Best Buy (BBY) 10-Q 8 Oct 09 2010 Q2 Quarterly report Financial data

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Millions	Aug. 29, 2009	Feb. 28, 2009	Aug. 30, 2008
CURRENT ASSETS
Cash and cash equivalents	$668	$498	$544
Short-term investments	93	11
Receivables	1,770	1,868	1,785
Merchandise inventories	5,738	4,753	6,105
Other current assets	1,035	1,062	894
Total current assets	9,304	8,192	9,328
PROPERTY AND EQUIPMENT, NET	4,162	4,174	4,119
GOODWILL	2,442	2,203	2,536
TRADENAMES	168	173	188
CUSTOMER RELATIONSHIPS	318	322	488
EQUITY AND OTHER INVESTMENTS	334	395	501
OTHER ASSETS	463	367	362
TOTAL ASSETS	17,191	15,826	17,522
CURRENT LIABILITIES
Accounts payable	5,407	4,997	5,924
Unredeemed gift card liabilities	400	479	457
Accrued compensation and related expenses	427	459	546
Accrued liabilities	1,543	1,382	1,455
Accrued income taxes	51	281	44
Short-term debt	1,091	783	1,515
Current portion of long-term debt	45	54	39
Total current liabilities	8,964	8,435	9,980
LONG-TERM LIABILITIES	1,217	1,109	929
LONG-TERM DEBT	1,111	1,126	1,136
Best Buy Co., Inc. Shareholders' Equity
Preferred stock, $1.00 par value: Authorized - 400,000 shares; Issued and outstanding - none	0	0	0
Common stock, $.10 par value: Authorized - 1.0 billion shares; Issued and outstanding - 416,539,000, 413,684,000 and 412,332,000 shares, respectively	42	41	41
Additional paid-in capital	329	205	112
Retained earnings	4,908	4,714	4,205
Accumulated other comprehensive income (loss)	27	(317)	394
Total Best Buy Co., Inc. shareholders' equity	5,306	4,643	4,752
Noncontrolling interests	593	513	725
Total shareholders' equity	5,899	5,156	5,477
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$17,191	$15,826	$17,522

1_CONDENSED CONSOLIDATED BALANC

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
	Aug. 29, 2009	Feb. 28, 2009	Aug. 30, 2008
Balance sheets
Preferred stock, par value	$1	$1	$1
Preferred stock, shares authorized	400,000	400,000	400,000
Preferred stock, shares issued	0	0	0
Preferred stock, shares outstanding	0	0	0
Common stock, par value	0.1	0.1	0.1
Common stock, shares authorized	1,000,000,000	1,000,000,000	1,000,000,000
Common stock, shares issued	416,539,000	413,684,000	412,332,000
Common stock, shares outstanding	416,539,000	413,684,000	412,332,000

CONSOLIDATED STATEMENTS OF EARN

CONSOLIDATED STATEMENTS OF EARNINGS (USD $)
In Millions, except Per Share data	3 Months Ended Aug. 29, 2009	3 Months Ended Aug. 30, 2008	6 Months Ended Aug. 29, 2009	6 Months Ended Aug. 30, 2008
Operating income
Revenue	$11,022	$9,801	$21,117	$18,791
Cost of goods sold	8,338	7,420	15,876	14,277
Gross profit	2,684	2,381	5,241	4,514
Selling, general and administrative expenses	2,404	2,042	4,613	3,898
Restructuring charges			52
Operating income	280	339	576	616
Other income (expense)
Investment income and other	18	9	27	30
Interest expense	(22)	(21)	(45)	(34)
Earnings before income tax expense and equity in loss of affiliates	276	327	558	612
Income tax expense	119	122	245	228
Equity in loss of affiliates				(1)
Net earnings including noncontrolling interests	157	205	313	383
Net loss (earnings) attributable to noncontrolling interests	1	(3)	(2)	(2)
Net earnings attributable to Best Buy Co., Inc.	$158	$202	$311	$381
Earnings per share attributable to Best Buy Co., Inc.
Basic	0.38	0.49	0.75	0.92
Diluted	0.37	0.48	0.74	0.91
Dividends declared per common share	0.14	0.13	0.27	0.26
Weighted average common shares outstanding (in millions)
Basic	416.5	412.1	415.8	411.7
Diluted	427	423.3	426.2	423

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Millions	6 Months Ended Aug. 29, 2009	6 Months Ended Aug. 30, 2008
OPERATING ACTIVITIES
Net earnings including noncontrolling interests	$313	$383
Adjustments to reconcile net earnings including noncontrolling interests to total cash provided by operating activities
Depreciation	407	312
Amortization of definite-lived intangible assets	42	1
Restructuring charges	52
Stock-based compensation	57	54
Deferred income taxes	6	(24)
Excess tax benefits from stock-based compensation	(1)	(4)
Other, net	(6)	(2)
Changes in operating assets and liabilities, net of acquired assets and liabilities
Receivables	165	(57)
Merchandise inventories	(883)	(899)
Other assets	48	14
Accounts payable	316	782
Other liabilities	(33)	(126)
Income taxes	(245)	(384)
Total cash provided by operating activities	238	50
INVESTING ACTIVITIES
Additions to property and equipment, net of $122 non-cash capital expenditures in the six months ended August 30, 2008	(310)	(502)
Purchases of investments	(7)	(70)
Sales of investments	37	183
Acquisition of business, net of cash acquired		(2,089)
Change in restricted assets	(11)	(10)
Settlement of net investment hedges	66
Other, net	(13)	(12)
Total cash used in investing activities	(238)	(2,500)
FINANCING ACTIVITIES
Borrowings of debt	2,967	2,188
Repayments of debt	(2,680)	(614)
Dividends paid	(117)	(107)
Issuance of common stock under employee stock purchase plan and for the exercise of stock options	77	46
Acquisition of noncontrolling interests	(34)
Excess tax benefits from stock-based compensation	1	4
Other, net	4	(12)
Total cash provided by financing activities	218	1,505
EFFECT OF EXCHANGE RATE CHANGES ON CASH	(48)	51
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	170	(894)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	498	1,438
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$668	$544

2_CONSOLIDATED STATEMENTS OF CA

CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) (USD $)
In Millions	6 Months Ended Aug. 30, 2008
Statement of cash flows
Non-cash capital expenditures	$122

DOCUMENT AND ENTITY INFORMATION

DOCUMENT AND ENTITY INFORMATION (USD $)
In Millions, except Share data	6 Months Ended Aug. 29, 2009	Aug. 30, 2008
Document and Entity Information
Document Type	10-Q
Document Period End Date	2009-08-29
Amendment Flag	false
Current Fiscal Year End Date	--02-27
Entity Central Index Key	0000764478
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Registrant Name	Best Buy Co Inc
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	Yes
Entity Common Stock, Shares Outstanding	416,539,000
Entity Public Float		$11,600

Basis of Presentation

Basis of Presentation
	3 Months Ended Aug. 29, 2009 USD / shares
Basis of Presentation
Basis of Presentation	1. Basis of Presentation Unless the context otherwise requires, the use of the terms Best Buy, we, us and our in these Notes to Condensed Consolidated Financial Statements refers to Best Buy Co.,Inc. and its consolidated subsidiaries. In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments necessary for a fair presentation as prescribed by accounting principles generally accepted in the United States. All adjustments were comprised of normal recurring adjustments, except as noted in these Notes to Condensed Consolidated Financial Statements. Historically, we have realized more of our revenue and earnings in the fiscal fourth quarter, which includes the majority of the holiday shopping season in the U.S., Europe and Canada, than in any other fiscal quarter. Due to the seasonal nature of our business, interim results are not necessarily indicative of results for the entire fiscal year. The interim financial statements and the related notes in this Quarterly Report on Form10-Q should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form10-K for the fiscal year ended February28, 2009. We consolidate the financial results of our Europe, China and Mexico operations on a two-month lag. There were no significant intervening events that would have materially affected our consolidated financial statements had they been recorded during the three months ended August29, 2009. In preparing the accompanying unaudited condensed consolidated financial statements, we evaluated the period from August30, 2009 through October6, 2009, the date the financial statements herein were available to be issued, for material subsequent events requiring recognition or disclosure. No such events were identified for this period.
Reclassifications	Reclassifications To maintain consistency and comparability, we reclassified certain prior-year amounts to conform to the current-year presentation as described in Note 1, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in our Annual Report on Form10-K for the fiscal year ended February28, 2009. To conform to the current-year presentation, which presents customer relationships separately on our consolidated balance sheets, we reclassified to customer relationships, $488 at August30, 2008, which was previously reported in other assets on our condensed consolidated balance sheet. In addition, as a result of the adoption of Statement of Financial Accounting Standards (SFAS) No.160, Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No.51, as described below in New Accounting Standards, we: reclassified to noncontrolling interests, a component of shareholders equity, $513 and $725 at February28, 2009, and August30, 2008, respectively, which was previously reported as minority interests on our condensed consolidated balance sheets; reported as separate captions within our consolidated statements of earnings, net earnings including noncontrolling interests, net (earnings) loss attributable to noncontrolling interests, and net earnings attributable to Best Buy Co.,Inc. of $205, $(3)and $202, respectively, for the three months ended August30, 2008, and $383, $(2)and $381, respectively, for the six months ended August30, 2008; and utilized net earnings including noncontrolling interests of $383 for the six months ended August30, 2008, as the starting point on our consolidated statements of cash flows in order to reconcile net earnings to cash flows from operating activities, rather than beginning with net earnings, which was previously exclusive of noncontrolling interests. These reclassifications had no effect on previously reported consolidated operating income, net earnings attributable to Best Buy Co.,Inc., or net cash flows from operating activities. Also, earnings per share continues to be based on net earnings attributable to Best Buy Co.,Inc.
New Accounting Standards	New Accounting Standards In June2009, the Financial Accounting Standards Board (FASB) issued SFAS No.168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. This standard replaces SFAS No.162, The Hierarchy of Generally Accepted Accounting Principles, and establishes only two levels of U.S. generally accepted accounting principles (GAAP), authoritative and nonauthoritative. The FASB Accounting Standards Codification (the Codification) became the source of authoritative, nongovernmental GAAP, except for rulesand interpretive releases of the Securities and Exchange Commission (SEC), which are sources of authoritative GAAP for SEC registrants. All other non-grandfathered, non-SEC accounting literature not included in the Codification became nonauthoritative. This standard is effective for financial statements for interim or annual reporting periods ending after September15, 2009. We have begun to use the new guidelines and numbering system prescribed by the Codification when referring to GAAP in the third quarter of fiscal 2010. As the Codification was not intended to change or alter existing GAAP, it will not have a material impact on our consolidated financial statements. In June2009, the FASB issued SFAS No.167, Amendments to FASB Interpretation No.46(R). This standard responds to concerns about the application of certain key provisions of FASB Interpretation (FIN) 46(R), including those regarding the transparency of the involvement with variable interest entities.Specifically, SFAS No.167 requires a qualitative approach to identifying a controlling financial interest in a variable interest entity (VIE) and requires ongoing assessment of whether an entity is a VIE and whether an interest in a VIE makes the holder the primary beneficiary of the VIE. In addition, the standard requires additional disclosures about the involvement with a VIE and any significant changes in risk exposure due to that involvement. SFAS No.167 is effective for fiscal years beginning after November15, 2009. We plan to adopt SFAS No.167 in fiscal 2011 and are evaluating the impact it will have on our consolidated financial statements. In June2009, the FASB issued SFAS No.166, Accounting for Transfers of Financial Assets, an amendment to SFAS No.140. The new standard eliminates the concept of a qualifying special-purpose entity, changes the requirements for derecognizing financial assets, and requires additional disclosures in order to enhance information reported to users of financial statements by providing greater transparency about transfers of financial assets, including securitization transactions, and an entitys continuing involvement in and exposure to the risks related to transferred financial assets. SFAS No.166 is effective for fiscal years beginning after November15, 2009. We plan to adopt SFAS No.166 in fiscal 2011 and are evaluating the impact it will have on our consolidated financial statements. In May2009, the FASB issued SFAS No.165, Subsequent Events. This standard is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet

Acquisitions

Acquisitions
	3 Months Ended Aug. 29, 2009 USD / shares
Acquisitions
Acquisitions	2. Acquisitions Five Star We acquired a 75% interest in Jiangsu Five Star Appliance Co., Ltd. (Five Star) in June2006, for $184, which included a working capital injection of $122. At the time of the acquisition, we also entered into an agreement with Five Stars minority shareholders to acquire the remaining 25% interest in Five Star within four years, subject to Chinese government approval. On February6, 2009, we were granted a business license to acquire the remaining 25% interest in Five Star and our acquisition converted Five Star into a wholly-owned foreign enterprise. The $191 purchase price for the remaining 25% interest was primarily based on a previously agreed-upon pricing formula, consisting of a base purchase price and an earn-out for the remaining Five Star shareholders. The amount paid in excess of the fair value of the net assets acquired, as agreed to at the time of the initial purchase, furthers our international growth plans and accelerates the integration of Best Buy and Five Star in China. The acquisition of the remaining 25% interest in Five Star for $191 was accounted for using the purchase method in accordance with SFAS No.141, Business Combinations. We recorded the net assets acquired at their estimated fair values. We included Five Stars operating results, which are reported on a two-month lag, from the date of acquisition as part of our International segment. The purchase price allocation is preliminary and will be finalized no later than the fourth quarter of fiscal 2010. None of the goodwill is deductible for tax purposes. The preliminary purchase price allocation was as follows: Net assets of noncontrolling interests $ 48 Tradenames 8 Goodwill 137 Total assets 193 Long-term liabilities (2 ) Purchase price allocated to assets and liabilities acquired $ 191 Napster On October25, 2008, we acquired Napster,Inc. (Napster) for $121 (or $100 net of cash acquired), pursuant to a cash tender offer whereby all issued and outstanding shares of Napster common stock, and all stock purchase rights associated with such shares, were acquired by us at a price of $2.65 per share. Of the $121 purchase price, $4 represented our previous ownership interest in Napster common shares. The effective acquisition date for accounting purposes was the close of business on October31, 2008, the end of Napsters fiscal October. We entered into this transaction as we believe Napster has one of the most comprehensive and easy-to-use digital music offerings in the industry. The amount we paid in excess of the fair value of the net assets acquired was to obtain Napsters capabilities and digital subscriber base to reach new customers with an enhanced experience for exploring and selecting music and other digital entertainment products over an increasing array of devices, such as bundling the sale of hardware with digital services. We believe the combined capabilities of our two companies allows us to build stronger relationships with customers and expand the number of subscribers. We have consolidated Napster in our financial results as part of our Domes

Investments

Investments
	3 Months Ended Aug. 29, 2009 USD / shares
Investments
Investments	3. Investments Investments were comprised of the following: August29, 2009 February28, 2009 August30, 2008 Short-term investments Money market fund $ 4 $ 8 $ Debt securities (auction-rate securities) 89 Other investments 3 Total short-term investments $ 93 $ 11 $ Equity and other investments Debt securities (auction-rate securities) $ 209 $ 314 $ 354 Marketable equity securities 78 41 101 Other investments 47 40 46 Total equity and other investments $ 334 $ 395 $ 501 Debt Securities Our debt securities are comprised of auction-rate securities (ARS). We classify our investments in ARS as available-for-sale and carry them at fair value. ARS were intended to behave like short-term debt instruments because their interest rates reset periodically through an auction process, most commonly at intervals of 7, 28 and 35 days. The auction process had historically provided a means by which we could rollover the investment or sell these securities at par in order to provide us with liquidity as needed. In mid-February2008, auctions began to fail due to insufficient buyers, as the amount of securities submitted for sale in auctions exceeded the aggregate amount of the bids. For each failed auction, the interest rate on the security moves to a maximum rate specified for each security, and generally resets at a level higher than specified short-term interest rate benchmarks. To date, we have collected all interest due on our ARS and expect to continue to do so in the future. We sold $22 of ARS at par during the first six months of fiscal 2010. However, at August29, 2009, our entire remaining ARS portfolio, consisting of 51 investments in ARS, was subject to failed auctions. Subsequent to August29, 2009, and through October6, 2009, we sold $6 (par value) of our ARS. As a result of the persistent failed auctions, and the uncertainty of when these investments could be liquidated at par, we have classified all of our investments in ARS as non-current assets within equity and other investments in our consolidated balance sheet at August29, 2009, except for $89, which was marketed and sold by UBS AG and its affiliates (collectively, UBS) and is classified within short-term investments. In October2008, we accepted a settlement with UBS pursuant to which UBS issued to us SeriesC-2 Auction Rate Securities Rights (ARS Rights). The ARS Rights provide us the right to receive the full par value of our UBS-brokered ARS of $89 plus accrued but unpaid interest at any time between June30, 2010, and July2, 2012. We plan to exercise our ARS Rights in the second quarter of fiscal 2011. Our ARS portfolio consisted of the following at August29, 2009, February28, 2009, and August30, 2008, at fair value: Description Natureofcollateralorguarantee August29,2009 February28, 2009 August30,2008 Student loan bonds Student loans guaranteed 95% to 100% by the U.S. government $ 278 $ 276 $ 295 Municipal revenue bonds 10

Fair Value Measurements

Fair Value Measurements
	3 Months Ended Aug. 29, 2009 USD / shares
Fair Value Measurements
Fair Value Measurements	4. Fair Value Measurements We adopted SFAS No.157, Fair Value Measurements, on March2, 2008. This standard defines fair value, establishes a framework for measuring fair value and expands disclosure requirements about fair value measurements. SFAS No.157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. SFAS No.157 also establishes a three-tier valuation hierarchy based upon observable and non-observable inputs: Level 1 Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date. Level 2 Significant other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly. Level 3 Significant unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize managements estimates of market participant assumptions. Assets and Liabilities that are Measured at Fair Value on a Recurring Basis The fair value hierarchy requires the use of observable market data when available. In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability. The following tables set forth by level within the fair value hierarchy, our financial assets and liabilities that were accounted for at fair value on a recurring basis at August29, 2009, February28, 2009, and August30, 2008, according to the valuation techniques we used to determine their fair values. Fair Value Measurements Using Inputs Considered as Fair Value at August29, 2009 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) ASSETS Short-term investments Money market fund $ 4 $ $ 4 $ Auction-rate securities 89 89 Other current assets U.S. Treasury bills (restricted cash) 80 80 Money market funds (restricted cash) 53 53 Derivative instruments 9 9 Equity and other investments Auction-rate securities 209 209 Marketable equity securities 78 78 Other assets Assets that fund deferred compensation 71 71 Derivative instruments 6 6 LIABILITIES Accrued liabilities Derivative instruments 1 1 Long-term liabilities Deferred compensation 60 60 Fair Value Meas

Goodwill and Intangible Assets

Goodwill and Intangible Assets
	3 Months Ended Aug. 29, 2009 USD / shares
Goodwill and Intangible Assets
Goodwill and Intangible Assets	5. Goodwill and Intangible Assets The changes in the carrying amount of goodwill and indefinite-lived tradenames by segment were as follows in the six months ended August29, 2009 and August30, 2008: Goodwill Tradenames Domestic International Total Domestic International Total Balances at February28, 2009 $ 434 $ 1,769 $ 2,203 $ 32 $ 72 $ 104 Adjustments to purchase price allocation 42 42 Changes in foreign currency exchange rates 197 197 7 7 Balances at August29, 2009 $ 434 $ 2,008 $ 2,442 $ 32 $ 79 $ 111 Goodwill Tradenames Domestic International Total Domestic International Total Balances at March1, 2008 $ 450 $ 638 $ 1,088 $ 23 $ 74 $ 97 Acquisition 1,491 1,491 Changes in foreign currency exchange rates (43 ) (43 ) (3 ) (3 ) Balances at August30, 2008 $ 450 $ 2,086 $ 2,536 $ 23 $ 71 $ 94 The following table provides the gross carrying amount and related accumulated amortization of definite-lived intangible assets: August29, 2009 February28, 2009 August30, 2008 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Tradenames $ 76 $ (19 ) $ 79 $ (10 ) $ 94 $ Customer relationships 406 (88 ) 367 (45 ) 489 (1 ) Total $ 482 $ (107 ) $ 446 $ (55 ) $ 583 $ (1 ) Total amortization expense for the three months ended August29, 2009 and August30, 2008 was $21 and less than $1, respectively, and was $42 and $1 for the six months then ended, respectively. The estimated future amortization expense for identifiable intangible assets during the remainder of fiscal 2010 and for the next four years is as follows: Fiscal Year Remainder of fiscal 2010 $ 44 2011 89 2012 67 2013 46 2014 41 Thereafter 88

Restructuring Charges

Restructuring Charges
	3 Months Ended Aug. 29, 2009 USD / shares
Restructuring Charges
Restructuring Charges	6. Restructuring Charges In the fourth quarter of fiscal 2009, we implemented a restructuring plan for our domestic and international businesses to support our fiscal 2010 strategy and long-term growth plans. We believe these changes will provide an operating structure that will support a more effective and efficient use of our resources and provide a platform from which key strategic initiatives can progress despite changing economic conditions. In the fourth quarter of fiscal 2009, we recorded charges of $78, related primarily to voluntary and involuntary separation plans at our corporate headquarters. In April2009, we notified our U.S. Best Buy store employees of our intention to update our store operating model, which included eliminating certain positions. In addition, we incurred restructuring charges related to employee termination benefits and business reorganization costs at Best Buy Europe within our International segment. As a result of our restructuring efforts, we recorded charges of $52 in the first quarter of fiscal 2010. No restructuring charges were recorded in the second quarter of fiscal 2010, and we believe we are substantially complete with our announced restructuring activities. All charges related to our restructuring plans were presented as restructuring charges in our consolidated statements of earnings. The composition of our restructuring charges incurred in the six months ended August29, 2009, as well as the cumulative amount incurred through August29, 2009, for both the Domestic and International segments, were as follows: Domestic International Total Six Months Ended August29, 2009 Cumulative Amount through August29, 2009 Six Months Ended August29, 2009 Cumulative Amount through August29, 2009 Six Months Ended August29, 2009 Cumulative Amount through August29, 2009 Termination benefits $ 25 $ 94 $ 26 $ 32 $ 51 $ 126 Facility closure costs 1 1 1 1 2 Property and equipment write-downs 2 2 Total $ 25 $ 97 $ 27 $ 33 $ 52 $ 130 The following table summarizes our restructuring accrual activity in the six months ended August29, 2009, related to termination benefits and facility closure costs: Termination Benefits Facility Closure Costs Total Balances at February28, 2009 $ 73 $ 1 $ 74 Charges 51 1 52 Cash payments (104 ) (1 ) (105 ) Effects of foreign exchange rates 2 2 Balances at August29, 2009 $ 22 $ 1 $ 23 We will continue to evaluate our operating structure and cannot project whether any further restructuring charges will be necessary.

Debt

Debt
	3 Months Ended Aug. 29, 2009 USD / shares
Debt
Debt	7. Debt Short-Term Debt Short-term debt consisted of the following: August29, 2009 February28, 2009 August30, 2008 JPMorgan credit facility $ 325 $ 162 $ 1,173 Europe receivables financing agreement Europe revolving credit facility 730 584 299 Canada revolving demand facility 2 China revolving demand facilities 36 35 43 Total short-term debt $ 1,091 $ 783 $ 1,515 Europe Receivables Financing Agreement In the second quarter of fiscal 2010, a subsidiary of Best Buy Europe (the Subsidiary) entered into a 350 (or $573) receivables financing agreement (the Agreement) with Barclays Bank PLC, as administrative agent, and a syndication of banks to finance the working capital needs of Best Buy Europe. The Agreement is secured by certain network carrier receivables of the Subsidiary. Availability on the facility is based on a percentage of the available acceptable receivables, as defined in the Agreement. Although no amount was outstanding under the Agreement at August29, 2009, in September2009, we drew the full amount available of 245 (or $401) on the Agreement. The Agreement expires on July3, 2012. Interest rates under the Agreement are variable, based on the three-month London Interbank Offered Rate (LIBOR) plus a margin of 3.00%, with a commitment fee of 1.5% on unused available capacity. The Agreement also required an initial commitment fee of 2.75%. The Agreement is not guaranteed by Best Buy Co.,Inc., or any subsidiary nor does it provide for any recourse to Best Buy Co.,Inc. The Agreement contains customary affirmative and negative covenants. Among other things, these covenants restrict or prohibit the Subsidiarys ability to incur certain types or amounts of indebtedness, incur additional encumbrances on its receivables, make material changes in the nature of its business, dispose of material assets, make guarantees, or engage in a change in control transaction. The Agreement also contains covenants that require the Subsidiary to comply with a maximum annual leverage ratio, a minimum annual interest coverage ratio and a minimum fixed charges coverage ratio. Europe Revolving Credit Facility In connection with a 475 (or $777) revolving credit facility available to Best Buy Europe with CPW as lender, Best Buy Co.,Inc. is named as guarantor, up to 50% of the amount outstanding. Concurrent with entering into the Agreement described above, we amended the revolving credit facility to decrease the amount available under the revolving credit facility by the amount available under the Agreement. The related guarantee by Best Buy Co.,Inc. was similarly reduced. The revolving credit facility expires in March2013. Long-Term Debt Long-term debt consisted of the following: August29, 2009 February28, 2009 August30, 2008 6.75% notes $ 500 $ 500 $ 500 Convertible debentures 402 402 402 Financing lease obligations 195 200 198 Capital lease obligations 55 65 63 Other debt 4 13 12 Total lon

Derivative Instruments

Derivative Instruments
	3 Months Ended Aug. 29, 2009 USD / shares
Derivative Instruments
Derivative Instruments	8. Derivative Instruments We manage our economic and transaction exposure to certain market-based risks through the use of derivative instruments. Under this strategy, foreign currency exchange contracts are utilized to manage foreign currency exposure to certain forecasted inventory purchases, revenue streams and net investments in certain foreign operations. Our primary objective in holding derivatives is to reduce the volatility of earnings and cash flows as well as net asset values associated with changes in foreign currency exchange rates. We do not hold or issue derivative financial instruments for trading or speculative purposes. We record all derivatives on our condensed consolidated balance sheets at fair value and evaluate hedge effectiveness prospectively and retrospectively. We formally document all hedging relationships at inception for all derivative hedges and the underlying hedged items, as well as the risk management objectives and strategies for undertaking the hedge transactions. Our strategy employs both cash flow and net investment hedges. We classify the cash flows from derivatives treated as hedges in our consolidated statement of cash flows in the same category as the item being hedged. In addition, we have derivatives which are not designated as hedging instruments. We have no derivatives that have credit-risk-related contingent features, and we mitigate our credit risk by engaging with major financial institutions as our counterparties. Cash Flow Hedges We enter into foreign currency exchange contracts to hedge against the effect of exchange rate fluctuations on certain revenue streams denominated in non-functional currencies. The contracts have terms of up to three years. We report the effective portion of the gain or loss on a cash flow hedge as a component of other comprehensive income and it is subsequently reclassified into net earnings in the period in which the hedged transaction affects net earnings or the forecasted transaction is no longer probable of occurring. We report the ineffective portion, if any, of the gain or loss in net earnings. Net Investment Hedges We also enter into foreign currency exchange swap contracts to hedge against the effect of euro and swiss franc exchange rate fluctuations on net investments of certain foreign operations. For a net investment hedge, we recognize changes in the fair value of the derivative as a component of foreign currency translation within other comprehensive income to offset a portion of the change in the translated value of the net investment being hedged, until the investment is sold or liquidated. We limit recognition in net earnings of amounts previously recorded in cumulative translation of other comprehensive income to circumstances such as complete or substantially complete liquidation of the net investment in the hedged foreign operation. We report the ineffective portion, if any, of the gain or loss in net earnings. Derivatives Not Designated as Hedging Instruments Derivatives not designated as hedging instruments include forward currency exchange contracts used to manage the impact of fluctuations in foreign currency exchan

Earnings per Share

Earnings per Share
	3 Months Ended Aug. 29, 2009 USD / shares
Earnings per Share
Earnings per Share	9. Earnings per Share Our basic earnings per share calculation is computed based on the weighted-average number of common shares outstanding. Our diluted earnings per share calculation is computed 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 shares of common stock include stock options, nonvested share awards and shares issuable under our employee stock purchase plan, as well as common shares that would have resulted from the assumed conversion of our convertible debentures. Since the potentially dilutive shares related to the convertible debentures are included in the calculation, the related interest expense, net of tax, is added back to net earnings, as the interest would not have been paid if the convertible debentures had been converted to common stock. Nonvested market-based awards and nonvested performance-based 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. The following table presents a reconciliation of the numerators and denominators of basic and diluted earnings per share attributable to Best Buy Co.,Inc. (shares in millions): ThreeMonthsEnded SixMonthsEnded August29, 2009 August30, 2008 August29, 2009 August30, 2008 Numerator Net earnings attributable to Best Buy Co.,Inc., basic $ 158 $ 202 $ 311 $ 381 Adjustment for assumed dilution Interest on convertible debentures, net of tax 2 1 3 3 Net earnings attributable to Best Buy Co.,Inc., diluted $ 160 $ 203 $ 314 $ 384 Denominator Weighted-average common shares outstanding 416.5 412.1 415.8 411.7 Effect of potentially dilutive securities Shares from assumed conversion of convertible debentures 8.8 8.8 8.8 8.8 Stock options and other 1.7 2.4 1.6 2.5 Weighted-average common shares outstanding, assuming dilution 427.0 423.3 426.2 423.0 Earnings per share attributable to Best Buy Co.,Inc. Basic $ 0.38 $ 0.49 $ 0.75 $ 0.92 Diluted $ 0.37 $ 0.48 $ 0.74 $ 0.91 The computation of average dilutive shares outstanding excluded options to purchase 20.0 million and 12.8 million shares of our common stock for the three months ended August29, 2009, and August30, 2008, respectively, and 20.0 million and 12.7 million shares of our common stock for the six months ended August29, 2009, and August30, 2008, respectively. These amounts were excluded as the options exercise prices were greater than the average market price of our common stock for the periods presented and, therefore, the effect would be antidilutive (i.e., including such options would result in higher earnings per share).

Supplemental Equity and Compreh

Supplemental Equity and Comprehensive Income Information
	3 Months Ended Aug. 29, 2009 USD / shares
Supplemental Equity and Comprehensive Income Information
Supplemental Equity and Comprehensive Income Information	10. Supplemental Equity and Comprehensive Income Information The following tables present our consolidated statements of changes in shareholders equity for the six months ended August29, 2009 and August30, 2008, respectively (shares in millions): Best Buy Co.,Inc. Common Shares Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income Total Best Buy Co.,Inc. Non controlling Interests Total Balances at February28, 2009 414 $ 41 $ 205 $ 4,714 $ (317 ) $ 4,643 $ 513 $ 5,156 Comprehensive income: Net earnings, six months ended August29, 2009 311 311 2 313 Other comprehensive income, net of tax Foreign currency translation adjustments 310 310 96 406 Unrealized gains on available-for-sale investments 30 30 30 Cash flow hedging instruments unrealized gains 4 4 4 8 Total comprehensive income 655 102 757 Acquisition of business (adjustments to purchase price allocation) (22 ) (22 ) Stock-based compensation 57 57 57 Issuance of common stock under employee stock purchase plan 1 21 21 21 Stock options exercised 1 1 55 56 56 Tax deficit from stock options exercised, restricted stock vesting and employee stock purchase plan (9 ) (9 ) (9 ) Common stock dividends, $0.27 per share (117 ) (117 ) (117 ) Balances at August29, 2009 416 $ 42 $ 329 $ 4,908 $ 27 $ 5,306 $ 593 $ 5,899 Best Buy Co.,Inc. Common Shares Common Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income Total Best Buy Co.,Inc. Non controlling Interests Total Balances at March1, 2008 411 $ 41 $ 8 $ 3,933 $ 502 $ 4,484 $ 40 $ 4,524 Comprehensive income: Net earnings (loss), six months ended August30, 2008 381 381 2 383 Other comprehensive income, net of tax Foreign currency translation adjustments (61 ) (61 ) 1 (60 ) Unrealized losses on available-for- sale investments (47 ) (47 ) (47 ) Total comprehensive income 273 3 276 Acquisition of businesses 682 682 Stock-based compensation 54 54 54 Issuance of common stock under employee stock purchase plan 25 25 25 Stock options exercised 1 21 21 21 Tax benefit from stock options exercised and employee stock purchase plan 4 4 4 Common stock dividends, $0.26 per share (109 ) (109 ) (109 ) Balances at August30, 2008 412 $ 41 $ 112 $ 4,205 $ 394 $ 4,752 $ 725 $ 5,477 The components of accu

Segments

Segments
	3 Months Ended Aug. 29, 2009 USD / shares
Segments
Segments	11. Segments We have organized our operations into two segments: Domestic and International. These segments are our primary areas of measurement and decision-making. The Domestic reportable segment is comprised of all operations within the U.S. and its territories. The International reportable segment is comprised of all operations outside the U.S. and its territories. We rely on an internal management reporting process that provides segment information to the operating income level for purposes of assessing performance and allocating resources. The accounting policies of the segments are the same as those described in Note 1, Summary of Significant Accounting Policies, in the Notes to Consolidated Financial Statements included in our Annual Report on Form10-K for the fiscal year ended February28, 2009. Revenue by reportable segment was as follows: ThreeMonthsEnded SixMonthsEnded August29, 2009 August30, 2008 August29, 2009 August30, 2008 Domestic $ 8,274 $ 8,133 $ 15,799 $ 15,586 International 2,748 1,668 5,318 3,205 Total revenue $ 11,022 $ 9,801 $ 21,117 $ 18,791 Operating income (loss) by reportable segment and the reconciliation to earnings before income tax expense and equity in loss of affiliates were as follows: ThreeMonthsEnded SixMonthsEnded August29, 2009 August30, 2008 August29, 2009 August30, 2008 Domestic $ 315 $ 315 $ 618 $ 592 International (35 ) 24 (42 ) 24 Total operating income 280 339 576 616 Other income (expense) Investment income and other 18 9 27 30 Interest expense (22 ) (21 ) (45 ) (34 ) Earnings before income tax expense and equity in loss of affiliates $ 276 $ 327 $ 558 $ 612 Assets by reportable segment were as follows: August29, 2009 February28, 2009 August30, 2008 Domestic $ 9,597 $ 9,059 $ 9,680 International 7,594 6,767 7,842 Total assets $ 17,191 $ 15,826 $ 17,522

Contingencies

Contingencies
	3 Months Ended Aug. 29, 2009 USD / shares
Contingencies
Contingencies	12. Contingencies We are involved in various legal proceedings arising in the normal course of conducting business. We believe the amounts provided in our consolidated financial statements are adequate in consideration of the probable and estimable liabilities. The resolution of those proceedings is not expected to have a material effect on our results of operations or financial condition.

Condensed Consolidating Financi

Condensed Consolidating Financial Information
	3 Months Ended Aug. 29, 2009 USD / shares
Condensed Consolidating Financial Information
Condensed Consolidating Financial Information	13. Condensed Consolidating Financial Information Our convertible debentures, due in 2022, are jointly and severally, fully and unconditionally, guaranteed by our wholly-owned indirect subsidiary Best Buy Stores, L.P. Investments in subsidiaries of Best Buy Stores, L.P., which have not guaranteed the convertible debentures, are accounted for under the equity method. We reclassified certain prior-year amounts as described in Note 1, Basis of Presentation, in this Quarterly Report on Form10-Q. The aggregate principal balance and carrying amount of our convertible debentures was $402 at August29, 2009. The convertible debentures may be converted into shares of our common stock by us at anytime or at the option of the holders if the criteria, as described in Note 6, Debt, of the Notes to Consolidated Financial Statements in our Annual Report on Form10-K for the fiscal year ended February28, 2009, are met. At August29, 2009, the debentures were not convertible at the option of the holders. We file a consolidated U.S. federal income tax return. We allocate income taxes in accordance with our tax allocation agreement. U.S. affiliates receive no tax benefit for taxable losses, but are allocated taxes at the required effective income tax rate if they have taxable income. The following tables present condensed consolidating balance sheets as of August29, 2009; February28, 2009; and August30, 2008; condensed consolidating statements of earnings for the three and six months ended August29, 2009, and August30, 2008; and condensed consolidating statements of cash flows for the six months ended August29, 2009, and August30, 2008: $ in millions, except per share amounts Condensed Consolidating Balance Sheets At August29, 2009 (Unaudited) BestBuy Co.,Inc. Guarantor Subsidiary Non- Guarantor Subsidiaries Eliminations Consolidated Assets Current Assets Cash and cash equivalents $ 123 $ 38 $ 507 $ $ 668 Short-term investments 89 4 93 Receivables 1 436 1,333 1,770 Merchandise inventories 3,993 1,770 (25 ) 5,738 Other current assets 101 117 840 (23 ) 1,035 Intercompany receivable 7,184 (7,184 ) Intercompany note receivable 819 43 (862 ) Total current assets 1,133 4,584 11,681 (8,094 ) 9,304 Property and Equipment, Net 217 1,986 1,959 4,162 Goodwill 20 2,422 2,442 Tradenames 168 168 Customer Relationships 318 318 Equity and Other Investments 220 114 334 Other Assets 83 57 369 (46 ) 463 Investments in Subsidiaries 10,073 142 1,446 (11,661 ) Total Assets $ 11,726 $ 6,789 $ 18,477 $ (19,801 ) $ 17,191 Liabilities and Shareholders Equity Current Liabilities Accounts payable $ 306 $ 35 $ 5,066 $ $ 5,407 Unredeemed gift card liabilities