Restructuring Charges

Charges incurred in the three months ended May 2, 2015, and May 3, 2014, for our restructuring activities were as follows ($ in millions):



	Three Months Ended
	May 2, 2015			May 3, 2014
Continuing operations
Canadian brand consolidation	$	188		$	—
Renew Blue	(2		)	6
Other restructuring activities⁽¹⁾	—			(4		)
Total continuing operations	186			2
Discontinued operations
Renew Blue	—			1
Total restructuring charges	$	186		$	3

(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 facility closure cost liability was $29 million at May 2, 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 quarter of fiscal 2016, we incurred $188 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. We expect to incur total pre-tax charges in the range of $200 million to $280 million related to this action, which includes restructuring charges and other non-restructuring asset impairments and costs. The total charges includes approximately $140 million to $180 million of cash charges. We expect to substantially complete this activity in fiscal 2016, with the exception of lease payments for vacated stores which will continue until the leases expire or we otherwise terminate the leases.

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 quarter of fiscal 2016 was as follows ($ in millions):



	International
Continuing operations
Inventory write-downs	$	8
Property and equipment impairments	29
Tradename impairment	40
Termination benefits	24
Facility closure and other costs	87
Total continuing operations	$	188

The following tables summarize our restructuring accrual activity during the three months ended May 2, 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	24			98			122
Cash payments	(17		)	(3		)	(20		)
Changes in foreign currency exchange rates	1			3			4
Balances at May 2, 2015	$	8		$	98		$	106

Renew Blue

In the fourth quarter of fiscal 2013, 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. We recognized a benefit of $2 million and incurred $6 million of restructuring charges related to Renew Blue initiatives during the first three months of fiscal 2016 and 2015, respectively. The benefit in the first three months of fiscal 2016 was primarily due to an adjustment to our employee termination benefit liability due to higher-than-expected employee retention. The charges in the first three 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, 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 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 the three months ended May 2, 2015, and May 3, 2014, as well as the cumulative amount incurred through May 2, 2015, was as follows ($ in millions):



	Domestic							International							Total
	Three Months Ended					Cumulative Amount		Three Months Ended					Cumulative Amount		Three Months Ended						Cumulative Amount
	May 2, 2015			May 3, 2014		Cumulative Amount		May 2, 2015		May 3, 2014			Cumulative Amount		May 2, 2015			May 3, 2014			Cumulative Amount
Continuing operations
Inventory write-downs	$	—		$	—	$	1	$	—	$	—		$	—	$	—		$	—		$	1
Property and equipment impairments	—			—		14		—		1			25		—			1			39
Termination benefits	(2		)	6		159		—		2			38		(2		)	8			197
Investment impairments	—			—		43		—		—			—		—			—			43
Facility closure and other costs	—			—		4		—		(3		)	51		—			(3		)	55
Total continuing operations	(2		)	6		221		—		—			114		(2		)	6			335
Discontinued operations
Property and equipment impairments	—			—		—		—		—			1		—			—			1
Termination benefits	—			—		—		—		—			16		—			—			16
Facility closure and other costs	—			—		—		—		1			11		—			1			11
Total Discontinued Operations	—			—		—		—		1			28		—			1			28
Total	$	(2	)	$	6	$	221	$	—	$	1		$	142	$	(2	)	$	7		$	363

The following tables summarize our restructuring accrual activity during the three months ended May 2, 2015, and May 3, 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	(2		)	(4		)	(6		)
Adjustments⁽¹⁾	(8		)	(4		)	(12		)
Changes in foreign currency exchange rates	—			1			1
Balances at May 2, 2015	$	6		$	16		$	22


(1)	Adjustments to termination benefits were due to higher-than-expected employee retention. In addition, adjustments include the remaining liabilities written off 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	22			2			24
Cash payments	(26		)	(6		)	(32		)
Adjustments⁽¹⁾	(14		)	(5		)	(19		)
Changes in foreign currency exchange rates	—			(5		)	(5		)
Balances at May 3, 2014	$	93		$	37		$	130


(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.