Average Price
per Share
In-the-money
2.8

 
20
%
 
$
22.99

 
3.1

 
94
%
 
$
25.60

 
5.9

 
34
%
 
$
24.38

Out-of-the-money
11.2

 
80
%
 
$
43.42

 
0.2

 
6
%
 
$
34.25

 
11.4

 
66
%
 
$
43.27

Total
14.0

 
100
%
 
$
39.37

 
3.3

 
100
%
 
$
26.11

 
17.3

 
100
%
 
$
36.81



The computation of dilutive shares outstanding excludes the out-of-the-money stock options because such outstanding options' exercise prices were greater than the average market price of our common shares and, therefore, the effect would be anti-dilutive (i.e., including such options would result in higher earnings per share).

The following table presents a reconciliation of the numerators and denominators of basic and diluted earnings per share in fiscal 2015, 2014 and 2013 (11-month):
 
12-Month
 
12-Month
 
11-Month
 
2015
 
2014
 
2013(1)
Numerator (in millions):
 
 
 
 
 
Net earnings (loss) from continuing operations attributable to Best Buy Co., Inc., shareholders, diluted
$
1,246

 
$
695

 
$
(259
)
Denominator (in millions):
 
 
 
 
 
Weighted-average common shares outstanding
349.5

 
342.1

 
338.6

Effect of potentially dilutive securities:
 
 
 
 
 
Stock options and other
4.1

 
5.5

 

Weighted-average common shares outstanding, assuming dilution
353.6

 
347.6

 
338.6

Net earnings (loss) per share from continuing operations attributable to Best Buy Co., Inc. shareholders
 
 
 
 
 
Basic
$
3.57

 
$
2.03

 
$
(0.76
)
Diluted
$
3.53

 
$
2.00

 
$
(0.76
)
(1)
The calculation of diluted loss per share for fiscal 2013 (11-month) does not include potentially dilutive securities because their inclusion would be anti-dilutive (i.e., reduce the net loss per share).

Repurchase of Common Stock
 
In June 2011, our Board of Directors authorized a $5.0 billion share repurchase program. The June 2011 program replaced our prior $5.5 billion share repurchase program authorized in June 2007. There is no expiration date governing the period over which we can repurchase shares under the June 2011 share repurchase program.

The following table presents the amount and cost of shares we repurchased and retired in fiscal 2015, 2014 and 2013 (11-month) under the June 2011 program and the June 2007 program ($ and shares in millions):
 
12-Month
 
12-Month
 
11-Month
 
2015
 
2014
 
2013
June 2011 Program
 
 
 
 
 
Total number of shares repurchased

 

 
6.3

Total cost of shares repurchased
$

 
$

 
$
122


 
At January 31, 2015, $4.0 billion remained available for additional purchases under the June 2011 share repurchase program. Repurchased shares have been retired and constitute authorized but unissued shares.
 
Comprehensive Income (Loss)
 
Comprehensive income (loss) is computed as net earnings (loss) plus certain other items that are recorded directly to shareholders' equity. In addition to net earnings (loss), the significant components of comprehensive income (loss) include foreign currency translation adjustments and unrealized gains and losses, net of tax, on available-for-sale marketable equity securities. Foreign currency translation adjustments do not include a provision for income tax expense when earnings from foreign operations are considered to be indefinitely reinvested outside the U.S.

The following table provides a reconciliation of the components of accumulated other comprehensive income, net of tax, attributable to Best Buy Co., Inc. shareholders for fiscal 2015, 2014, and 2013 (11-month), respectively ($ in millions):
 
Foreign Currency Translation
 
Available-For-Sale Investments
 
Total
Balances at March 3, 2012
93

 
(3
)
 
90

Adjustment for fiscal year-end change
11

 

 
11

Balances at January 28, 2012
104

 
(3
)
 
101

Foreign currency translation adjustments
9

 

 
9

Unrealized gains on available-for-sale investments

 
2

 
2

Balances at February 2, 2013
113

 
(1
)
 
112

Foreign currency translation adjustments
(136
)
 

 
(136
)
Unrealized gains on available-for-sale investments

 
7

 
7

Reclassification of foreign currency translation adjustments into earnings due to sale of business
508

 

 
508

Reclassification of losses on available-for-sale investments into earnings

 
1

 
1

Balances at February 1, 2014
$
485

 
$
7

 
$
492

Foreign currency translation adjustments
(103
)
 

 
(103
)
Unrealized losses on available-for-sale investments

 
(3
)
 
(3
)
Reclassification of gains on available-for-sale investments into earnings

 
(4
)
 
(4
)
Balances at January 31, 2015
$
382

 
$

 
$
382


 
There is generally no tax impact related to foreign currency translation adjustments, as the earnings are considered permanently reinvested. In addition, there were no material tax impacts related to gains or losses on available-for-sale investments in the periods presented.