BEST BUY CO INC, 10-K filed on 4/2/2018
Annual Report
v3.8.0.1
Document and Entity Information - USD ($)
$ in Billions
12 Months Ended
Feb. 03, 2018
Mar. 29, 2018
Jul. 28, 2017
Document and Entity Information [Abstract}      
Entity Registrant Name BEST BUY CO INC    
Entity Central Index Key 0000764478    
Document Type 10-K    
Document Period End Date Feb. 03, 2018    
Amendment Flag false    
Current Fiscal Year End Date --02-03    
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Filer Category Large Accelerated Filer    
Entity Public Float     $ 13.0
Entity Common Stock, Shares Outstanding   282,713,593  
Document Fiscal Year Focus 2018    
Document Fiscal Period Focus FY    
v3.8.0.1
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
Feb. 03, 2018
Jan. 28, 2017
CURRENT ASSETS    
Cash and cash equivalents $ 1,101 $ 2,240
Short-term investments 2,032 1,681
Receivables, net 1,049 1,347
Merchandise inventories 5,209 4,864
Other current assets 438 384
Total current assets 9,829 10,516
Property and Equipment    
Land and buildings 623 618
Leasehold improvements 2,327 2,227
Fixtures and equipment 5,410 4,998
Property under capital and financing leases 340 300
Property and equipment, gross 8,700 8,143
Less accumulated depreciation 6,279 5,850
Net property and equipment 2,421 2,293
Goodwill 425 425
Other Assets 374 622
Total Assets 13,049 13,856
CURRENT LIABILITIES    
Accounts payable 4,873 4,984
Unredeemed gift card liabilities 385 427
Deferred revenue 453 418
Accrued compensation and related expenses 561 358
Accrued liabilities 864 865
Accrued income taxes 137 26
Current portion of long-term debt 544 44
Total current liabilities 7,817 7,122
Long-Term Liabilities 809 704
Long-Term Debt 811 1,321
Contingencies and Commitments (Note 12)
Best Buy Co., Inc. Shareholders’ Equity    
Preferred stock, $1.00 par value: Authorized — 400,000 shares; Issued and outstanding — none 0 0
Common stock, $0.10 par value: Authorized — 1.0 billion shares; Issued and outstanding — 282,988,000 and 311,108,000 shares, respectively 28 31
Additional paid-in capital 0 0
Retained earnings 3,270 4,399
Accumulated other comprehensive income 314 279
Total equity 3,612 4,709
Total Liabilities and Equity $ 13,049 $ 13,856
v3.8.0.1
CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - $ / shares
Feb. 03, 2018
Jan. 28, 2017
Preferred stock, par value (in dollars per share) $ 1.00 $ 1.00
Preferred stock, authorized shares 400,000 400,000
Preferred stock, issued shares 0 0
Preferred stock, outstanding shares 0 0
Common stock, par value (in dollars per share) $ 0.10 $ 0.10
Common stock, authorized shares 1,000,000,000 1,000,000,000
Common stock, issued shares 282,988,000 311,108,000
Common stock, outstanding shares 282,988,000 311,108,000
v3.8.0.1
CONSOLIDATED STATEMENTS OF EARNINGS - USD ($)
shares in Millions, $ in Millions
12 Months Ended
Feb. 03, 2018
Jan. 28, 2017
Jan. 30, 2016
Revenue $ 42,151 $ 39,403 $ 39,528
Cost of goods sold 32,275 29,963 30,334
Restructuring charges — cost of goods sold 0 0 3
Gross profit 9,876 9,440 9,191
Selling, general and administrative expenses 8,023 7,547 7,618
Restructuring charges 10 39 198
Operating income 1,843 [1] 1,854 [2] 1,375
Other income (expense)      
Gain on sale of investments 1 3 2
Investment income and other 48 31 13
Interest expense (75) (72) (80)
Earnings from continuing operations before income tax expense 1,817 1,816 1,310
Income tax expense 818 609 503
Net earnings from continuing operations 999 [3] 1,207 807
Gain from discontinued operations (Note 2), net of tax expense of $0, $7 and $1, respectively 1 21 90
Net earnings $ 1,000 $ 1,228 $ 897
Basic earnings per share      
Continuing operations $ 3.33 $ 3.79 $ 2.33
Discontinued operations 0.00 0.07 0.26
Basic earnings per share 3.33 3.86 2.59
Diluted earnings per share      
Continuing operations 3.26 3.74 2.30
Discontinued operations 0.00 0.07 0.26
Diluted earnings per share $ 3.26 [4] $ 3.81 [4] $ 2.56
Weighted-average common shares outstanding      
Basic 300.4 318.5 346.5
Diluted 307.1 322.6 350.7
[1] Includes $0 million, $2 million, $(2) million and $10 million of restructuring charges (benefit) recorded in the fiscal first, second, third and fourth quarters, respectively, and $10 million for the 12 months ended February 3, 2018, related to measures we took to restructure our businesses. Also includes $80 million related to a one-time bonus for certain employees and $20 million related to a one-time contribution to the Best Buy Foundation in response to future tax savings created by the Tax Act for the fiscal fourth quarter and 12 months ended February 3, 2018.
[2] Includes $29 million, $0 million, $1 million and $9 million of restructuring charges recorded in the fiscal first, second, third and fourth quarters, respectively, and $39 million for the 12 months ended January 28, 2017, related to measures we took to restructure our businesses. Also, includes $161 million of CRT litigation settlements, net of related legal fees and costs, recorded in the fiscal first quarter and in the 12 months ended January 28, 2017, related to products purchased and sold in prior fiscal years.
[3] Includes $283 million of charges resulting from the Tax Act for the fiscal fourth quarter and 12 months ended February 3, 2018, including $209 million associated with the deemed repatriation tax and $74 million primarily related to the revaluation of deferred tax assets and liabilities.
[4] The sum of our quarterly diluted earnings per share does not equal our annual diluted earnings per share due to differences in quarterly and annual weighted-average shares outstanding.
v3.8.0.1
CONSOLIDATED STATEMENTS OF EARNINGS (PARENTHETICAL) - USD ($)
$ in Millions
12 Months Ended
Feb. 03, 2018
Jan. 28, 2017
Jan. 30, 2016
Income Statement [Abstract]      
Tax effect of discontinued operations $ 0 $ 7 $ 1
v3.8.0.1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Statement - USD ($)
$ in Millions
12 Months Ended
Feb. 03, 2018
Jan. 28, 2017
Jan. 30, 2016
Net earnings $ 1,000 $ 1,228 $ 897
Foreign currency translation adjustments 35 10 (44)
Reclassification of foreign currency translations adjustments into earnings due to sale of business 0 (2) (67)
Comprehensive income $ 1,035 $ 1,236 $ 786
v3.8.0.1
CONSOLIDATED STATEMENTS OF CASH FLOWS
$ in Millions
12 Months Ended
Feb. 03, 2018
USD ($)
Jan. 28, 2017
USD ($)
Jan. 30, 2016
USD ($)
OPERATING ACTIVITIES      
Net earnings $ 1,000 $ 1,228 $ 897
Adjustments to reconcile net earnings (loss) to total cash provided by operating activities      
Depreciation 683 654 657
Restructuring charges 10 39 201
Gain on sale of business 0 0 (99)
Stock-based compensation 129 108 104
Deferred Income Tax Expense (Benefit)_Total Ops 162 201 49
Other, net (13) (17) 59
Changes in operating assets and liabilities:      
Receivables 315 (193) 123
Merchandise inventories (335) 199 86
Other assets (21) 10 36
Accounts payable (196) 518 (536)
Other liabilities 117 23 (140)
Income taxes 290 (213) (94)
Total cash provided by operating activities 2,141 2,557 1,343
INVESTING ACTIVITIES      
Additions to property and equipment, net of $123, $48 and $92, respectively, of non-cash capital expenditures (688) (580) (649)
Purchases of investments (4,325) (3,045) (2,281)
Sales of investments 4,018 2,689 2,427
Proceeds from sale of business, net of cash transferred 0 0 (51)
Proceeds from property disposition 2 56 0
Other, net (9) 3 28
Total cash used in investing activities (1,002) (877) (526)
FINANCING ACTIVITIES      
Repurchase of common stock (2,004) (698) (1,000)
Prepayment of accelerated share repurchase 0 0 (55)
Issuance of common stock 163 171 47
Dividends paid (409) (505) (499)
Repayments of debt (46) (394) (28)
Other, net (1) 8 (1)
Total cash used in financing activities (2,297) (1,418) (1,536)
Effect of exchange rate changes on cash 25 10 (38)
Increase (decrease) in cash, cash equivalents and restricted cash (1,133) 272 (757)
Cash, cash equivalents and restricted cash at beginning of period, excluding held for sale 2,433 2,161 2,616
Cash, cash equivalents and restricted cash at beginning of period, held for sale 0 0 302
Cash, cash equivalents and restricted cash at end of period 1,300 2,433 2,161
Supplemental Disclosure of Cash Flow Information      
Income taxes paid 366 628 550
Interest paid $ 81 $ 76 $ 77
v3.8.0.1
CONSOLIDATED STATEMENTS OF CASH FLOWS (PARENTHETICAL) - USD ($)
$ in Millions
12 Months Ended
Feb. 03, 2018
Jan. 28, 2017
Jan. 30, 2016
Statement of Cash Flows [Abstract]      
Non-cash capital expenditures $ 123 $ 48 $ 92
v3.8.0.1
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($)
shares in Millions, $ in Millions
Total
Total Best Buy Co., Inc. Shareholders' Equity
Common Stock
Prepaid Share Repurchase
Additional Paid-In Capital
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Noncontrolling Interest
Beginning balances at Jan. 31, 2015 $ 5,000 $ 4,995 $ 35   $ 437 $ 4,141 $ 382 $ 5
Beginning balances (in shares) at Jan. 31, 2015     352          
Increase (decrease) in shareholders' equity                
Net earnings 897 897 $ 0   0 897 0 0
Other comprehensive income (loss), net of tax:                
Foreign currency translation adjustments (44) (44)         (44) 0
Reclassification of foreign currency translations adjustments into earnings due to sale of business (67) (67) $ 0   0 0 (67) 0
Prepaid repurchase of common stock (55) (55)   $ (55)     0 0
Tax benefits from stock options exercised, restricted stock vesting and employee stock purchase plan 2 2     2      
Restricted stock vested and stock options exercised (in shares)     5          
Restricted stock vested and stock options exercised 40 40     40      
Issuance of common stock under employee stock purchase plan 7 7 $ 0   7      
Stock-based compensation 104 104     104      
Common stock dividends, $1.36 per share during the period ended Feb. 3, 2018, $1.57 per share during the period ended January 28, 2017, $1.43 per share during the period ended January 30, 2016, respectively (501) (501)     3 (504) 0  
Sale of noncontrolling interest (5)   0   0 0   (5)
Repurchase of common stock (1,000) (1,000) $ (3)   (593) (404)    
Repurchase of common stock (in shares)     (33)          
Ending balances at Jan. 30, 2016 4,378 4,378 $ 32 (55) 0 4,130 271 0
Ending balances (in shares) at Jan. 30, 2016     324          
Increase (decrease) in shareholders' equity                
Net earnings 1,228 1,228 $ 0   0 1,228 0 0
Other comprehensive income (loss), net of tax:                
Foreign currency translation adjustments 10 10 0   0 0 10 0
Reclassification of foreign currency translations adjustments into earnings due to sale of business (2) (2) 0   0 0 (2) 0
Settlement of accelerated share repurchase 55 55 $ 0 55 0 0 0 0
Tax benefits from stock options exercised, restricted stock vesting and employee stock purchase plan 17 17     17      
Restricted stock vested and stock options exercised (in shares)     8          
Restricted stock vested and stock options exercised 164 164 $ 1   163      
Issuance of common stock under employee stock purchase plan 7 7 0   7      
Stock-based compensation 108 108     108      
Common stock dividends, $1.36 per share during the period ended Feb. 3, 2018, $1.57 per share during the period ended January 28, 2017, $1.43 per share during the period ended January 30, 2016, respectively (505) (505) 0   0 (505) 0 0
Repurchase of common stock (751) (751) $ (2)   (295) (454)    
Repurchase of common stock (in shares)     (21)          
Ending balances at Jan. 28, 2017 4,709 4,709 $ 31 0 0 4,399 279 0
Ending balances (in shares) at Jan. 28, 2017     311          
Increase (decrease) in shareholders' equity                
ASU adoption cumulative adjustment (2) (2)     10 (12)    
Net earnings 1,000 1,000 $ 0   0 1,000 0 0
Other comprehensive income (loss), net of tax:                
Foreign currency translation adjustments 35 35 $ 0   0 0 35 0
Reclassification of foreign currency translations adjustments into earnings due to sale of business 0              
Restricted stock vested and stock options exercised (in shares)     7          
Restricted stock vested and stock options exercised 156 156 $ 1   155 0 0 0
Issuance of common stock under employee stock purchase plan 7 7 0   7 0 0 0
Stock-based compensation 129 129 0   129 0 0 0
Common stock dividends, $1.36 per share during the period ended Feb. 3, 2018, $1.57 per share during the period ended January 28, 2017, $1.43 per share during the period ended January 30, 2016, respectively (411) (411) 0   0 (411) 0 0
Repurchase of common stock (2,009) (2,009) $ (4)   (299) (1,706)    
Repurchase of common stock (in shares)     (35)          
Other (2) (2)     (2)      
Ending balances at Feb. 03, 2018 $ 3,612 $ 3,612 $ 28 $ 0 $ 0 $ 3,270 $ 314 $ 0
Ending balances (in shares) at Feb. 03, 2018     283          
v3.8.0.1
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (PARENTHETICAL) - $ / shares
12 Months Ended
Feb. 03, 2018
Jan. 28, 2017
Jan. 30, 2016
Statement of Stockholders' Equity [Abstract]      
Dividends declared per common share (in dollars per share) $ 1.36 $ 1.57 $ 1.43
v3.8.0.1
Summary of Significant Accounting Policies
12 Months Ended
Feb. 03, 2018
Summary of Significant Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

Unless the context otherwise requires, the use of the terms "Best Buy," "we," "us" and "our" in these Notes to Consolidated Financial Statements refers to Best Buy Co., Inc. and, as applicable, its consolidated subsidiaries.

Description of Business

We are a leading provider of technology products, services and solutions. We offer these products and services to customers who visit our stores, engage with Geek Squad agents or use our websites or mobile applications. We have operations in the U.S., Canada and Mexico. We have two reportable segments: Domestic and International. The Domestic segment is comprised of the operations in all states, districts and territories of the U.S., under various brand names including Best Buy, bestbuy.com, Best Buy Mobile, Best Buy Direct, Best Buy Express, Geek Squad, Magnolia Home Theater and Pacific Kitchen and Home. The International segment is comprised of all operations in Canada and Mexico under the brand names Best Buy, Best Buy Express, Best Buy Mobile and Geek Squad and the domain names bestbuy.ca and bestbuy.com.mx.

Basis of Presentation

The consolidated financial statements include the accounts of Best Buy Co., Inc. and its consolidated subsidiaries. All intercompany balances and transactions are eliminated upon consolidation.

In order to align our fiscal reporting periods and comply with statutory filing requirements, we consolidate the financial results of our Mexico operations on a one-month lag. Our policy is to accelerate recording the effect of events occurring in the lag period that significantly affect our consolidated financial statements. No significant intervening event occurred in these operations that would have materially affected our financial condition, results of operations, liquidity or other factors had it been recorded during fiscal 2018, 2017 or 2016.

Discontinued Operations

Discontinued operations are primarily comprised of Jiangsu Five Star Appliance Co., Limited ("Five Star") within our International segment. See Note 2, Discontinued Operations, for further information.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. ("GAAP") requires us to make estimates and assumptions. These estimates and assumptions affect the reported amounts in the consolidated financial statements, as well as the disclosure of contingent liabilities. Future results could be materially affected if actual results were to differ from these estimates and assumptions.

Fiscal Year

Our fiscal year ends on the Saturday nearest the end of January. Fiscal 2018 included 53 weeks, with the additional week occurring in the fourth quarter, and fiscal 2017 and 2016 each included 52 weeks.

Unadopted Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers. The new guidance establishes a single comprehensive model for entities to use in accounting for revenue and supersedes most current revenue recognition guidance. It introduces a five-step process for revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards under current guidance.

We will adopt this standard in the first quarter of fiscal 2019 using the modified retrospective method. Under this method, we will recognize the cumulative effect of the changes in retained earnings at the date of adoption, but will not restate prior periods. We currently estimate the pre-tax impact of these changes to increase retained earnings by approximately $75 million to $100 million. We expect the impact of adoption to be immaterial to net earnings on an ongoing basis.

Our adoption assessment included a detailed review of contracts for each revenue stream and a comparison of historical accounting policies to the new standard. Based on these procedures, we have determined the impact will be (1) minor changes to the timing of recognition of revenues related to our gift cards and loyalty programs and certain third-party software licenses where we are the agent, and (2) presentation changes to certain immaterial revenues that are currently reported on a gross or net basis. In addition, the balance sheet presentation of our sales return reserve will change to present a separate return asset and liability, instead of net presentation used currently.

As part of our adoption, we have modified our control procedures and processes, including reporting logic from impacted systems, although we do not expect these updates to have a material effect on our internal controls over financial reporting.

Additionally, the adoption of ASU 2014-09 will result in increased footnote disclosures, particularly with regard to (1) revenue-related balance sheet accounts and associated activity in the fiscal period, (2) disaggregation of revenue by channel and product category, (3) unsatisfied performance obligations for our service contracts with a duration of over one year, (4) the pro-forma impact of changes to our financial statements in the initial year of adoption, and (5) qualitative disclosures related to the nature and terms of our sales, timing of the transfer of control and judgments used in our application of the five-step process.

In February 2016, the FASB issued ASU 2016-02, Leases, and has since issued additional ASUs to further clarify or add options to the issued guidance. The new guidance was issued to increase transparency and comparability among companies by requiring most leases to be included on the balance sheet and by expanding disclosure requirements. Based on the effective dates, we expect to adopt the new guidance in the first quarter of fiscal 2020 using the recently-proposed prospective method and have begun implementing required upgrades to our existing lease systems. While we expect adoption to lead to a material increase in the assets and liabilities recorded on our balance sheet and an increase to our footnote disclosures related to leases, we are still evaluating the impact on our consolidated statement of earnings. We also expect that adoption of the new standard will require changes to our internal controls over financial reporting.

In October 2016, the FASB issued ASU 2016-16, Intra-Entity Transfers of Assets Other Than Inventory. The new guidance requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. We will adopt ASU 2016-16 in the first quarter of fiscal 2019. Based on our preliminary assessment, we believe the impact of adopting the new guidance will be immaterial to our annual and interim financial statements.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging. The new guidance amends the hedge accounting recognition and presentation requirements. Based on the effective dates, we will prospectively adopt this standard in the first quarter of fiscal 2019. We believe the impact will be immaterial to our annual and interim financial statements.

In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The new guidance allows the reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The guidance is effective for our fiscal 2020, with early adoption permitted. We plan to early adopt ASU 2018-02 in the first quarter of fiscal 2019. Based on our preliminary assessment, we believe the impact will be immaterial to our annual and interim financial statements.

Adopted Accounting Pronouncements

In the first quarter of fiscal 2018, we adopted the following ASUs:

ASU 2015-11, Inventory: Simplifying the Measurement of Inventory. The adoption did not have a material impact on our results of operations, cash flows or financial position.

ASU 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting. Excess tax benefits and tax deficiencies are now recognized in our provision for income taxes as a discrete event rather than as a component of shareholders’ equity. In addition, we elected to account for forfeitures as they occur. The cumulative effect of this policy change amounted to $12 million, net of tax, and was recorded as a reduction to our retained earnings opening balance. Finally, we elected to present the Consolidated Statements of Cash Flows on a retrospective transition method and prior periods have been adjusted to present excess tax benefits as cash flows from operating activities.

ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, and ASU 2016-18, Statement of Cash Flows: Restricted Cash. The retrospective adoption increased our beginning and ending cash balances within our statement of cash flows. The adoption had no other material impacts to our cash flow statement and had no impact on our results of operations or financial position.

The following table reconciles the Consolidated Statement of Cash Flows line items impacted by the adoption of these standards at January 28, 2017, and January 30, 2016:
 
January 28, 2017 Reported
 
ASU 2016-09 Adjustment
 
ASU 2016-15 Adjustment
 
ASU 2016-18 Adjustment
 
January 28, 2017 Adjusted
Operating activities
 
 
 
 
 
 
 
 
 
Other, net
$
(31
)
 
$
14

 
$

 
$

 
$
(17
)
Changes in operating assets and liabilities:


 


 


 


 


Receivables
(185
)
 

 
(8
)
 

 
(193
)
Merchandise inventories
193

 

 
6

 

 
199

Total cash provided by (used in) operating activities
2,545

 
14

 
(2
)
 

 
2,557

Investing activities

 

 

 

 

Additions to property and equipment, net
(582
)
 

 
2

 

 
(580
)
Change in restricted assets
(8
)
 

 

 
8

 

Total cash provided by (used in) investing activities
(887
)
 

 
2

 
8

 
(877
)
Financing activities

 

 

 

 

Other, net
22

 
(14
)
 

 

 
8

Total cash used in financing activities
(1,404
)
 
(14
)
 

 

 
(1,418
)
Increase in cash, cash equivalents and restricted cash
264

 

 

 
8

 
272

Cash, cash equivalents and restricted cash at beginning of period
1,976

 

 

 
185

 
2,161

Cash, cash equivalents and restricted cash at end of period
$
2,240

 
$

 
$

 
$
193

 
$
2,433


 
January 30, 2016 Reported
 
ASU 2016-09 Adjustment
 
ASU 2016-15 Adjustment
 
ASU 2016-18 Adjustment
 
January 30, 2016 Adjusted
Operating activities
 
 
 
 
 
 
 
 
 
Other, net
$
38

 
$
21

 
$

 
$

 
$
59

Total cash provided by operating activities
1,322

 
21

 

 

 
1,343

Investing activities
 
 
 
 
 
 
 
 
 
Proceeds from sale of business, net of cash transferred
103

 

 

 
(154
)
 
(51
)
Change in restricted assets
(47
)
 

 

 
47

 

Total cash used in investing activities
(419
)
 

 

 
(107
)
 
(526
)
Financing activities
 
 
 
 
 
 
 
 
 
Other, net
20

 
(21
)
 

 

 
(1
)
Total cash used in financing activities
(1,515
)
 
(21
)
 

 

 
(1,536
)
Decrease in cash, cash equivalents and restricted cash
(650
)
 

 

 
(107
)
 
(757
)
Cash, cash equivalents and restricted cash at beginning of period, excluding held for sale
2,432

 

 

 
184

 
2,616

Cash, cash equivalents and restricted cash at beginning of period, held for sale
194

 

 

 
108

 
302

Cash, cash equivalents and restricted cash at end of period
$
1,976

 
$

 
$

 
$
185

 
$
2,161



Total Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of Cash, cash equivalents and restricted cash reported within our Consolidated Balance Sheets to the total shown in our Consolidated Statements of Cash Flows:
 
January 28, 2017
 
January 30, 2016
Cash and cash equivalents
$
2,240

 
$
1,976

Restricted cash included in Other current assets
193

 
185

Total cash, cash equivalents and restricted cash
$
2,433

 
$
2,161


Amounts included in restricted cash are pledged as collateral or restricted to use for general liability insurance and workers' compensation insurance.

Cash and Cash Equivalents

Cash primarily consists of cash on hand and bank deposits. Cash equivalents consist of money market funds, commercial paper, corporate bonds and time deposits with an original maturity of 3 months or less when purchased. The amounts of cash equivalents at February 3, 2018, and January 28, 2017, were $524 million and $1,531 million, respectively, and the weighted-average interest rates were 1.1% and 0.5%, respectively.

Receivables

Receivables consist principally of amounts due from mobile phone network operators for device sales and commissions, banks for customer credit card and debit card transactions and vendors for various vendor funding programs.

We establish allowances for uncollectible receivables based on historical collection trends and write-off history. Our allowances for uncollectible receivables were $37 million and $52 million at February 3, 2018, and January 28, 2017, respectively.

Merchandise Inventories

Merchandise inventories are recorded at the lower of cost or net realizable value and the weighted average method is used to determine the cost of inventory. In-bound freight-related costs from our vendors are included as part of the net cost of merchandise inventories. Also included in the cost of inventory are certain vendor allowances that are not a reimbursement of specific, incremental and identifiable costs to promote a vendor's products. Other costs associated with acquiring, storing and transporting merchandise inventories to our retail stores are expensed as incurred and included in cost of goods sold.

Our inventory valuation reflects adjustments for anticipated physical inventory losses (e.g., theft) that have occurred since the last physical inventory. Physical inventory counts are taken on a regular basis to ensure that the inventory reported in our consolidated financial statements is properly stated.

Our inventory valuation also reflects markdown adjustments for the excess of the cost over the net recovery we expect to realize from the ultimate sale or other disposal of inventory and establish a new cost basis. Subsequent changes in facts or circumstances do not result in the reversal of previously recorded markdown adjustments or an increase in the newly established cost basis.

Restricted Assets

Restricted cash totaled $199 million and $193 million at February 3, 2018, and January 28, 2017, respectively, and is included in Other current assets on our Consolidated Balance Sheets. Such balances are pledged as collateral or restricted to use for general liability insurance and workers' compensation insurance.

Property and Equipment

Property and equipment are recorded at cost. We compute depreciation using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are depreciated over the shorter of their estimated useful lives or the period from the date the assets are placed in service to the end of the lease term, which includes optional renewal periods if they are reasonably assured. Accelerated depreciation methods are generally used for income tax purposes.
When property is retired or otherwise disposed of, the cost and accumulated depreciation are removed from our Consolidated Balance Sheets and any resulting gain or loss is reflected on our Consolidated Statements of Earnings.

Repairs and maintenance costs are charged directly to expense as incurred. Major renewals or replacements that substantially extend the useful life of an asset are capitalized and depreciated.

Costs associated with the acquisition or development of software for internal use are capitalized and amortized over the expected useful life of the software, generally from two to seven years. A subsequent addition, modification or upgrade to internal-use software is capitalized to the extent that it enhances the software's functionality or extends its useful life. Capitalized software is included in fixtures and equipment. Software maintenance and training costs are expensed in the period incurred.

Property under capital and financing leases is comprised of buildings and equipment used in our operations. These assets are typically depreciated over the shorter of the useful life of the asset or the term of the lease. The carrying value of property under capital and financing leases was $184 million and $166 million at February 3, 2018, and January 28, 2017, respectively, net of accumulated depreciation of $156 million and $134 million, respectively.

Estimated useful lives by major asset category are as follows:
Asset
Life
(in years)
Buildings
5-35
Leasehold improvements
3-15
Fixtures and equipment
2-15
Property under capital and financing leases
3-5


Impairment of Long-Lived Assets and Costs Associated With Exit Activities

Long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Factors considered important that could result in an impairment review include, but are not limited to, negative operating income for the most recent 12-month period, significant under-performance relative to historical or planned operating results, significant changes in the manner of use or expected life of the assets or significant changes in our business strategies. An impairment loss is recognized when the estimated undiscounted cash flows expected to result from the use of the asset plus net proceeds expected from the disposition of the asset, if any, are less than the carrying value of the asset net of other liabilities. When an impairment loss is recognized, the carrying amount of the asset is reduced to its estimated fair value using valuation techniques, such as discounted cash flow analysis.

When reviewing long-lived assets for impairment, we group long-lived assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. For example, long-lived assets deployed at store locations are reviewed for impairment at the individual store level, which involves comparing the carrying value of all land, buildings, leasehold improvements, fixtures and equipment located at each store to the net cash flow projections for each store. In addition, we conduct separate impairment reviews at other levels as appropriate, for example, to evaluate potential impairment of assets shared by several areas of operations, such as information technology systems. Refer to Note 3, Fair Value Measurements, for further information associated with the long-lived asset impairments, including valuation techniques used, impairment charges incurred and remaining carrying values.

The present value of costs associated with vacated properties, primarily future lease costs net of expected sublease income, are charged to earnings when we cease using the property. We accelerate depreciation on property and equipment we expect to retire when a decision is made to abandon a property.

At February 3, 2018, and January 28, 2017, the obligation associated with vacant properties included in Accrued liabilities on our Consolidated Balance Sheets was $17 million and $29 million, respectively, and the obligation associated with vacant properties included in Long-term liabilities on our Consolidated Balance Sheets was $21 million and $37 million, respectively. The obligation associated with vacant properties at February 3, 2018, and January 28, 2017, included amounts associated with our restructuring activities as further described in Note 4, Restructuring Charges.

Leases

We conduct the majority of our retail and distribution operations from leased locations. The leases generally require payment of real estate taxes, insurance and common area maintenance, in addition to rent. The terms of our new lease agreements for large-format stores are generally less than 10 years, although we have existing leases with terms up to 20 years. Small-format stores generally have lease terms that are less than 3 years. Most of the leases contain renewal options and escalation clauses, and certain store leases require contingent rents based on factors such as specified percentages of revenue or the consumer price index.

For leases that contain predetermined fixed escalations of the minimum rent, we recognize the related rent expense on a straight-line basis from the date we take possession of the property to the end of the initial lease term. We record any difference between the straight-line rent amounts and amounts payable under the leases as part of deferred rent, in accrued liabilities or long-term liabilities, as appropriate.

Cash or lease incentives received upon entering into certain store leases ("tenant allowances") are recognized on a straight-line basis as a reduction to rent from the date we take possession of the property through the end of the initial lease term. We record the unamortized portion of tenant allowances as a part of deferred rent, in accrued liabilities or long-term liabilities, as appropriate.

At February 3, 2018, and January 28, 2017, deferred rent included in Accrued liabilities on our Consolidated Balance Sheets was $30 million and $33 million, respectively, and deferred rent included in Long-term liabilities on our Consolidated Balance Sheets was $107 million and $121 million, respectively.

In addition, we have financing leases for agreements when we are deemed the owner of the leased buildings, typically due to significant involvement during the construction period, and do not qualify for sales recognition under the sale-leaseback accounting guidance. We record the cost of the building in property and equipment, with the related short-term liability recorded in current portion of long-term debt and the long-term liability recorded in long-Term Debt. At February 3, 2018, and January 28, 2017, we had $191 million and $177 million, respectively, outstanding under financing lease obligations. Refer to Note 8, Leases, for maturity details.
Assets acquired under capital and financing leases are depreciated over the shorter of the useful life of the asset or the lease term, including renewal periods, if reasonably assured.
Goodwill and Intangible Assets
Goodwill

Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations. We test goodwill for impairment annually, as of the first day of the fiscal fourth quarter, or when indications of potential impairment exist. We monitor the existence of potential impairment indicators throughout the fiscal year. We test for goodwill impairment at the reporting unit level and our reporting units are the components of operating segments which constitute businesses for which discrete financial information is available and is regularly reviewed by segment management. No components were aggregated in arriving at our reporting units. Our only reporting unit with a goodwill balance at the beginning of fiscal 2018 was our Domestic segment.

Our detailed impairment testing involves comparing the fair value of each reporting unit to its carrying value, including goodwill. Fair value reflects the price a market participant would be willing to pay in a potential sale of the reporting unit and is based on discounted cash flows or relative market-based approaches. If the fair value exceeds carrying value, then it is concluded that no goodwill impairment has occurred. If the carrying value of the reporting unit exceeds its fair value, a second step is required to measure possible goodwill impairment loss. The second step includes hypothetically valuing the tangible and intangible assets and liabilities of the reporting unit as if the reporting unit had been acquired in a business combination. Then, the implied fair value of the reporting unit's goodwill is compared to the carrying value of that goodwill. If the carrying value of the reporting unit's goodwill exceeds the implied fair value of the goodwill, we recognize an impairment loss in an amount equal to the excess, not to exceed the carrying value. In fiscal 2018, we determined that the fair value of the Domestic reporting unit exceeded its carrying value, and as a result, no goodwill impairment was recorded. No goodwill impairment was recorded in fiscal 2017 or 2016.

Tradenames

We have an indefinite-lived tradename related to Pacific Sales included within our Domestic segment, which is recorded within Other assets on our Consolidated Balance Sheets. As of the end of fiscal 2018, we have no indefinite-lived tradenames within our International segment.

Our valuation of identifiable intangible assets acquired is based on information and assumptions available to us at the time of acquisition, using income and market approaches to determine fair value. We do not amortize our indefinite-lived tradenames, but test for impairment annually, or when indications of potential impairment exist. We utilize the relief from royalty method to determine the fair value of our indefinite-lived tradename. If the carrying value exceeds the fair value, we recognize an impairment loss in an amount equal to the excess. In fiscal 2018, we determined that the fair value of the tradenames exceeded their carrying value, and as a result, no impairment was recorded. No impairments were recorded in fiscal 2017. In fiscal 2016, we recorded a $39 million impairment related to our indefinite-lived Future Shop tradename as part of the Canadian brand consolidation. Refer to Note 4, Restructuring Charges, for additional information. No other impairments were identified in fiscal 2016.

As of February 3, 2018, January 28, 2017, and January 30, 2016, the carrying amount of goodwill and indefinite-lived tradenames was $425 million and $18 million, respectively.

The following table provides the gross carrying amount of goodwill and cumulative goodwill impairment losses ($ in millions):
 
February 3, 2018
 
January 28, 2017
 
Gross Carrying
Amount
 
Cumulative
Impairment
 
Gross Carrying
Amount
 
Cumulative
Impairment
Goodwill
$
1,100

 
$
(675
)
 
$
1,100

 
$
(675
)


Insurance

We are self-insured for certain losses related to health, workers' compensation and general liability claims; however, we obtain third-party insurance coverage to limit our exposure to certain claims. Some of these self-insured losses are managed through a wholly-owned insurance captive. We estimate our self-insured liabilities using a number of factors, including historical claims experience, an estimate of incurred but not reported claims, demographic and severity factors and valuations provided by independent third-party actuaries. Our self-insured liabilities included in our Consolidated Balance Sheets were as follows ($ in millions):
 
February 3, 2018
 
January 28, 2017
Accrued liabilities
$
67

 
$
65

Long-term liabilities
64

 
63

Total
$
131

 
$
128



Income Taxes

We account for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. We record a valuation allowance to reduce the carrying amounts of deferred tax assets if it is more likely than not that such assets will not be realized.

In determining our provision for income taxes, we use an annual effective income tax rate based on annual income, permanent differences between book and tax income and statutory income tax rates. The effective income tax rate also reflects our assessment of the ultimate outcome of tax audits. We adjust our annual effective income tax rate as additional information on outcomes or events becomes available. Discrete events, such as audit settlements or changes in tax laws, are recognized in the period in which they occur.

Our income tax returns are periodically audited by U.S. federal, state and local and foreign tax authorities. At any one time, multiple tax years are subject to audit by the various tax authorities. In evaluating the exposures associated with our various tax filing positions, we may record a liability for such exposures. A number of years may elapse before a particular matter, for which we have established a liability, is audited and fully resolved or clarified. We adjust our liability for unrecognized tax benefits and income tax provisions in the period in which an uncertain tax position is effectively settled, the statute of limitations expires for the relevant taxing authority to examine the tax position or when more information becomes available. We include our liability for unrecognized tax benefits, including accrued penalties and interest, in Accrued income taxes and Long-term liabilities on our Consolidated Balance Sheets and in Income tax expense on our Consolidated Statements of Earnings.

Accrued Liabilities

The major components of accrued liabilities at February 3, 2018, and January 28, 2017, were state and local tax liabilities, advertising accruals, loyalty program liabilities, rent-related liabilities and self-insurance reserves.

Long-Term Liabilities

The major components of long-term liabilities at February 3, 2018, and January 28, 2017, were unrecognized tax benefits, income tax liabilities, rent-related liabilities, self-insurance reserves, deferred compensation plan liabilities and deferred revenue from service contracts.

Foreign Currency

Foreign currency denominated assets and liabilities are translated into U.S. dollars using the exchange rates in effect at our Consolidated Balance Sheet date. For operations reported on a one-month lag, we use the exchange rates in effect one month prior to our Consolidated Balance Sheet date. Results of operations and cash flows are translated using the average exchange rates throughout the period. The effect of exchange rate fluctuations on the translation of assets and liabilities is included as a component of shareholders' equity in accumulated other comprehensive income. Gains and losses from foreign currency transactions, which are included in SG&A, have not been significant in any of the periods presented.

Revenue Recognition

We recognize revenue when the sales price is fixed or determinable, collection is reasonably assured and the customer takes possession of the merchandise, or in the case of services, the service has been provided. Revenue excludes sales taxes collected. Revenue from merchandise sales and services is reported net of sales returns, which includes an estimate of future returns based on historical return rates, with a corresponding reduction to cost of sales. Our sales returns reserve, which represents the estimated gross margin impact of returns, was $23 million and $28 million at February 3, 2018, and January 28, 2017, respectively.

For revenue transactions that involve multiple deliverables, we defer the revenue associated with any undelivered elements. The amount of revenue deferred in connection with the undelivered elements is determined using the relative fair value of each element.
Our deferred revenues primarily relate to merchandise not yet delivered to customers, services not yet completed and technical support contracts not yet completed. Short-term deferred revenue was $453 million and $418 million as of February 3, 2018, and January 28, 2017, respectively. At February 3, 2018, and January 28, 2017, deferred revenue included within long-term liabilities was $22 million and $34 million, respectively.

Merchandise revenue
Revenue is recognized for store sales when the customer receives and pays for merchandise. In the case of items paid for in store but subsequently delivered to the customer, revenue is recognized once delivery has been completed.
For transactions initiated online, customers choose whether to collect merchandise from one of our stores (“in-store pick up”) or have it delivered to them (typically using third-party parcel delivery companies). For in-store pick up, we recognize revenue once the customer has taken possession of merchandise. For items delivered directly to the customer, we recognize revenue when delivery has been completed. Any fees charged to customers for delivery are also recognized when delivery has been completed.
Services
Revenue related to consultation, design, installation, set-up, repair and educational classes are recognized once the service is complete. We sell various protection plans with extended warranty coverage for merchandise and technical support to assist customers in using their devices. Such plans have terms typically ranging from one month to five years. For extended warranty protection, third-party underwriters assume the risk associated with the coverage and are deemed to be the legal obligor. We record the net commissions we receive (the amount charged to the customer less the premiums remitted to the underwriter) as revenue when the corresponding merchandise revenue is recognized. In addition, we are eligible to receive profit-sharing payments, which are dependent upon the performance of the portfolio. We record such profit-share as revenue once the portfolio period to which it relates is complete and we have sufficient evidence to estimate the amount. Service and commission revenues earned from the sale of extended warranties represented 2.0%, 2.2% and 2.3% of revenue in fiscal 2018, 2017 and 2016, respectively. These percentages include $68 million, $133 million and $158 million in fiscal 2018, 2017 and 2016, respectively, of profit-share revenue.
For technical support contracts, we assume responsibility for fulfilling the support to customers and we recognize the associated revenue either on a straight-line basis over the life of the contracts, or if sufficient history is available, on a usage basis.
Credit card revenue
We offer promotional financing and credit cards issued by third-party banks that manage and directly extend credit to our customers. The banks are the sole owners of the accounts receivable generated under the program and accordingly, we do not hold any consumer receivables related to these programs. We are eligible to receive a profit-share from our banking partners based on the performance of the programs. We record such profit-share as revenue once the portfolio period to which it relates is complete, and we have sufficient evidence to estimate the amount.
Gift cards
We sell gift cards to our customers in our retail stores, online and through select third parties. We do not charge administrative fees on unused gift cards and our gift cards do not have an expiration date. We recognize revenue from gift cards when the card is redeemed by the customer. For unredeemed gift cards, we recognize breakage when the likelihood of the gift card being redeemed by the customer is deemed remote, and we determine that we do not have a legal obligation to remit the value of the unredeemed gift cards to a relevant jurisdiction ("gift card breakage"). We determine the breakage rate based on historical redemption patterns and record projected breakage 24 months after the gift card is issued. Gift card breakage income is included in revenue. Gift card breakage income was $40 million, $37 million and $46 million in fiscal 2018, 2017 and 2016, respectively.

Sales Incentives
We frequently offer sales incentives that entitle our customers to receive a gift card at the time of purchase or a reduction in the price of a product or service either at the point of sale or by submitting a claim for a refund (for example, coupons, rebates, etc.). For sales incentives issued to the customer in conjunction with a sale of merchandise or services, the reduction in revenue is recognized at the time of sale, based on the expected retail value of the incentive expected to be redeemed.
Customer Loyalty Programs
We have customer loyalty programs which allow members to earn points for each purchase completed with us or when using our co-branded credit cards. Points earned enable members to receive a certificate that may be redeemed on future purchases at our Best Buy branded stores. Depending on the customer's membership level within our loyalty program, certificate expirations typically range from 2 to 12 months from the date of issuance. The value of points earned by our loyalty program members is included in accrued liabilities and recorded as a reduction of revenue at the time the points are earned, based on the value of points that are projected to be redeemed.
We recognize revenue when: (1) a certificate is redeemed by the customer; (2) a certificate expires; or (3) the likelihood of a certificate being redeemed by a customer is low ("certificate breakage"). We determine our certificate breakage rate based upon historical redemption patterns.
Cost of Goods Sold and Selling, General and Administrative Expenses
The following table illustrates the primary costs classified in each major expense category:
Cost of Goods Sold
 
Cost of products sold, including:
 
 
 
Freight expenses associated with moving merchandise inventories from our vendors to our distribution centers;
 
 
 
Vendor allowances that are not a reimbursement of specific, incremental and identifiable costs; and
 
 
 
Cash discounts on payments to merchandise vendors;
 
Cost of services provided, including:
 
 
 
Payroll and benefit costs for services employees; and
 
 
 
Cost of replacement parts and related freight expenses;
 
Physical inventory losses;
 
Markdowns;
 
Customer shipping and handling expenses;
 
Costs associated with operating our distribution network, including payroll and benefit costs, occupancy costs and depreciation; and
 
Freight expenses associated with moving merchandise inventories from our distribution centers to our retail stores.
SG&A
 
Payroll and benefit costs for retail and corporate employees;
 
Occupancy and maintenance costs of retail, services and corporate facilities;
 
Depreciation and amortization related to retail, services and corporate assets;
 
Advertising costs;
 
Vendor allowances that are a reimbursement of specific, incremental and identifiable costs;
 
Tender costs, including bank charges and costs associated with credit and debit card interchange fees;
 
Charitable contributions;
 
Outside and outsourced service fees;
 
Long-lived asset impairment charges; and
 
Other administrative costs, such as supplies, travel and lodging.


Vendor Allowances

We receive allowances from certain vendors through a variety of programs and arrangements intended to offset our costs of promoting and selling merchandise inventories. Vendor allowances are primarily in the form of receipt-based funds or sell-through credits. Receipt-based funds are generally determined at an agreed percentage of the purchase price and are initially deferred and recorded as a reduction of merchandise inventories. The deferred amounts are then included as a reduction of cost of goods sold when the related product is sold. Sell-through credits are generally calculated using an agreed upon amount for each unit sold and are recognized when the related product is sold. Vendor allowances provided as a reimbursement of specific, incremental and identifiable costs, such as specialized store labor or training costs, are included in SG&A as an expense reduction when the cost is incurred.

Advertising Costs

Advertising costs, which are included in SG&A, are expensed when the advertisement is customer-facing. Advertising costs consist primarily of digital, print and television advertisements, as well as promotional events. Advertising expenses were $776 million, $743 million and $742 million in fiscal 2018, 2017 and 2016, respectively.

Stock-Based Compensation

We apply the fair value recognition provisions of accounting guidance as they relate to our stock-based compensation, which requires us to recognize expense for the fair value of our stock-based compensation awards. Compensation expense is recognized over the period in which services are required. It is recognized on a straight-line basis, except where there are performance awards that vest on a graded basis in which case the expense for these awards is front-loaded, or recognized on a graded attribution basis.
v3.8.0.1
Discontinued Operations
12 Months Ended
Feb. 03, 2018
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations
Discontinued Operations

Discontinued operations are primarily comprised of Jiangsu Five Star Appliance Co., Limited ("Five Star") within our International segment. During the fourth quarter of fiscal 2015, we entered into a definitive agreement to sell our Five Star business to Yingtan City Xiangyuan Investment Limited Partnership and Zhejiang Jiayuan Real Estate Group Co. On February 13, 2015, we completed the sale of Five Star and recognized a gain on sale of $99 million. Following the sale of Five Star, we continued to hold as available-for-sale one retail property in Shanghai, China. The assets of this property were classified as held-for-sale on our Consolidated Balance Sheets and were $31 million as of January 30, 2016. In May 2016, we completed the sale of the property and recognized a gain, net of income tax, of $16 million. The gain on sale of the property is included in Other, net within Operating activities on our Consolidated Statements of Cash Flows.

The aggregate financial results of all discontinued operations for fiscal 2018, 2017 and 2016 were as follows ($ in millions):
 
2018
 
2017
 
2016
Revenue
$

 
$

 
$
217

Restructuring charges(1)

 

 
1

Gain (loss) from discontinued operations before income tax expense
1

 
28

 
(8
)
Income tax expense

 
(7
)
 
(1
)
Gain on sale of discontinued operations

 

 
99

Net earnings from discontinued operations
$
1

 
$
21

 
$
90

(1)
See Note 4, Restructuring Charges, for further discussion of the restructuring charges associated with discontinued operations.
v3.8.0.1
Fair Value Measurements
12 Months Ended
Feb. 03, 2018
Fair Value Disclosures [Abstract]  
Fair Value Measurements
Fair Value Measurements

Fair value is 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. To measure fair value, we use a three-tier valuation hierarchy based upon observable and non-observable inputs:

Level 1 — Unadjusted quoted prices that are available in active markets for 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, including:

Quoted prices for similar assets or liabilities in active markets;
Quoted prices for identical or similar assets in non-active markets;
Inputs other than quoted prices that are observable for the asset or liability; and
Inputs that are derived principally from or corroborated by other observable market data.

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 management's 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 table sets 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 February 3, 2018, and January 28, 2017, according to the valuation techniques we used to determine their fair values ($ in millions):
 
 
 
Fair Value at
 
Fair Value Hierarchy
 
February 3, 2018
 
January 28, 2017
Assets
 
 
 
 
 
Cash and cash equivalents
 
 
 
 
 
Money market funds
Level 1
 
$
21

 
$
290

Commercial paper
Level 2
 
90

 

Time deposits
Level 2
 
65

 
15

Short-term investments
 
 
 
 
 
Commercial paper
Level 2
 
474

 
349

Time deposits
Level 2
 
1,558

 
1,332

Other current assets
 
 
 
 
 
Money market funds
Level 1
 
3

 
7

Commercial paper
Level 2
 
60

 
60

Foreign currency derivative instruments
Level 2
 
2

 
2

Time deposits
Level 2
 
101

 
100

Other assets
 
 
 
 
 
Interest rate swap derivative instruments
Level 2
 

 
13

Marketable securities that fund deferred compensation
Level 1
 
99

 
96

Liabilities
 
 
 
 
 
Accrued liabilities
 
 
 
 
 
Interest rate swap derivative instruments
Level 2
 
1

 

Foreign currency derivative instruments
Level 2
 
8

 
3

Long-term liabilities
 
 
 
 
 
Interest rate swap derivative instruments
Level 2
 
4

 


There were no transfers between levels during the periods presented. During fiscal 2017, our remaining investments in auction rate securities ("ARS"), which were classified as Level 3, were called at par, which resulted in proceeds of $2 million and no realized gain or loss. As of February 3, 2018, and January 28, 2017, we had no items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3).

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Money market funds. Our money market fund investments are measured at fair value as they trade in an active market using quoted market prices and, therefore, are classified as Level 1.

Commercial paper. Our investments in commercial paper are measured using inputs based upon quoted prices for similar instruments in active markets and, therefore, are classified as Level 2.

Time deposits. Our time deposits are balances held with banking institutions that cannot be withdrawn for specified terms without a penalty. Time deposits are held at face value plus accrued interest, which approximates fair value, and are classified as Level 2.

Foreign currency derivative instruments. Comprised primarily of foreign currency forward contracts and foreign currency swap contracts, our foreign currency derivative instruments are measured at fair value using readily observable market inputs, such as quotations on forward foreign exchange points and foreign interest rates. Our foreign currency derivative instruments are classified as Level 2, as these instruments are custom, over-the-counter contracts with various bank counterparties that are not traded in active markets.

Interest rate swap derivative instruments. Our interest rate swap contracts are measured at fair value using readily observable inputs, such as the LIBOR interest rate. Our interest rate swap derivative instruments are classified as Level 2, as these instruments are custom, over-the-counter contracts with various bank counterparties that are not traded in active markets.

Marketable securities that fund deferred compensation. The assets that fund our deferred compensation consist of investments in mutual funds. These investments are classified as Level 1 as the shares of these mutual funds trade with sufficient frequency and volume to enable us to obtain pricing information on an ongoing basis.

Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis

Assets and liabilities that are measured at fair value on a nonrecurring basis relate primarily to our tangible fixed assets, goodwill and other intangible assets, which are remeasured when the derived fair value is below carrying value on our Consolidated Balance Sheets. For these assets, we do not periodically adjust carrying value to fair value, except in the event of impairment. When we determine that impairment has occurred, the carrying value of the asset is reduced to fair value and the difference is recorded within Selling, general and administrative expenses and Restructuring charges on our Consolidated Statements of Earnings for non-restructuring and restructuring charges, respectively.

There were no fair value remeasurements related to discontinued operations recorded in fiscal 2018 and 2017. The following table summarizes the fair value remeasurements related to continuing operations recorded in fiscal 2018 and 2017 ($ in millions):
 
2018
 
2017
 
Impairments
 
Remaining Net
Carrying Value(1)
 
Impairments
 
Remaining Net
Carrying Value (1)
Property and equipment (non-restructuring)
$
9

 
$

 
$
28

 
$

Property and equipment (restructuring)(2)
1

 

 
8

 

Total
$
10

 
$

 
$
36

 
$

(1)
Remaining net carrying value approximates fair value. Because assets subject to long-lived asset impairment are not measured at fair value on a recurring basis, certain fair value measurements presented in the table may reflect values at earlier measurement dates and may no longer represent the fair values at February 3, 2018, and January 28, 2017.
(2)
See Note 4, Restructuring Charges, for additional information.

All of the fair value remeasurements included in the table above were based on significant unobservable inputs (Level 3). Fixed asset fair values were derived using a discounted cash flow ("DCF") model to estimate the present value of net cash flows that the asset or asset group is expected to generate. The key inputs to the DCF model generally included our forecasts of net cash generated from revenue, expenses and other significant cash outflows, such as capital expenditures, as well as an appropriate discount rate. In the case of assets for which the impairment was the result of restructuring activities, no future cash flows have been assumed as the assets will cease to be used and expected sale values are nominal.

Fair Value of Financial Instruments

Our financial instruments, other than those presented in the disclosures above, include cash, receivables, other investments, accounts payable, other payables and long-term debt. The fair values of cash, receivables, accounts payable and other payables approximated carrying values because of the short-term nature of these instruments. If these instruments were measured at fair value in the financial statements, they would be classified as Level 1 in the fair value hierarchy. Fair values for other investments held at cost are not readily available, but we estimate that the carrying values for these investments approximate fair value. See Note 5, Debt, for information about the fair value of our long-term debt.
v3.8.0.1
Restructuring Charges (Notes)
12 Months Ended
Feb. 03, 2018
Restructuring and Related Activities [Abstract]  
Restructuring Charges
Restructuring Charges
 
Summary
 
Restructuring charges incurred in fiscal 2018, 2017 and 2016 were as follows ($ in millions):
 
2018
 
2017
 
2016
Continuing operations
 
 
 
 
 
Best Buy Mobile
$
9

 
$

 
$

Renew Blue Phase 2

 
26

 

Canadian brand consolidation
(2
)
 
3

 
200

Renew Blue(1)
3

 
5

 
(2
)
Other restructuring activities(2)

 
5

 
3

Total
$
10

 
$
39

 
$
201


(1)
Represents activity related to our remaining termination benefits and vacant space liabilities, primarily in our International segment, for our Renew Blue restructuring program, which began in the fourth quarter of fiscal 2013. Charges related to the Domestic segment were $0 million, $0 million and a benefit of $1 million for fiscal 2018, 2017 and 2016, respectively; and to the International segment were $3 million, $5 million and a benefit of $1 million for fiscal 2018, 2017 and 2016, respectively. As of February 3, 2018, the termination benefits liability was $0 million and the remaining vacant space liability was $11 million. We may continue to incur immaterial adjustments to the vacant space 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.
(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 $4 million at February 3, 2018.

Best Buy Mobile

On March 1, 2018, we announced our intent to close all of our 257 remaining Best Buy Mobile stand-alone stores in the U.S. This decision was a result of changing economics in the mobile industry since we began opening these stores in 2006, along with the integration of our mobile model into our core stores and on-line channel, which are today more economically compelling. We expect to incur total pre-tax restructuring charges between $55 million and $65 million, primarily related to the termination of store leases that will be paid in fiscal 2019. In fiscal 2018, we incurred $9 million of restructuring charges related to implementing these changes, which consisted of $8 million of employee termination benefits and $1 million of property and equipment impairments. All restructuring charges related to this plan are from continuing operations and are presented in Restructuring charges on our Consolidated Statements of Earnings.

As of February 3, 2018, the termination benefits liability was $8 million as there were no cash payments or adjustments during fiscal 2018, and the vacant space liability was $0 million.

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. In fiscal 2017, we incurred $26 million of restructuring charges related to implementing these changes, which 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 on our Consolidated Statements of Earnings.

No restructuring charges were incurred in fiscal 2018 related to Renew Blue Phase 2. The composition of the restructuring charges we incurred during fiscal 2017 for Renew Blue Phase 2 was as follows ($ in millions):
 
Domestic
2017
Property and equipment impairments
$
8

Termination benefits
18

      Total Renew Blue Phase 2 restructuring charges
$
26



There was no activity in our restructuring accrual in fiscal 2018 related to Renew Blue Phase 2. The following table summarizes our restructuring accrual activity during fiscal 2017 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
(17
)
Adjustments
(2
)
Balances at January 28, 2017
$



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 fiscal 2018, we recorded a benefit of $2 million related to adjustments to our vacant space liabilities outstanding due to changes in estimates related to sublease income. During fiscal 2017, we incurred $3 million of restructuring charges, which primarily consisted of lease exit costs. In fiscal 2016, we incurred $200 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 on our Consolidated Statements of Earnings, and the remainder of the restructuring charges are presented in Restructuring charges on our Consolidated Statements of Earnings. All restructuring charges related to this plan are from continuing operations.

The composition of the restructuring charges we incurred for this program in fiscal 2018, 2017 and 2016, as well as the cumulative amount incurred through the end of fiscal 2018, was as follows ($ in millions):
 
International
 
2018
 
2017
 
2016
 
Cumulative Amount
Continuing operations
 
 
 
 
 
 
 
Inventory write-downs
$

 
$

 
$
3

 
$
3

Property and equipment impairments

 

 
30

 
30

Tradename impairment

 

 
40

 
40

Termination benefits

 

 
25

 
25

Facility closure and other costs
(2
)
 
3

 
102

 
103

Total continuing operations
$
(2
)
 
$
3

 
$
200

 
$
201



The following tables summarize our restructuring accrual activity during fiscal 2018, 2017 and 2016, related to termination benefits and facility closure and other costs as a result of Canadian brand consolidation ($ in millions):
 
Termination
Benefits
 
Facility
Closure and
Other Costs
 
Total
Balances at January 31, 2015
$

 
$

 
$

Charges
28

 
113

 
141

Cash payments
(24
)
 
(47
)
 
(71
)
Adjustments(1)
(2
)
 
5

 
3

Changes in foreign currency exchange rates

 
(7
)
 
(7
)
Balances at January 30, 2016
2

 
64

 
66

Charges

 
1

 
1

Cash payments
(2
)
 
(37
)
 
(39
)
Adjustments(1)

 
2

 
2

Changes in foreign currency exchange rates

 
4

 
4

Balances at January 28, 2017

 
34

 
34

Charges

 

 

Cash payments

 
(18
)
 
(18
)
Adjustments(1)

 
(2
)
 
(2
)
Changes in foreign currency exchange rates

 
1

 
1

Balances at February 3, 2018
$

 
$
15

 
$
15

(1)
Adjustments related to termination benefits relate to higher-than-expected employee retention. Adjustments related to facility closure and other costs represent changes in sublease assumptions.
v3.8.0.1
Debt (Notes)
12 Months Ended
Feb. 03, 2018
Debt Disclosure [Abstract]  
Debt
Debt

Short-Term Debt

U.S. Revolving Credit Facility

On June 27, 2016, we entered into a $1.25 billion five-year senior unsecured revolving credit facility agreement (the "Five-Year Facility Agreement") with a syndicate of banks. The Five-Year Facility Agreement replaced the previous $1.25 billion senior unsecured revolving credit facility (the "Previous Facility") with a syndicate of banks, which was originally scheduled to expire in June 2019, but was terminated on June 27, 2016.

The interest rate under the Five-Year Facility Agreement is variable and is determined at our option as: (i) the sum of (a) the greatest of (1) JPMorgan Chase Bank, N.A.'s prime rate, (2) the greater of the federal funds rate and the overnight bank funding rate plus, in each case, 0.5%, and (3) the one-month London Interbank Offered Rate (“LIBOR”), subject to certain adjustments plus 1%, and (b) a variable margin rate (the “ABR Margin”); or (ii) the LIBOR plus a variable margin rate (the “LIBOR Margin”). In addition, a facility fee is assessed on the commitment amount. The ABR Margin, LIBOR Margin and the facility fee are based upon our current senior unsecured debt rating. Under the Five-Year Facility Agreement, the ABR Margin ranges from 0.00% to 0.50%, the LIBOR Margin ranges from 0.90% to 1.50% and the facility fee ranges from 0.10% to 0.25%. At February 3, 2018, and January 28, 2017, there were no borrowings outstanding. As of February 3, 2018, $1.25 billion was available under the Five-Year Facility Agreement.

The Five-Year Facility Agreement is guaranteed by certain of our subsidiaries and contains customary affirmative and negative covenants. Among other things, these covenants restrict certain of our subsidiaries' ability to incur certain types or amounts of indebtedness, incur liens on certain assets, make material changes in corporate structure or the nature of our business, dispose of material assets, engage in a change in control transaction, make certain foreign investments, enter into certain restrictive agreements or engage in certain transactions with affiliates. The Five-Year Facility Agreement also contains covenants that require us to maintain a maximum quarterly cash flow leverage ratio and a minimum quarterly interest coverage ratio (both ratios measured quarterly for the previous 12 months). The Five-Year Facility Agreement contains default provisions including, but not limited to, failure to pay interest or principal when due and failure to comply with covenants.

Long-Term Debt
 
Long-term debt consisted of the following ($ in millions):
 
February 3, 2018
 
January 28, 2017
2018 Notes
$
500

 
$
500

2021 Notes
650

 
650

Interest rate swap valuation adjustments
(5
)
 
13

Subtotal
1,145

 
1,163

Debt discounts and issuance costs
(3
)
 
(5
)
Financing lease obligations
191

 
177

Capital lease obligations
22

 
30

Total long-term debt
1,355

 
1,365

Less: current portion
544

 
44

Total long-term debt, less current portion
$
811

 
$
1,321



2018 Notes

On July 16, 2013, we completed the sale of $500 million principal amount of notes due August 1, 2018 (the “2018 Notes”). The 2018 Notes bear interest at a fixed rate of 5.00% per year, payable semi-annually on February 1 and August 1 of each year, beginning on February 1, 2014. Net proceeds from the sale of the 2018 Notes were $495 million, after underwriting and issue discounts totaling $5 million.

We may redeem some or all of the 2018 Notes at any time, at a redemption price equal to the greater of (1) 100% of the principal amount of the 2018 Notes to be redeemed, and (2) the sum of the present values of each remaining scheduled payment of principal and interest on the 2018 Notes to be redeemed, discounted to the redemption date on a semi-annual basis at the Treasury Rate plus 50 basis points. Furthermore, if a change of control triggering event occurs, we will be required to offer to purchase the remaining unredeemed 2018 Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest to the purchase date.

The 2018 Notes are unsecured and unsubordinated obligations and rank equally with all of our other unsecured and unsubordinated debt. The 2018 Notes contain covenants that, among other things, limit our ability and the ability of our subsidiaries to incur debt secured by liens and enter into sale and lease-back transactions. As of February 3, 2018, the 2018 Notes are classified within our Current portion of long-term debt on our Consolidated Balance Sheets.

2021 Notes

In March 2011, we issued $650 million principal amount of notes due March 15, 2021 (the “2021 Notes”). The 2021 Notes bear interest at a fixed rate of 5.50% per year, payable semi-annually on March 15 and September 15 of each year, beginning on September 15, 2011. The 2021 Notes were issued at a slight discount to par, which when coupled with underwriting discounts of $4 million, resulted in net proceeds from the sale of the 2021 Notes of $644 million.

We may redeem some or all of the 2021 Notes at any time at a redemption price equal to the greater of (i) 100% of the principal amount, and (ii) the sum of the present values of each remaining scheduled payment of principal and interest discounted to the redemption date on a semiannual basis, plus accrued and unpaid interest on the principal amount to the redemption date as described in the indenture (including the supplemental indenture) relating to the 2021 Notes. Furthermore, if a change of control triggering event occurs, we will be required to offer to purchase the remaining unredeemed 2021 Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest to the purchase date.

The 2021 Notes are unsecured and unsubordinated obligations and rank equally with all of our other unsecured and unsubordinated debt. The 2021 Notes contain covenants that, among other things, limit our ability to incur debt secured by liens or to enter into sale and lease-back transactions.

Fair Value and Future Maturities

The fair value of long-term debt, excluding debt discounts and issuance costs and financing and capital lease obligations, approximated $1,199 million and $1,240 million at February 3, 2018, and January 28, 2017, respectively, based primarily on the quoted market prices, compared to carrying values of $1,145 million and $1,163 million at February 3, 2018, and January 28, 2017, respectively. If our long-term debt was recorded at fair value, it would be classified as Level 2 in the fair value hierarchy.

At February 3, 2018, the future maturities of long-term debt, net of interest rate swaps and excluding debt discounts, issuance costs and financing and capital lease obligations (see Note 8, Leases, for the future lease obligation maturities), consisted of the following ($ in millions):
Fiscal Year
 
2019
$
499

2020

2021

2022
646

2023

Thereafter

Total long-term debt
$
1,145

v3.8.0.1
Derivative Instruments Derivative Instruments (Notes)
12 Months Ended
Feb. 03, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments
Derivative Instruments

We manage our economic and transaction exposure to certain risks through the use of foreign currency derivative instruments and interest rate swaps. Our objective in holding derivatives is to reduce the volatility of net earnings, cash flows and net asset value associated with changes in foreign currency exchange rates and interest rates. We do not hold derivative instruments for trading or speculative purposes. We have no derivatives that have credit risk-related contingent features and we mitigate our credit risk by engaging with financial institutions with investment grade credit ratings as our counterparties.

We record all derivative instruments on our Consolidated Balance Sheets at fair value and evaluate hedge effectiveness prospectively and retrospectively when electing to apply hedge accounting. We formally document all hedging relations at inception for derivative hedges and the underlying hedged items, as well as the risk management objectives and strategies for undertaking the hedge transaction. In addition, we have derivatives which are not designated as hedging instruments.

Net Investment Hedges

We use foreign exchange forward contracts to hedge against the effect of Canadian dollar exchange rate fluctuations on a portion of our net investment in our Canadian operations. The contracts have terms of up to 12 months. 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 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 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 of the gain or loss, if any, in net earnings.

Interest Rate Swaps

We use "receive fixed-rate, pay variable-rate" interest rate swaps to mitigate the effect of interest rate fluctuations on our 2018 Notes and 2021 Notes. Our interest rate swap contracts are considered perfect hedges because the critical terms and notional amounts match those of our fixed-rate debt being hedged and are therefore accounted as a fair value hedge using the shortcut method. Under the shortcut method, we recognize the change in the fair value of the derivatives with an offsetting change to the carrying value of the debt. Accordingly, there is no impact on our Consolidated Statements of Earnings from the fair value of the derivatives.

Derivatives Not Designated as Hedging Instruments

We use foreign currency forward contracts to manage the impact of fluctuations in foreign currency exchange rates relative to recognized receivable and payable balances denominated in non-functional currencies. The contracts generally have terms of up to 12 months. These derivative instruments are not designated in hedging relationships and, therefore, we record gains and losses on these contracts directly to net earnings.

Summary of Derivative Balances

The following table presents the gross fair values of our outstanding derivative instruments and the corresponding classification at February 3, 2018, and January 28, 2017 ($ in millions):
 
February 3, 2018
 
January 28, 2017
Contract Type
Assets
 
Liabilities
 
Assets
 
Liabilities
Derivatives designated as net investment hedges(1)
$
2

 
$
7

 
$
2

 
$
2

Derivatives designated as interest rate swaps(2)

 
5

 
13

 

No hedge designation (foreign exchange forward contracts)(1)

 
1

 

 
1

Total
$
2

 
$
13

 
$
15

 
$
3

(1)
The fair value is recorded in Other current assets or Accrued liabilities on our Consolidated Balance Sheets.
(2)
The fair value is recorded in Other assets or Long-term liabilities on our Consolidated Balance Sheets.

The following table presents the effects of derivative instruments by contract type on other comprehensive income ("OCI") and on our Consolidated Statements of Earnings for fiscal 2018 and 2017 ($ in millions):
 
2018
 
2017
Derivatives designated as net investment hedges
 
 
 
Pre-tax loss recognized in OCI
$
(14
)
 
$
(14
)
Derivatives designated as interest rate swaps
 
 
 
Gain (loss) recognized within interest expense
 
 
 
Interest rate swap loss
$
(18
)
 
$
(12
)
Long-term debt gain
18

 
12

Net impact
$

 
$

No hedge designation (foreign exchange forward contracts)
 
 
Loss recognized within selling, general and administrative expenses
$
(3
)
 
$
(3
)


The following table presents the notional amounts of our derivative instruments at February 3, 2018, and January 28, 2017 ($ in millions):
 
Notional Amount
Contract Type
February 3, 2018
 
January 28, 2017
Derivatives designated as net investment hedges
$
462

 
$
205

Derivatives designated as interest rate swaps
1,150

 
750

No hedge designation (foreign exchange forward contracts)
33

 
43

Total
$
1,645

 
$
998

v3.8.0.1
Shareholders' Equity
12 Months Ended
Feb. 03, 2018
Equity [Abstract]  
Shareholders Equity
Shareholders' Equity

Stock Compensation Plans

Our Best Buy Co., Inc. Amended and Restated 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 February 3, 2018, a total of 19.2 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 terms.

Our outstanding stock options have a 10-year term. Outstanding stock options issued to employees generally vest over a three-year period. Share awards vest based either upon attainment of specified goals or solely upon continued employment ("time-based"). 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") or upon the achievement of company performance goals ("performance-based"). We have time-based share awards that vest in their entirety at the end of three-year periods, time-based share awards that vest 33% on each of the three anniversary dates of the grant date, 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 that vest one year from the grant date.

Our Employee Stock Purchase Plan, as amended, 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. Employees are required to hold the common stock purchased for 12 months. In fiscal 2018, 2017 and 2016, 0.1 million, 0.2 million and 0.2 million shares, respectively, were purchased through our employee stock purchase plans. At February 3, 2018, and January 28, 2017, plan participants had accumulated $3 million and $2 million, respectively, to purchase our common stock pursuant to this plan.

Stock-based compensation expense was as follows in fiscal 2018, 2017 and 2016 ($ in millions):
 
2018
 
2017
 
2016
Stock options
$
6

 
$
9

 
$
15

Share awards:
 
 
 
 
 
Market-based
19

 
15

 
16

Performance-based
13

 
6

 

Time-based
91

 
78

 
73

Total
$
129

 
$
108

 
$
104



Stock Options

Stock option activity was as follows in fiscal 2018:
 
Stock
Options
 
Weighted-Average Exercise Price per Share
 
Weighted-Average Remaining Contractual Term
(in years)
 
Aggregate
Intrinsic Value
(in millions)
Outstanding at January 28, 2017
6,987,000

 
$
36.61

 
 
 
 

Granted
176,000

 
$
44.85

 
 
 
 

Exercised
(3,931,000
)
 
$
40.05

 
 
 
 

Forfeited/canceled
(163,000
)
 
$
43.50

 
 
 
 

Outstanding at February 3, 2018
3,069,000

 
$
32.32

 
5.1
 
$
119

Vested or expected to vest at February 3, 2018
3,069,000

 
$
32.32

 
5.1
 
$
119

Exercisable at February 3, 2018
2,434,000

 
$
30.40

 
3.5
 
$
99



The weighted-average grant-date fair value of stock options granted during fiscal 2018, 2017 and 2016 was $12.52, $8.04 and $11.59, 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 2018, 2017 and 2016, was $57 million, $55 million and $14 million, respectively. At February 3, 2018, there was $2 million of unrecognized compensation expense related to stock options that is expected to be recognized over a weighted-averag