Restructuring Charges

Charges incurred in the three and six months ended July 30, 2016, and August 1, 2015, for our restructuring activities were as follows ($ in millions):



	Three Months Ended						Six Months Ended
	July 30, 2016			August 1, 2015			July 30, 2016		August 1, 2015
Renew Blue Phase 2	$	(2	)	$	—		$	25	$	—
Canadian brand consolidation	2			(4		)	1		184
Renew Blue⁽¹⁾	—			—			3		(2		)
Other restructuring activities⁽²⁾	—			—			—		—
Total restructuring charges	$	—		$	(4	)	$	29	$	182

(1)

Represents activity related to our remaining vacant space liability, primarily in our International segment, for our Renew Blue restructuring program which began in the fourth quarter of 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 vacant space liability was $10 million at July 30, 2016.

(2)

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 vacant space liability was $14 million at July 30, 2016.

Renew Blue Phase 2

In the first quarter of fiscal 2017, we took several strategic actions to eliminate and simplify certain components of our operations and restructure certain field and corporate teams as part of our Renew Blue Phase 2 plan. We recorded a benefit of $2 million and incurred charges of $25 million related to Phase 2 of the plan during the second quarter and first six months of fiscal 2017, respectively. The benefit related to lower severance costs than expected and the charges incurred primarily consisted of employee termination benefits and property and equipment impairments. All restructuring charges related to this plan are from continuing operations and are presented in restructuring charges in our Condensed Consolidated Statements of Earnings.

The composition of the restructuring charges we incurred during the three and six months ended July 30, 2016 for Renew Blue Phase 2 was as follows ($ in millions):



	Domestic
	July 30, 2016
	Three Months Ended			Six Months Ended
Property and equipment impairments	$	—		$	7
Termination benefits	(2		)	18
Total Renew Blue - Phase 2 restructuring charges	$	(2	)	$	25

The following table summarizes our restructuring accrual activity during the six months ended July 30, 2016, related to termination benefits as a result of Renew Blue Phase 2 ($ in millions):



	Termination Benefits
Balances at January 30, 2016	$	—
Charges	19
Cash payments	(15		)
Adjustments⁽¹⁾	(2		)
Balances at July 30, 2016	$	2

(1) Adjustments to termination benefits represent changes in retention assumptions.

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 second quarter and first six months of fiscal 2017, we incurred $2 million and $1 million of restructuring charges related to our Canadian brand consolidation, respectively, which was due to changes in our facility closure and other costs assumptions. In the second quarter of fiscal 2016, we recorded a benefit of $4 million related primarily to inventory write-downs. In the first six months of 2016 we incurred $184 million of restructuring charges, which primarily consisted of lease exit costs, a tradename impairment, property and equipment impairments, employee termination benefits and inventory write-downs.

The inventory write-downs related to our Canadian brand consolidation are presented in restructuring charges – cost of goods sold in our Condensed Consolidated Statements of Earnings, and the remainder of the restructuring charges are presented in restructuring charges in our Condensed Consolidated Statements of Earnings.

The composition of total restructuring charges we incurred for the Canadian brand consolidation in the three and six months ended July 30, 2016, and August 1, 2015, as well as the cumulative amount incurred through July 30, 2016, was as follows ($ in millions):



	International
	Three Months Ended					Six Months Ended
	July 30, 2016		August 1, 2015			July 30, 2016		August 1, 2015		Cumulative Amount
Inventory write-downs	$	—	$	(3	)	$	—	$	5	$	3
Property and equipment impairments	—		1			—		30		30
Tradename impairment	—		—			—		40		40
Termination benefits	—		—			—		24		25
Facility closure and other costs	2		(2		)	1		85		103
Total Canadian brand consolidation restructuring charges	$	2	$	(4	)	$	1	$	184	$	201

The following tables summarize our restructuring accrual activity during the six months ended July 30, 2016, and August 1, 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 30, 2016	$	2		$	64		$	66
Charges	—			1			1
Cash payments	(1		)	(18		)	(19		)
Adjustments⁽¹⁾	—			(1		)	(1		)
Changes in foreign currency exchange rates	—			4			4
Balances at July 30, 2016	$	1		$	50		$	51



	Termination Benefits			Facility Closure and Other Costs			Total
Balances at January 31, 2015	$	—		$	—		$	—
Charges	27			104			131
Cash payments	(21		)	(18		)	(39		)
Adjustments⁽¹⁾	(2		)	(4		)	(6		)
Changes in foreign currency exchange rates	—			(3		)	(3		)
Balances at August 1, 2015	$	4		$	79		$	83

(1) Adjustments to facility closure and other costs represent changes in sublease assumptions. Adjustments to termination benefits represent changes in retention assumptions.