Best Buy (BBY) 10-K risk factor changes: FY2018 vs FY2017

[removed: You should carefully consider each] [added: Each] of the following risk factors [added: should carefully be considered] in conjunction with other information provided in this Annual Report on Form 10-K and in our other public disclosures.

The retail [removed: business] [added: sector] is highly competitive.

Some of our competitors have greater financial resources than [removed: us] [added: us, have greater brand recognition] and may be able to offer lower prices than us for a sustained period of time.

The retail [removed: industry] [added: sector] continues to experience a trend towards an increase in sales initiated online and using mobile applications, and some online-only businesses have lower operating costs than us and are not [added: generally] required to collect [removed: and remit] sales taxes in [removed: all] [added: certain] U.S. states, which can negatively impact the ability of multi-channel retailers to be price competitive on a tax-included basis.

| • | the emergence of new products and categories (for example, [removed: virtual reality);] [added: voice assistants);] |

| • | cannibalization of categories (for example, the effect of [removed: smart phones] [added: smartphones] on demand for GPS, mobile audio, digital imaging devices, etc.); |

| • | intense consumer interest in high-profile product updates (for example, smartphone model [removed: updates)] [added: updates),] which concentrates purchasing activity around new launch dates and can often lead to shortages of merchandise; |

The effects of these factors can also be exacerbated by the competitive environment and the ease with which customers can research and compare product features and [removed: price.][added: prices.]

| • | [removed: not offering] [added: failure to offer] the products and services that our customers want; |

| • | [removed: not securing] [added: inability to secure] adequate access to brands or products for which consumer demand exceeds supply; |

These and other similar factors could have a material adverse impact on our [removed: revenues] [added: revenue] and profitability.

In fiscal [removed: 2017,] [added: 2018,] our 20 largest suppliers accounted for approximately [removed: 77%] [added: 70%] of the merchandise we purchased [removed: (75%] [added: (77%] in fiscal [removed: 2016),] [added: 2017),] with 5 suppliers – Apple, Samsung, [removed: Sony,] Hewlett-Packard, [added: Sony] and [removed: LG Electronics] [added: Lenovo] – representing approximately [removed: 53%] [added: 56%] of total merchandise purchased [removed: (51%] [added: (53%] in fiscal [removed: 2016).][added: 2017).]

To varying degrees, our vendors may be able to leverage their competitive advantages [removed: --] [added: —] for example, their financial strength, the strength of their brand with customers, their own stores or online channels or their relationships with other retailers [removed: --] [added: —] to our commercial disadvantage.

For example, if carriers change the structure of customer contracts, customer upgrade terms, customer qualification requirements, monthly fee plans, cancellation fees or service levels, the volume of upgrades and new contracts we sign with customers may be reduced, adversely affecting our [removed: revenues] [added: revenue] and profitability.

Carriers may decide to cease allowing us to offer their contracts or certain categories of their contracts, focus their marketing efforts on alternative [removed: channels or make unfavorable changes to our commissions or other terms.]

Each of these factors could have a [removed: materially] [added: material] adverse impact on our revenue and profitability.

[added: Our ability] to [added: find qualified vendors who can supply products in a timely and efficient manner that meet our standards of quality and safety can be difficult, especially with respect to] goods sourced from outside the U.S. Political or financial instability, merchandise quality issues, product safety concerns, cross-border trade restrictions or tariffs, work stoppages, port delays, foreign currency exchange rate fluctuations, transportation capacity and costs, inflation, civil unrest, natural disasters, outbreaks of pandemics and other factors relating to foreign trade are beyond our control.

These and other related issues could [removed: materially adversely affect] [added: have a material adverse impact on] our financial results.

| • | the engagement of third parties to assist with some aspects of construction and [removed: installation] [added: installation,] and the potential responsibility for the actions they [removed: take] [added: take,] and for compliance with building codes and related regulations. |

[removed: Consumer] [added: Real GDP growth, consumer] confidence, inflation, employment levels, oil prices, interest rates, tax rates, availability of consumer financing, housing market conditions, foreign currency exchange rate fluctuations, costs for items such as fuel and [removed: food and other macroeconomic trends can adversely affect consumers' demand for the products and services that we offer.]

Our supply chain is a critical part of our operations, particularly in light of [removed: recent] industry trends and [removed: initiatives] [added: initiatives,] such as ship-from-store and the emphasis on fast [removed: and free] delivery when purchasing online.

We depend on our vendors' ability to deliver [added: products to us at the right location, right time and in the right quantities.]

The risks associated with our dependence on third parties are greater for small parcel home [removed: deliveries,] [added: deliveries] because of the relatively small number of carriers with the scope and capacity required by our business.

The turnover rate in the retail [removed: industry] [added: sector] is relatively high, and there is an ongoing need to recruit and train new employees.

In addition, a significant amount of turnover of our executive team or other employees in key positions with specific knowledge relating to us, our operations and our [removed: industry] [added: industry,] may negatively impact our operations.

| • | changing patterns of customer consumption and behavior, particularly in light of an evolving [removed: omni-channel] [added: multi-channel] environment; |

| • | the trade area demographics and economic [removed: data of] [added: factors for] each of our stores; |

| • | [removed: having to close] [added: closing] stores and [removed: abandon] [added: abandoning] the related assets, while retaining the financial commitments of the leases; |

| • | [removed: having] [added: operating] stores, supply chain or service locations that no longer meet the needs of our business; and |

These consequences could have a [removed: materially] [added: material] adverse impact on our profitability, cash flows and liquidity.

It is difficult for us to influence some of these [removed: factors,] [added: factors] and the costs of exiting a property can be significant.

In addition to rent, we are still responsible for [removed: the maintenance,] taxes, insurance and common area maintenance charges for vacant properties until the lease commitment expires or is terminated.

Similarly, when we enter into a contract with a tenant to sub-lease property, we usually retain our obligations as the master [removed: lessor.][added: lessee.]

Some elements of our costs may be higher than our [removed: competitors,] [added: competitors'] because of, for example, our differential service offerings or levels of customer service.

Accordingly, our ongoing drive to reduce [removed: cost] [added: costs] and increase efficiency represents a strategic imperative.

[removed: Our liquidity may be materially adversely affected by constraints] [added: Constraints] in the capital markets or our vendor credit [removed: terms.][added: terms may have a material adverse impact on our liquidity.]

Without sufficient liquidity, we could be forced to curtail our [removed: operations,] [added: operations] or we may not be able [removed: to pursue business opportunities.]

The future availability of financing will depend on a variety of factors, such as economic and market conditions, the regulatory environment for banks and other financial institutions, the availability of [removed: credit and] [added: credit,] our credit ratings and our reputation with potential lenders.

These factors could [removed: materially adversely affect] [added: have a material adverse effect on] our costs of borrowing and our ability to pursue business opportunities, and threaten our ability to meet our obligations as they become due.

Our credit ratings and outlooks at March [removed: 20, 2017,] [added: 29, 2018,] are summarized below.

They may also be able to secure better terms from vendors and devote more resources to technology, fulfillment and marketing.

Competition may also result from new entrants in the markets we serve, offering products and/or services that compete with us.

| • | increasing demand for internet-based services that may replace physical products such as hard drives, media and entertainment software products; |

channels or make unfavorable changes to our commissions or other terms.

Vendors may also fail to invest adequately in design, production or distribution facilities, may reduce their customer incentives, advertising and promotional activities or change their pricing policies.

| • | increased risk of errors or omissions in the fulfillment of services; |

food and other macroeconomic trends can adversely affect consumers' demand for the products and services that we offer.

It is important that we be able to maintain optimal levels of inventory in each store and distribution center and respond rapidly to shifting demands.

Any disruption to, or inefficiency in, our supply chain network could damage our revenue and profitability.

Our strategy to expand into new products, services and technologies brings new business, financial and regulatory risks.

As we introduce new products and services, using new technologies and applications, we may have limited experience in these newer market segments, and our customers may not like our new value propositions.

These offerings may present new and difficult technology challenges, and we may be subject to claims if customers of these offerings experience service disruptions or failures or other issues.

In addition, this expansion increases the complexity of our business and places significant strain on our management, personnel, operations, systems, technical performance, financial resources, and internal financial and regulatory control and reporting functions.

In addition, new initiatives we test through trials and pilots may not scale or grow effectively or as we expected, which could limit our growth and negatively affect our operating results.

They may also involve significant laws or regulations that are beyond our current expertise.

Operational factors such as, for example, failure to deliver high quality services, uncompetitive pricing, failure to meet delivery promises or business interruptions could damage our reputation.

External factors, such as negative public remarks or accusations, could also be damaging.

Failure to identify and lease suitable locations for our stores and other facilities could impair our ability to compete successfully and our profitability.

| • | the products and services we offer at each store; |

to pursue business opportunities.

In fiscal 2018, Fitch Ratings Limited affirmed its long-term credit rating of BBB- and changed its outlook from Stable to Positive.

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Our business involves the collection, use and storage of customer information, including payment card information, as well as confidential information regarding our employees, vendors and other company information.

We also share confidential information with suppliers and other third parties, as well as use third-party technology and systems which transmit customer information for a variety of activities.

Sensitive customer data may also be present on customer-owned devices entrusted to us for service and repair.

Vulnerable code on products sold or serviced, including our exclusive brands, may also result in a compromise of customer privacy or security.

Our efforts to protect against such compromises and ensure appropriate handling of customer data on devices we manufacture, sell and service may not be effective, resulting in potential liability and damage to our customer relationships.

Our information technology systems and those of our partners are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, worms, other malicious computer programs, denial-of-service attacks, security breaches (through cyber-attacks and other malicious actions), catastrophic events such as fires, tornadoes, earthquakes and hurricanes, and usage errors by our employees.

If we do not continually invest in securing these systems against attacks or fail to effectively upgrade and maintain our hardware, software, network and system infrastructure and improve the efficiency and resiliency of our systems, it could cause system interruptions and delays.

| • | cybersecurity breaches; or |

They can also affect our information systems, resulting in disruption to various aspects of our operations, including our ability to transact with customers and fulfill orders.

| • | the impact of potential changes in U.S. or other countries' tax laws and regulations or evolving interpretations of existing laws, including additional guidance and legislation related to the Tax Cuts and Jobs Act; and |

| • | political conditions and geopolitical events, including war and terrorism; |

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| • | different rules or practices regarding employee relations, including the existence of works councils or unions; |

Our ability to find qualified vendors who can supply products in a timely and efficient manner that meet our standards of quality and safety can be difficult, especially with respect

products to us at the right location, right time and in the right quantities.

Our success is dependent on the design and execution of appropriate business strategies.

We operate in a highly-competitive and ever-changing commercial environment.

Our success is dependent on our ability to identify, develop and execute appropriate strategies within this environment.

Strategies that have proved successful in the past may not be successful in the future.

Our current strategy includes continuous improvement of our business and the pursuit of new growth opportunities.

It is possible that our strategies may be ineffective and that we may need to make substantial changes to them in the future.

It is also possible that we will be unsuccessful in executing our strategies or that they expose us to additional risks.

Our results could be materially adversely affected if we fail to develop and execute appropriate strategies.

The market value of our common stock and debt instruments could be materially adversely affected if investors are uncertain about the appropriateness of our strategies or our ability to execute them.

Refer to Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, for further information regarding our strategies.

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The use and handling of personally identifiable data by our business, our business associates and third parties is regulated at the state, federal and international levels.

We are also contractually obligated to comply with certain industry standards regarding payment card information.

confidential information over public networks, including the use of cashless payments.

As a result, unauthorized parties may obtain access to our data systems and misappropriate employee, customer and other confidential data.

Advances in computer capabilities, new discoveries in the field of cryptography or other developments may not prevent the compromise of our customer transaction processing capabilities and customer personal data.

| • | the impact of potential changes in U.S. or other countries tax laws and regulations, including the imposition of the border adjustment tax on imported products as is currently being discussed by U.S. Congress that could increase the cost of the products we sell because a significant portion of the products we sell in the U.S. are sourced from outside of the country; and |

rates, interest rates, the regulatory and competitive environment and expenses of operating the program.

| • | political conditions; |

If our financial results for a particular period

[removed: | • |] [added: In fiscal 2018, we declared Renew Blue complete and unveiled a new strategy:] Best Buy 2020: Building the New [removed: Blue |][added: Blue.]

The Domestic segment is comprised of [removed: all] [added: the] operations [removed: within] [added: in all states, districts and territories of] the U.S. [removed: and its districts] [added: The International segment is comprised of all operations in Canada] and [removed: territories.][added: Mexico.]

Fiscal [removed: 2017, 2016 and 2015 each included 52 weeks, noting that fiscal] 2018 [removed: will include] [added: included] 53 weeks with the additional week included in the fourth quarter.

Our business, like that of many [added: retailers, is seasonal.]

Our comparable sales calculation compares revenue from stores, websites and call centers operating for at least 14 full months, as well as revenue related to certain other comparable sales [removed: channels for a particular period to the corresponding period in the prior year.]

The calculation of comparable sales excludes the impact of revenue from discontinued [removed: operations and] [added: operations,] the effect of fluctuations in foreign currency exchange rates (applicable to our International segment [removed: only).][added: only) and the impact of the extra week in fiscal 2018.]

For these reasons, our internal management reporting also includes non-GAAP [added: financial] measures.

Generally, our non-GAAP [added: financial] measures include adjustments for items such as restructuring charges, goodwill [removed: impairments, non-restructuring asset] impairments and gains or losses on investments.

Non-GAAP [added: financial] measures as presented herein may not be comparable to similarly titled measures used by other companies.

We also use the term "constant [removed: currency",] [added: currency,"] which represents results adjusted to exclude foreign currency impacts.

We believe the disclosure of revenue changes in constant currency [removed: provides] [added: can provide] useful supplementary information to investors in light of significant fluctuations in currency rates and our inability to report comparable store sales for the International segment [removed: in] [added: from the first quarter of] fiscal 2016 [added: through the third quarter of fiscal 2017] as a result of the Canadian brand consolidation.

We also believe our non-GAAP debt to EBITDAR ratio is relevant because it enables investors to compare our indebtedness to [added: that of retailers who own, rather than lease, their stores.]

[removed: | • | The successful Canadian brand consolidation was the primary driver of] [added: Our International segment] operating income [removed: of $90] [added: was $91] million in [removed: our International segment for] fiscal [removed: 2017] [added: 2018] compared to [removed: a loss of $210] [added: $90] million in [removed: fiscal 2016; |][added: the prior-year period.]

[removed: Our customers] [added: Customers] are at the core of Best Buy 2020.

Technology continues to evolve, [removed: creating more excitement and] opening [removed: up] an increasing range of possibilities for our customers.

[removed: Our] [added: The] purpose [added: of our strategy] is to help [added: our] customers [removed: pursue their passions and] enrich their lives [removed: with the help of] [added: through] technology.

The results of Jiangsu Five Star Appliance Co., Limited ("Five Star"), in our International segment, are presented as discontinued operations [removed: in] [added: on] our Consolidated Statements of Earnings.

| Consolidated Performance Summary | [removed: | 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | |

| Revenue | [removed: |] $ | [removed: 39,403] [added: 42,151] | | | $ | [removed: 39,528] [added: 39,403] | | | $ | [removed: 40,339] [added: 39,528] | |

| Revenue % [removed: decline |] [added: gain (decline)] | [removed: (0.3] [added: 7.0] | | [removed: )%] [added: %] | | [removed: (2.0] [added: (0.3] | | )% | | [removed: (0.7] [added: (2.0] | | )% |

| Comparable sales % gain (1) | [removed: | 0.3] [added: 5.6] | | % | | [removed: 0.5] [added: 0.3] | | % | | 0.5 | | % |

| Comparable sales % [removed: gain (decline),] [added: decline,] excluding estimated impact of installment billing(1)(2) | [removed: |] n/a | | | | [removed: (0.1] [added: n/a] | | [removed: )%] | | [removed: —] [added: (0.1] | | [removed: %] [added: )%] |

| Restructuring charges - cost of goods sold | [removed: |] $ | — | | | $ | [removed: 3] [added: —] | | | $ | [removed: —] [added: 3] | |

| Gross profit | [removed: |] $ | [removed: 9,440] [added: 9,876] | | | $ | [removed: 9,191] [added: 9,440] | | | $ | [removed: 9,047] [added: 9,191] | |

| Gross profit as a % of revenue(3) | [removed: | 24.0] [added: 23.4] | | % | | [removed: 23.3] [added: 24.0] | | % | | [removed: 22.4] [added: 23.3] | | % |

| SG&A | [removed: |] $ | [removed: 7,547] [added: 8,023] | | | $ | [removed: 7,618] [added: 7,547] | | | $ | [removed: 7,592] [added: 7,618] | |

| SG&A as a % of revenue | [removed: | 19.2] [added: 19.0] | | % | | [removed: 19.3] [added: 19.2] | | % | | [removed: 18.8] [added: 19.3] | | % |

| Restructuring charges | [removed: |] $ | [removed: 39] [added: 10] | | | $ | [removed: 198] [added: 39] | | | $ | [removed: 5] [added: 198] | |

| Operating income | [removed: |] $ | [removed: 1,854] [added: 1,843] | | | $ | [removed: 1,375] [added: 1,854] | | | $ | [removed: 1,450] [added: 1,375] | |

| Operating income as a % of revenue | [removed: | 4.7] [added: 4.4] | | % | | [removed: 3.5] [added: 4.7] | | % | | [removed: 3.6] [added: 3.5] | | % |

| Net earnings from continuing operations | [removed: |] $ | [removed: 1,207] [added: 999] | | | $ | [removed: 807] [added: 1,207] | | | $ | [removed: 1,246] [added: 807] | |

| Gain [removed: (loss)] from discontinued operations(4) | [removed: |] $ | [removed: 21] [added: 1] | | | $ | [removed: 90] [added: 21] | | | $ | [removed: (13] [added: 90] | [removed: )] |

| Diluted earnings per share from continuing operations | [removed: |] $ | [removed: 3.74] [added: 3.26] | | | $ | [removed: 2.30] [added: 3.74] | | | $ | [removed: 3.53] [added: 2.30] | |

| Diluted earnings per share | [removed: |] $ | [removed: 3.81] [added: 3.26] | | | $ | [removed: 2.56] [added: 3.81] | | | $ | [removed: 3.49] [added: 2.56] | |

| (1) | The Canadian brand consolidation that was initiated in the first quarter of fiscal 2016 had a material impact on a year-over-year basis on the Canadian retail stores and website. As such, beginning in the first quarter of fiscal 2016 through the third quarter of fiscal 2017, all store and website revenue was removed from the comparable sales base, and an International segment (comprised of Canada and Mexico) comparable sales metric has not been provided. Therefore, Consolidated comparable sales for fiscal 2017 include revenue from continuing operations in the Domestic segment for the full year and the International segment for the fourth quarter only, and Consolidated comparable sales for fiscal 2016 equal the Domestic segment comparable sales. [added: Comparable sales also exclude the impact of the extra week in fiscal 2018.] |

| (4) | Includes both gain [removed: (loss)] from discontinued operations and net earnings from discontinued [removed: operations attributable to noncontrolling interests.] [added: operations.] |

| (1) | Non-comparable sales reflects the impact of revenue in our International segment for the first through third quarters of fiscal 2017, net store opening and closing activity, as well [removed: as,] [added: as] the impact of revenue streams not included within our comparable sales calculation, such as profit share revenue, certain credit card revenue, gift card breakage and sales of merchandise to wholesalers and dealers, as applicable. |

The SG&A rate remained flat on a year-over-year basis with both [removed: our] Domestic and International segments contributing flat year-over-year SG&A as a percentage of revenue.

[removed: SG&A restructuring] [added: Restructuring] charges decreased from $198 million in fiscal 2016 to $39 million in fiscal 2017.

For further discussion of each segment's [removed: SG&A] restructuring charges, see Segment Performance Summary, below.

Fiscal 2017 and 2016 each included 52 weeks.

channels for a particular period to the corresponding period in the prior year.

Beginning in the first quarter of fiscal 2018, we no longer exclude non-restructuring property and equipment impairment charges from our non-GAAP financial metrics.

When we began to execute our Renew Blue transformation in the fourth quarter of fiscal 2013, we adopted a change to non-GAAP reporting to exclude non-restructuring property and equipment impairment charges from our non-GAAP results.

From that point, through the fourth quarter of fiscal 2017, we believed that reporting non-GAAP results that excluded these charges provided a supplemental view of our ongoing performance that was useful and relevant to our investors.

Now that Renew Blue has ended and Best Buy 2020: Building The New Blue has officially launched, we believe it is no longer necessary to adjust for non-restructuring property and equipment impairments in our non-GAAP reporting.

We believe that future such impairments will predominantly be immaterial and incurred in the ordinary scope of ongoing operations.

Accordingly, commencing in the first quarter of fiscal 2018, we no longer adjust for non-restructuring property and equipment impairments.

Impacted prior period non-GAAP financial measures have been recast to conform with this presentation.

We believe we can do this by focusing on customers’ underlying needs, such as entertainment, communications, security and health.

We continue to believe we have a material opportunity to grow the company.

Technology innovations continue to be vibrant and exciting and we believe our market offers room for differentiation.

Against this backdrop, we intend to fulfill our purpose and grow the company by expanding what we sell, evolving how we sell and building key enablers, all while continuing to reduce costs.

To these ends, in fiscal 2018, we expanded our In-Home Advisor program, introduced our Total Tech Support offering, continued to enhance associate proficiency, and continued to improve and simplify the online buying process for our customers.

We invested in enterprise customer relationship management capabilities and continued to develop our services platform.

We also began investing in the transformation of our supply chain, while continuing to make progress on our productivity goals.

Based on early results, as outlined in the Results of Operations section below, we believe our strategy is working.

Fiscal 2018 included 53 weeks, and fiscal 2017 and 2016 included 52 weeks.

| Net earnings | $ | 1,000 | | | $ | 1,228 | | | $ | 897 | |

Consolidated revenue of $42.2 billion in fiscal 2018 increased 7.0% compared to fiscal 2017.

Fiscal 2018 includes approximately $760 million of revenue from the extra week.

Our Domestic segment contributed a rate decrease of 0.4% of revenue, while our International segment contributed a rate decrease of 0.2%.

Our Domestic and International segments both contributed a rate decrease of 0.1% of revenue.

Restructuring charges decreased from $39 million in fiscal 2017 to $10 million in fiscal 2018.

The fiscal 2018 and fiscal 2017 activity primarily related to our Domestic segment.

The decrease in our operating income was primarily due to a decrease in our gross profit rate and an increase in SG&A.

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. Refer to Note 4, Restructuring Charges, of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for further information about our restructuring activities.

Domestic segment revenue of $38.7 billion in fiscal 2018 increased 6.7% compared to the prior year and includes approximately $715 million of revenue from the extra week.

| Total revenue increase | 6.7 | % |

In fiscal 2017, we recognized $110 million of such profit-share revenue.

The fiscal 2018 profit-share revenue decrease from fiscal 2017 reflects reductions to the premiums that we pay to the third-party underwriter.

| | February 3, 2018 | | | January 28, 2017 | | | February 3, 2018 | | | January 28, 2017 | |

| Entertainment | 8 | % | | 7 | % | | 12.6 | % | | (13.8 | )% |

| Appliances | 10 | % | | 9 | % | | 11.4 | % | | 7.8 | % |

| Services | 4 | % | | 5 | % | | 4.0 | % | | (3.3 | )% |

We believe the strong execution of our business strategy, combined with better product availability, a continued healthy consumer confidence, positive macro conditions and a favorable competitive environment contributed to our Domestic comparable sales growth across most of our categories.

| • | Consumer Electronics: The 3.1% comparable sales gain was driven primarily by smart home, home theater, headphones and voice assistants, partially offset by declines in health and fitness. |

| • | Computing and Mobile Phones: The 5.3% comparable sales gain was driven primarily by computing, mobile phones and wearables, partially offset by declines in tablets. |

| • | Entertainment: The 12.6% comparable sales gain was driven primarily by gaming hardware. |

| • | Appliances: The 11.4% comparable sales gain was driven primarily by large and small appliances. |

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The International segment is comprised of all operations outside the U.S. and its territories.

retailers, is seasonal.

that of retailers who own, rather than lease, their stores.

During fiscal 2017, we executed against the three priorities we shared at the beginning of the year:

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| 1. | Build on our strong industry position and multi-channel capabilities to drive the existing business; |

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| 2. | Drive cost reduction and efficiencies; and |

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| 3. | Advance key initiatives to drive future growth and differentiation. |

Below is summary of our progress against these priorities:

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| • | We believe we continued to gain market share in most of our product categories. We believe the total market for our product categories was down low-single digits in calendar 2016 and that our market share gains helped us offset the market decline; |

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| • | We increased our Net Promoter Score by over 350 basis points; |

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| • | We grew the Domestic segment online revenue with comparable sales of 20.8% in fiscal 2017; |

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| • | We continued to progress against our three-year target to reduce cost and optimize gross profit by $400 million and achieved $350 million cumulative savings by the end of fiscal 2017; these savings enable us to invest in customer experience improvements while maintaining near flat SG&A; |

In addition, we have swapped [removed: a portion] [added: all] of our fixed-rate debt to floating-rate such that the interest expense on this debt will vary with short-term interest rates.

As of [removed: January 28, 2017,] [added: February 3, 2018,] we had [removed: $3.9] [added: $3.1] billion of cash and short-term investments and [removed: $750 million] [added: $1.2 billion] of debt that has been swapped to floating rate.

Therefore, we had net cash and short-term investments of [removed: $3.2] [added: $2.0] billion generating [removed: income, which] [added: income that] is exposed to interest rate changes.

As of [removed: January 28, 2017,] [added: February 3, 2018,] a 50 basis point increase in short-term interest rates would [removed: lead] [added: have led] to an estimated [removed: $16] [added: $10] million reduction in net interest expense, and conversely a 50 basis point decrease in short-term interest rates would [removed: lead] [added: have led] to an estimated [removed: $16] [added: $10] million increase in net interest expense.

Refer to Note 6, Derivative Instruments, of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for further information regarding [removed: our] these instruments.

The [removed: strength] [added: weakening] of the U.S. dollar compared to the Canadian dollar [removed: and Mexican peso] compared to the prior-year period had a [removed: negative] [added: positive] overall impact on our revenue as these currencies translated into [removed: fewer] [added: more] U.S. dollars.

[removed: We estimate that] [added: In fiscal 2017, the impact of] foreign currency exchange rate fluctuations had a net unfavorable impact on our revenue [removed: in fiscal 2017] of approximately $76 million and a net favorable impact on earnings of $4 million.

[removed: In fiscal 2016, the impact of] [added: We estimate that] foreign currency exchange rate fluctuations had a net [removed: unfavorable] [added: favorable] impact on our revenue [added: in fiscal 2018] of approximately [removed: $534] [added: $85] million and a net favorable impact on earnings of [removed: $20] [added: $4] million.

Exchange rate fluctuations in the U.S. dollar compared to the Mexican peso compared to the prior-year period had an immaterial impact in the current year.

Unless the context otherwise requires, the [removed: use of the] terms "we," "us" and "our" in this Annual Report on Form 10-K [removed: refers] [added: refer] to Best Buy Co., Inc. and, as applicable, its consolidated subsidiaries.

We have [added: retail] operations in the U.S., Canada and Mexico.

[removed: Information About Our] Segments and Geographic Areas

The International segment is comprised of all operations in Canada and Mexico under the brand names Best Buy, [removed: bestbuy.com.ca, bestbuy.com.mx,] Best Buy Express, Best Buy [removed: Mobile and] [added: Mobile,] Geek [removed: Squad.][added: Squad and the domain names bestbuy.ca and bestbuy.com.mx.]

Both segments operate [removed: an omni-channel] [added: a multi-channel] platform that [removed: provides] [added: allows] customers [removed: the ability] to shop when and where they want.

Development of merchandise and services offerings, pricing and promotions, procurement and supply chain, online and mobile application operations, marketing and advertising and labor deployment across all channels are centrally [removed: managed at our corporate headquarters.][added: managed.]

| • | Consumer Electronics - [removed: home theater, home automation,] digital imaging, health and [removed: fitness] [added: fitness, home automation, home theater] and portable [removed: audio;] [added: audio (including headphones, portable speakers and voice assistants);] |

| • | Computing and Mobile Phones - computing and peripherals, [removed: networking, tablets,] [added: e-readers,] mobile phones (including related mobile network carrier commissions), [added: networking, tablets and] wearables (including [removed: smart watches) and e-readers;] [added: smartwatches);] |

| • | Entertainment - [added: drones,] gaming hardware and software, movies, music, technology [removed: toys] [added: toys, virtual reality] and other software; |

| • | Appliances - major appliances (for example, [removed: refrigeration,] dishwashers, [removed: ovens,] laundry, [added: ovens, refrigerators,] etc.) and small appliances (for example, [added: blenders,] coffee makers, [removed: blenders,] etc.); |

| • | Services - consultation, [removed: design,] delivery, [added: design, educational classes,] installation, [removed: set-up,] [added: memberships,] protection plans, repair, [removed: technical support] [added: set-up] and [removed: educational classes;] [added: technical support;] and |

[removed: The] [added: Our] ship-from-store capability allows us to improve product availability and delivery times for customers.

In fiscal [removed: 2017,] [added: 2018,] our 20 largest suppliers accounted for approximately [removed: 77%] [added: 70%] of the merchandise we purchased, with five suppliers – Apple, Samsung, [removed: Sony,] Hewlett-Packard, [added: Sony] and [removed: LG Electronics] [added: Lenovo] – representing approximately [removed: 53%] [added: 56%] of total merchandise purchased.

We generally do not have long-term written contracts with our vendors that would require them to continue supplying us with merchandise or [added: that] secure any of the key terms of our arrangements.

We had approximately 1,200 large-format and [removed: 400] [added: 300] small-format stores at the end of fiscal [removed: 2017] [added: 2018] throughout our Domestic and International segments.

Our stores are a vital component of our [removed: omni-channel] [added: multi-channel] strategy and [removed: represent] [added: we believe they are] an important competitive advantage.

[removed: In the U.S., we] [added: We] have the ability to ship from all of our Best Buy [removed: stores.][added: stores in the U.S. and all of our large-format stores in Canada.]

[removed: In recent years,] [added: Beginning in 2013,] we [removed: have] opened vendor store-within-a-store concepts to allow closer vendor partnership and a [removed: better] [added: higher] quality customer experience.

In fiscal [removed: 2018] [added: 2019] and beyond, we will continue to look for opportunities to optimize our store space, [removed: renegotiating] [added: renegotiate] leases and selectively [removed: opening] [added: open] or [removed: closing] [added: close] locations to support our [removed: operations.][added: operations, as evidenced by our recent announcement to close all of our remaining Best Buy Mobile stand-alone stores in the U.S.]

We own or have the right to use valuable intellectual property such as trademarks, service marks and tradenames, including, but not limited to, Best Buy, Best Buy Mobile, [added: Best Buy Express,] Dynex, Geek Squad, Insignia, Magnolia, Modal, My Best Buy, Pacific Sales, [added: Pacific Kitchen and Home,] Rocketfish, Platinum and our Yellow Tag logo.

A [removed: higher] [added: large] proportion of our revenue and earnings is generated in the fiscal fourth quarter, which includes the majority of the holiday shopping season in the U.S., Canada and Mexico.

Our competitors are primarily multi-channel retailers, internet-based businesses, technology service providers, traditional store-based [removed: retailers] [added: retailers,] and vendors and mobile network [removed: carriers,] [added: carriers] who offer their products and services directly to customers.

We believe our ability to deliver a [removed: high quality] [added: high-quality] customer experience offers us a key competitive advantage.

Some of our competitors have [removed: low] [added: lower] cost operating structures and seek to compete for sales primarily on price.

In addition, in the U.S., online-only operators are [removed: exempt from collecting] [added: not generally required to collect] sales taxes in certain states.

[removed: Best Buy is committed] [added: We work hard] to positively [removed: impacting] [added: impact] the environment and our communities.

We believe that [removed: effectively managing] [added: reducing] our [removed: environmental impacts, setting] [added: impact on the environment via realistic yet assertive] sustainability goals and advancing energy-efficient consumer solutions [added: helps] create long-term value for all of our stakeholders.

We [removed: are] continuously [removed: looking] [added: look] for cost-effective solutions to minimize carbon emissions in our operations.

In fiscal [removed: year 2016,] [added: 2018,] we set a new goal to reduce our own carbon emissions by [removed: 45] [added: 60] percent by 2020 (over a 2009 baseline), from both operational reductions and renewable [removed: sourcing.][added: sourcing, and we currently expect to meet or exceed this goal.]

[removed: See] [added: Refer to] our Best Buy Corporate Responsibility & Sustainability Report [added: on our website] for further information on environmental performance.

At the end of fiscal [removed: 2017,] [added: 2018,] we employed approximately 125,000 full-time, part-time and seasonal employees in the U.S., Canada, Mexico and our sourcing office in China.

We are subject to the reporting requirements of the [removed: Securities] Exchange Act [removed: of 1934 (the "Exchange Act")] and its rules and regulations.

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. We expect the majority of these stores to close during the half of fiscal 2019.

| • | Other - beverages, snacks, sundry items and other product offerings within our International segment (including baby, luggage and sporting goods). |

This resulted in permanently closing 66 Future Shop stores and converting 65 Future Shop stores to the Best Buy brand.

| • | Other - snacks, beverages and other sundry items. |

In March 2015, we made a decision to consolidate Future Shop and Best Buy stores and websites in Canada under the Best Buy brand.

For the fiscal year ended [removed: January 28, 2017][added: February 3, 2018]

[removed: ][added: ]

| Large accelerated filer x | | Accelerated filer o | | Non-accelerated filer o | | Smaller reporting company o | [added: | Emerging growth company o |]

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of July [removed: 29, 2016,] [added: 28, 2017,] was approximately [removed: $7.8] [added: $13.0] billion, computed by reference to the price of [removed: $33.60] [added: $57.64] per share, the price at which the common equity was last sold on July [removed: 29, 2016,] [added: 28, 2017,] as reported on the New York Stock Exchange-Composite Index.

As of March [removed: 20, 2017,] [added: 29, 2018,] the registrant had [removed: 309,110,840] [added: 282,713,593] shares of its Common Stock issued and outstanding.

Portions of the registrant's definitive Proxy Statement relating to its [removed: 2017] [added: 2018] Regular Meeting of Shareholders ("Proxy Statement") are incorporated by reference into Part III.

With the exception of historical information, the matters discussed in this Annual Report on Form 10-K are forward-looking statements and may be identified by the use of words such as "anticipate," "assume," "believe," "estimate," "expect," "intend," "foresee," "outlook," "plan," [removed: "project,"] [added: "project"] and other words and terms of similar meaning.

BEST BUY FISCAL [removed: 2017] [added: 2018] FORM 10-K

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10-K 1 bby-2018x10k.htm 10-K

______________________________________________________________

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

| [PART I](#s27ED39B6E5F6419A564308173F244E4B) | | [4](#s27ED39B6E5F6419A564308173F244E4B) |

| | [Executive Officers of the Registrant](#s916D1E41626BAEF752F2081740515B1C) | [21](#s916D1E41626BAEF752F2081740515B1C) |

| [PART II](#s1BC9F3F532AE21387FE808174072C164) | | [23](#s1BC9F3F532AE21387FE808174072C164) |

| [PART IV](#sFD9C9F1FFE889E22062B0817498F5EBE) | | [94](#sFD9C9F1FFE889E22062B0817498F5EBE) |

| | [Signatures](#sE98AD9A9FE6FB1959F7208174A151296) | [97](#sE98AD9A9FE6FB1959F7208174A151296) |

| | [Schedule II](#sF193E0839E45876FB967081730A10C00) | [98](#sF193E0839E45876FB967081730A10C00) |

10-K 1 bby-2017x10k.htm 10-K

________________________________

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| | | | | | | |

| [PART I](#s2D73C045C38C55F79D9F0983677A987E) | | [4](#s2D73C045C38C55F79D9F0983677A987E) |

| | [Executive Officers](#s7D2A90C3573A5FFBBAD7483569F8B8DE) | [20](#s7D2A90C3573A5FFBBAD7483569F8B8DE) |

| [PART II](#sF91892EE1E635EAB8B81B40FFBEC9BE5) | | [22](#sF91892EE1E635EAB8B81B40FFBEC9BE5) |

| [PART IV](#sC66D23F6627D5AAEB4482807C074143C) | | [94](#sC66D23F6627D5AAEB4482807C074143C) |

| | [Signatures](#sC23912B0EEB257F58DB747A230344477) | [96](#sC23912B0EEB257F58DB747A230344477) |

| | [Schedule II](#sE2DEC73B187456D9A784085BF73DEE01) | [98](#sE2DEC73B187456D9A784085BF73DEE01) |

The following table summarizes the location and total square footage of our Domestic segment stores at the end of fiscal [removed: 2017:][added: 2018:]

| Alabama | | [removed: 15] [added: 12] | | | [removed: 3] [added: 2] | | | — | |

| Arizona | | [removed: 23] [added: 22] | | | [removed: 2] [added: 1] | | | — | |

| Arkansas | | 9 | | | [removed: 4] [added: 2] | | | — | |

| Connecticut | | 12 | | | [removed: 5] [added: 2] | | | — | |

| Florida | | 64 | | | [removed: 31] [added: 28] | | | — | |

| Georgia | | 28 | | | [removed: 10] [added: 8] | | | — | |

| Idaho | | 5 | | | [removed: 2] [added: 1] | | | — | |

| Illinois | | [removed: 49] [added: 46] | | | 11 | | | — | |

| Kansas | | [removed: 9] [added: 8] | | | [removed: 3] [added: 2] | | | — | |

| Maine | | [removed: 4] [added: 3] | | | — | | | — | |

| Maryland | | 21 | | | [removed: 10] [added: 7] | | | — | |

| Massachusetts | | [removed: 24] [added: 23] | | | [removed: 10] [added: 7] | | | — | |

| Minnesota | | [removed: 22] [added: 20] | | | 11 | | | — | |

| Missouri | | [removed: 19] [added: 18] | | | [removed: 9] [added: 7] | | | — | |

| Nevada | | 10 | | | [removed: 4] [added: 3] | | | — | |

| New Jersey | | [removed: 27] [added: 26] | | | [removed: 8] [added: 7] | | | — | |

| New Mexico | | 5 | | | [removed: 3] [added: 2] | | | — | |

| New York | | 53 | | | [removed: 13] [added: 8] | | | — | |

| North Carolina | | 32 | | | [removed: 9] [added: 7] | | | — | |

| Ohio | | [removed: 37] [added: 35] | | | [removed: 10] [added: 9] | | | — | |

| Oklahoma | | 13 | | | [removed: 4] [added: 3] | | | — | |

| South Carolina | | [removed: 14] [added: 13] | | | [removed: 4] [added: 3] | | | — | |

| Tennessee | | 16 | | | [removed: 8] [added: 7] | | | — | |

| Texas | | 103 | | | [removed: 30] [added: 22] | | | — | |

| Virginia | | 34 | | | [removed: 8] [added: 7] | | | — | |

| Washington | | 19 | | | [removed: 8] [added: 3] | | | — | |

| Square footage (in thousands) | [removed: | 39,662] [added: 3,783] | | | [removed: 429] [added: 48] | | | [removed: 737] [added: —] | |

The following table summarizes the ownership status of our Domestic segment store locations at the end of fiscal [removed: 2017:][added: 2018:]

| | | U.S. Best Buy Stores | | | U.S. Best Buy Mobile Stand- Alone [removed: Stores] [added: Stores(1)] | | | Pacific Sales Stores | |

| Leased store locations | [added: 131] | [removed: 965] | | [added: 51] | [removed: 309] | | [added: 25] | [removed: 28] | | [added: 6 | |]

The following table summarizes the location, ownership status and total square footage of space utilized for distribution centers, service [removed: centers and] [added: centers,] corporate [added: and field] offices of our Domestic segment at the end of fiscal [removed: 2017:][added: 2018:]

| Distribution centers | | [removed: 24] [added: 23] locations in [removed: 18] [added: 17] U.S. states | | [removed: 7,844] [added: 8,750] | | | 3,168 | |

| Territory field offices | | [removed: 12] [added: 11] locations throughout the U.S. | | [removed: 109] [added: 96] | | | — | |

The following table summarizes the location and total square footage of our International segment stores at the end of fiscal [removed: 2017:][added: 2018:]

| British Columbia | 22 | | | [removed: 9] [added: 10] | | | — | |

| Ontario | 54 | | | [removed: 29] [added: 26] | | | — | |

| Square footage (in thousands) | [removed: 3,783] [added: 759] | | | [removed: 50] [added: —] | | | [removed: —] [added: 12] | |

| Estado de Mexico | [removed: 3] [added: 4] | | | — | | | — | |

| Square footage (in thousands) | [removed: 670] | [added: 39,082] | | [removed: —] | [added: 362] | | [removed: 8] | [added: 735] | [added: |]

| California | | 117 | | | 16 | | | 28 | |

| Total store count | | 1,008 | | | 257 | | | 28 | |

| (1) | 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. We expect the majority of these stores to close during the first half of fiscal 2019. Refer to Note 4, Restructuring Charges, of the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for further information about our restructuring activities. |

| | |

| --- | --- |

| Ciudad de Mexico | 8 | | | — | | | 4 | |

| Morelos | 1 | | | — | | | — | |

| Quintana Roo | 1 | | | — | | | — | |

| Yucatan | 1 | | | — | | | — | |

| California | | 118 | | | 18 | | | 28 | |

| Total | | 1,026 | | | 309 | | | 28 | |

| Distrito Federal | 7 | | | — | | | 3 | |

| Hubert Joly | | [removed: 57] [added: 58] | | Chairman and Chief Executive Officer | | [removed: 4] [added: 5] |

| Corie Barry | | [removed: 42] [added: 43] | | Chief Financial Officer | | [removed: 17] [added: 18] |

| [removed: Paula F. Baker] [added: Kamy Scarlett] | | [removed: 49] [added: 54] | | Chief Human Resources Officer | | [removed: 13] [added: 4] |

| Shari L. Ballard | | [removed: 50] [added: 51] | | [added: Senior Executive Vice President &] President, Multi-channel Retail [removed: and Operations] | | [removed: 24] [added: 25] |

| R. Michael (Mike) Mohan | | [removed: 49] [added: 50] | | [added: Senior Executive Vice President &] Chief Merchandising and Marketing Officer | | [removed: 13] [added: 14] |

| Keith J. Nelsen | | [removed: 53] [added: 54] | | General Counsel and Secretary | | [removed: 11] [added: 12] |

| Asheesh Saksena | | [removed: 52] [added: 53] | | Chief Strategic Growth Officer | | [removed: 1] [added: 2] |

| Trish Walker | | [removed: 50] [added: 51] | | President, Services | | [removed: 1] [added: 2] |

| Mathew R. Watson | | [removed: 46] [added: 47] | | [added: Senior Vice President, Controller and] Chief Accounting Officer | | [removed: 11] [added: 12] |

Prior to that time, Mr. Joly worked in the technology sector at Electronic Data Systems (now part of Hewlett-Packard [removed: Company)] [added: Co.)] from 1996 to 1999 and at McKinsey & Company, Inc. from 1983 to 1996.

Mr. Joly is currently a member of the [removed: Board] [added: board] of [removed: Directors] [added: directors] of Ralph Lauren [removed: Corporation,] [added: Corp.,] a leader in the design, marketing and retailing of premier lifestyle products.

He also serves on the [removed: Board of Directors] [added: executive committees] for the Retail Industry Leaders [removed: Association, the Executive Committee of] [added: Association and] the Minnesota Business [removed: Partnership] [added: Partnership,] and on the [removed: Board] [added: board] of [removed: Trustees] [added: trustees] of the Minneapolis Institute of Arts and the Minnesota Orchestra.

In this role, she is responsible for overseeing all aspects of global finance, as well as information technology, [removed: information security,] [added: digital technology, enterprise risk and compliance,] audit, procurement and pricing functions.

Ms. Barry joined Best Buy in 1999 and has held a variety of financial and operational roles within the organization, both in the field and at [removed: the corporate campus.][added: corporate.]

She most recently was [removed: our Chief Strategic Growth Officer] [added: the company’s chief strategic growth officer] and the [removed: Interim Leader] [added: interim leader] of Best Buy’s [removed: Services Organization] [added: services organization] from 2015 until 2016.

Prior to that dual-role, she served as [removed: Senior Vice President] [added: senior vice president] of [removed: Domestic Finance] [added: domestic finance] from 2013 [removed: until] [added: to] 2015; [removed: Vice President, Chief Financial Officer] [added: vice president, chief financial officer] and business development of our [removed: Home Business Group] [added: home business group] from 2012 to 2013; and [removed: Vice President, Finance] [added: vice president, finance] of the [removed: Home Customer Solutions Group] [added: home customer solutions group] from 2010 [removed: until] [added: to] 2012.

Prior to Best Buy, Ms. Barry worked at Deloitte & [removed: Touche] [added: Touche,] LLP.

[removed: Baker] [added: Kamy Scarlett] was appointed our Chief Human Resources Officer in [removed: March 2016.][added: June 2017.]

In [removed: her] [added: this] role, [removed: Ms. Baker] [added: she] oversees talent development and the health and well-being of the more than 125,000 Best Buy employees worldwide.

Ballard is our [added: Senior Executive Vice President and] President, Multi-channel [removed: Retail and Operations.][added: Retail.]

[removed: Previously,] [added: Prior to her current role,] she served as [removed: President, International] [added: president, U.S. retail from 2014 to 2017; chief human resources officer from 2014 to 2016; president, international] and [removed: Chief Human Resources Officer] [added: chief human resources officer] from 2013 to 2014; [removed: Executive Vice President] [added: executive vice president] and [removed: President, International] [added: president, international] from 2012 to 2013; [removed: Executive Vice][added: executive vice president, president - Americas from March 2010 until 2012; executive vice president - retail channel management from 2007 to 2010; and executive vice president - human resources and legal from 2004 to 2007.]

[removed: Ms. Ballard] serves on the board of directors [removed: for] [added: of] the University of Minnesota Foundation.

Michael (Mike) Mohan is our [added: Senior Executive Vice President and] Chief Merchandising and Marketing Officer.

[removed: Previously, Mr. Mohan] [added: Prior to his current role, he] served as [removed: President, Home since June] [added: chief merchandising officer from 2014 to 2017; president, home from] 2013 [removed: until his current appointment; Senior Vice President, General Manager] [added: to 2014; senior vice president, general manager] - [removed: Home Business Group] [added: home business group] from 2011 to [removed: June] 2013; [removed: Senior Vice President, Home Theater] [added: senior vice president, home theatre] from 2008 to 2011; and [removed: Vice President, Home Entertainment] [added: vice president, home entertainment] from 2006 to 2008.

Prior to joining Best Buy in 2004 as [removed: Vice President, Digital Imaging,] [added: vice president, digital imaging,] Mr. Mohan was [removed: Vice President] [added: vice president] and [removed: General Merchandising] [added: general merchandising] manager for Good Guys, an audio/video specialty retailer in the western [removed: United States.][added: U.S. Mr. Mohan also previously worked at Future Shop in Canada from 1988 to 1997, prior to our acquisition of the company, where he served in various merchandising roles.]

In this role, he manages our enterprise legal [added: function] and [removed: risk management functions, as well as] acts as Secretary to our Board of Directors.

Mr. Nelsen is a member of the board of directors of NuShoe, Inc., a privately held shoe repair facility in San Diego, [removed: California and serves on the boards of the Children's Cancer Research Fund and the Chad Greenway Lead the Way Foundation.][added: California.]

Asheesh Saksena [removed: was appointed] [added: is] our Chief Strategic Growth [removed: Officer in June 2016.][added: Officer.]

In this role, he leads [removed: our] [added: the company’s] efforts to refine and implement our growth strategy.

[removed: Mr. Saksena is a] [added: A] highly strategic leader with more than 20 years of experience in creating and leading strategic [removed: growth.][added: growth, Mr. Saksena joined Best Buy in June 2016.]

[removed: Prior to joining Best Buy, he] [added: He previously] served [removed: from 2011 to 2016] as the [removed: Executive Vice President] [added: executive vice president] of [removed: Strategy] [added: strategy] and [removed: New Business Development] [added: new business development from 2011 to 2016] at Cox Communications, one of the nation’s leading cable television providers.

Prior to that, he was the [removed: Deputy Chief Strategy Officer] [added: deputy chief strategy officer from 2008 until 2011] for Time Warner [removed: Cable from 2008 to 2011.][added: Cable.]

Trish Walker was appointed our [removed: President of] [added: President,] Services in April 2016.

In this role, she oversees [removed: our Geek Squad] [added: all] services in stores, online and in customers’ homes.

Before joining [removed: Best Buy,] [added: us in 2016,] Ms. Walker spent 27 years at Accenture, most recently serving as [removed: Senior Managing Director leading the] [added: senior managing director and] North America retail practice and global client account lead.

[removed: Watson has] [added: He previously] served as our [removed: Vice President, Controller] [added: vice president, controller] and [removed: Chief Accounting Officer since] [added: chief accounting officer from] April [removed: 2015.][added: 2015 until his current role.]

Mr. Watson is responsible for our [removed: controllership] [added: controllership, financial operations] and external reporting functions.

(As of March 29, 2018)

Ms. Scarlett joined Best Buy in 2014.

She has served in a variety of retail operations, marketing and human resources leadership roles since beginning her career in retail more than 30 years ago.

Most recently, she was senior vice president of retail and chief human resources officer for Best Buy Canada from 2014 to May 2017.

She was responsible for sales and profits in more than 180 stores in addition to enacting the human resources and talent management strategies for the company.

Prior to joining Best Buy, Ms. Scarlett was the chief operating officer from 2012 to 2014 at Grafton-Fraser Inc., a leading Canadian retailer of men’s apparel.

She also previously held leadership roles at Loblaw Cos., Hudson’s Bay Co. and Dylex Inc.

In her role, she is responsible for all U.S. Best Buy stores, e-commerce, Best Buy Mexico and the company’s real estate strategy.

Ms. Ballard

He is responsible for the category management, merchandising, marketing, supply chain and Best Buy Direct functions for Best Buy’s core U.S. business.

Mr. Mohan serves on the board of directors for Bloomin’ Brands, a hospitality industry company that owns several American casual dining restaurant chains, and as a national trustee for the Boys & Girls Clubs of America.

He also is responsible for strategic planning across the company.

That includes the Geek Squad, a national tech-support organization with more than 20,000 agents dedicated to helping customers learn about and enjoy their technology, as well as the company’s service plan portfolio and customer care.

She has worked with many leading retailers over the years, including Nordstrom, CVS, L.L. Bean, Macy’s and The Limited.

She also led Accenture’s work on the Best Buy account for several years, during which she worked closely with Geek Squad.

Watson was appointed our Senior Vice President, Controller and Chief Accounting Officer in October 2017.

He serves on the boards of directors of AchieveMpls and The Best Buy Foundation.

(As of March 20, 2017)

Paula F.

Prior to her current role, she served as Vice President, Territory General Manager for the Southeast region of the United States, responsible for 172 stores and more than 10,000 employees, since 2012.

Prior to that, Ms. Baker was a Territory Human Resources Director from 2010 to 2012.

She has also previously held District Manager and General Manager roles from 2004 to 2010.

Before joining Best Buy in 2004, Ms. Baker worked at Books-A-Million, a large chain bookstore in the southeast, Golfsmith International, a retail golf superstore, and St. Andrews Golf Company, a premier golf club manufacturer and retailer, in retail leadership roles.

Ms. Baker serves as a board member on the Richard M.

Schulze Foundation and on the Quality Committee of Children’s Hospital of Minnesota.

She was named President, U.S. Retail and Chief Human Resources Officer in 2014 and in March 2016 transitioned out of her human resources responsibilities to focus primarily on our store operations.

In March 2017, she added responsibility for E-commerce and will now focus primarily on maximizing the multi-channel customer experience.

President, President - Americas from March 2010 until 2012; Executive Vice President - Retail Channel Management from 2007 to 2010; and Executive Vice President - Human Resources and Legal from 2004 to 2007.

He was appointed our Chief Merchandising Officer in January 2014 and in March 2017 added responsibility for our marketing organization.

In this role, he manages the category management supply chain, merchandising and marketing functions for our U.S. business, including our category growth strategies, vendor relationships, private label business, merchandise assortment and marketing strategy, branding and execution.

Mr. Mohan also previously worked at Future Shop in Canada from 1988 to 1997, prior to our acquisition of the company, where he served in various merchandising roles.

Mr. Mohan serves as a trustee for the Boys & Girls Clubs of America.

He serves on the board of directors of AchieveMpls.

On March 1, [removed: 2017,] [added: 2018,] we announced a [removed: 21%] [added: 32%] increase in our regular quarterly dividend to [removed: $0.34] [added: $0.45] per share.

| | Fiscal [removed: 2017] [added: 2018] | | | | | | | | Fiscal [removed: 2016] [added: 2017] | | | | | | | | Fiscal Year | | | | | | |

| | High | | | | Low | | | | High | | | | Low | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | |

| First [removed: Quarter] [added: quarter] | $ | [removed: 34.95] [added: 52.67] | | | $ | [removed: 26.10] [added: 41.67] | | | $ | [removed: 42.00] [added: 34.95] | | | $ | [removed: 34.13] [added: 26.10] | | | $ | [removed: 0.73] [added: 0.34] | | | $ | [removed: 0.74] [added: 0.73] | |

| Second [removed: Quarter] [added: quarter] | [removed: 33.63] [added: 61.95] | | | | [removed: 28.76] [added: 50.29] | | | | [removed: 37.18] [added: 33.63] | | | | [removed: 31.68] [added: 28.76] | | | | [removed: 0.28] [added: 0.34] | | | | [removed: 0.23] [added: 0.28] | | |

| Third [removed: Quarter] [added: quarter] | [removed: 40.58] [added: 63.32] | | | | [removed: 32.02] [added: 51.61] | | | | [removed: 39.10] [added: 40.58] | | | | [removed: 28.32] [added: 32.02] | | | | [removed: 0.28] [added: 0.34] | | | | [removed: 0.23] [added: 0.28] | | |

| Fourth [removed: Quarter] [added: quarter] | [removed: 49.40] [added: 78.59] | | | | [removed: 37.10] [added: 52.92] | | | | [removed: 36.51] [added: 49.40] | | | | [removed: 25.31] [added: 37.10] | | | | [removed: 0.28] [added: 0.34] | | | | [removed: 0.23] [added: 0.28] | | |

As of March [removed: 20, 2017,] [added: 29, 2018,] there were 2,566 holders of record of our common stock.

There is no expiration date governing the period over which we can repurchase shares under the [removed: June 2011 program.][added: February 2017 authorization.]

During fiscal [removed: 2017,] [added: 2018,] we repurchased and retired [removed: 21.1] [added: 35.1] million shares at a cost of [removed: $0.8] [added: $2.0] billion.

At [removed: the end of fiscal 2017, $2.2] [added: February 3, 2018, $3.0] billion of the $5.0 billion of share repurchases authorized by our Board in [removed: June 2011] [added: February 2017] was available for future share repurchases.

In February 2017, our Board [removed: approved] [added: authorized] a new [removed: $5] [added: $5.0] billion share repurchase [removed: authorization, which] [added: program that] superseded the [added: previous $5.0 billion] authorization from [added: June] 2011.

The following table presents the total number of shares of our common stock that we purchased during the fourth quarter of fiscal [removed: 2017,] [added: 2018,] the average price paid per share, the number of shares that we purchased as part of our publicly announced repurchase program and the approximate dollar value of shares that [removed: still could have been repurchased] [added: may yet be purchased] at the end of the applicable fiscal period, pursuant to our [removed: June 2011] [added: February 2017] $5.0 billion share repurchase program:

| (1) | At the beginning of the fourth quarter of fiscal [removed: 2017,] [added: 2018,] there was [removed: $2.5] [added: $3.9] billion available for share repurchases under our [removed: June 2011] [added: February 2017] $5.0 billion share repurchase program. The "Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program" reflects the [removed: $223] [added: $863] million we purchased in the fourth quarter of fiscal [removed: 2017] [added: 2018] pursuant to such program. For additional information, see Note 7, Shareholders' Equity, of the Notes to the Consolidated Financial Statements included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. |

The graph assumes an investment of $100 at the close of trading on [removed: March] [added: February] 2, [removed: 2012,] [added: 2013,] the last trading day of fiscal [removed: 2012,] [added: 2013,] in our common stock, the S&P 500 and the S&P Retailing Group.

[removed: ][added: ]

| Fiscal Year | [removed: 2012 | | | |] 2013 | | | | 2014 | | | | 2015 | | | | 2016 | | | | 2017 | | | [added: | 2018 | | |]

On March 1, 2018, we announced our intent to repurchase $1.5 billion of shares in fiscal 2019, which reflects an updated two-year plan of $3.5 billion compared to the original $3.0 billion two-year plan announced on March 1, 2017.

Between the end of fiscal 2018 and March 29, 2018, we repurchased an incremental 3.5 million shares of our common stock at a cost of $249 million.

| Oct. 29, 2017 through Nov. 25, 2017 | 3,505,721 | | | $ | 56.13 | | | 3,505,721 | | | $ | 3,694,000,000 | |

| Nov. 26, 2017 through Dec. 30, 2017 | 5,070,197 | | | $ | 64.00 | | | 5,070,197 | | | $ | 3,370,000,000 | |

| Dec. 31, 2017 through Feb. 3, 2018 | 4,672,740 | | | $ | 73.06 | | | 4,672,740 | | | $ | 3,029,000,000 | |

| Total fiscal 2018 fourth quarter | 13,248,658 | | | $ | 65.11 | | | 13,248,658 | | | $ | 3,029,000,000 | |

| Best Buy Co., Inc. | $ | 100.00 | | | $ | 149.45 | | | $ | 228.78 | | | $ | 188.60 | | | $ | 307.25 | | | $ | 516.16 | |

| S&P 500 | 100.00 | | | | 121.52 | | | | 138.80 | | | | 137.88 | | | | 165.51 | | | | 209.22 | | |

| S&P Retailing Group | 100.00 | | | | 127.72 | | | | 153.64 | | | | 184.32 | | | | 218.76 | | | | 321.37 | | |

In June 2011, our Board authorized up to $5.0 billion of share repurchases, which became effective on June 21, 2011.

On March 1, 2017, we announced our intent to repurchase $3 billion of shares over the next two years.

| Oct. 30, 2016 through Nov. 26, 2016 | 1,534,476 | | | $ | 40.09 | | | 1,534,476 | | | $ | 2,399,000,000 | |

| Nov. 27, 2016 through Dec. 31, 2016 | 1,705,027 | | | $ | 46.13 | | | 1,705,027 | | | $ | 2,321,000,000 | |

| Jan. 1, 2017 through Jan. 28, 2017 | 1,900,057 | | | $ | 43.50 | | | 1,900,057 | | | $ | 2,238,000,000 | |

| Total Fiscal 2017 Fourth Quarter | 5,139,560 | | | $ | 43.35 | | | 5,139,560 | | | $ | 2,238,000,000 | |

| Best Buy Co., Inc. | $ | 100.00 | | | $ | 68.66 | | | $ | 102.94 | | | $ | 157.58 | | | $ | 129.90 | | | $ | 211.63 | |

| S&P 500 | 100.00 | | | | 111.94 | | | | 136.02 | | | | 155.37 | | | | 154.34 | | | | 185.27 | | |

| S&P Retailing Group | 100.00 | | | | 123.88 | | | | 156.39 | | | | 188.05 | | | | 221.02 | | | | 261.85 | | |

| Fiscal Year | [removed: | 2017(1)] [added: 2018(1)(2)] | | | | [removed: 2016(2)] [added: 2017(3)] | | | | [removed: 2015(3)] [added: 2016(4)] | | | | [removed: 2014(4)] [added: 2015(5)] | | | | [removed: 2013(5)(6)] [added: 2014(6)] | | |

| Consolidated Statements of Earnings Data | | | | | | | | | | | | | | | | | | | | [removed: |]

| Revenue | [removed: |] $ | [removed: 39,403] [added: 42,151] | | | $ | [removed: 39,528] [added: 39,403] | | | $ | [removed: 40,339] [added: 39,528] | | | $ | [removed: 40,611] [added: 40,339] | | | $ | [removed: 38,252] [added: 40,611] | |

| Operating income | [added: 1,843] | [added: | | |] 1,854 | | | | 1,375 | | | | 1,450 | | | | 1,144 | | | [removed: | 90 | | |]

| Net earnings [removed: (loss)] from continuing operations | [added: 999] | [added: | | |] 1,207 | | | | 807 | | | | 1,246 | | | | 695 | | | [removed: | (259 | | ) |]

| Gain (loss) from discontinued operations | [added: 1] | [added: | | |] 21 | | | | 90 | | | | (11 | | ) | | (172 | | ) | [removed: | (161 | | ) |]

| Net earnings [removed: (loss)] including noncontrolling interests | [added: 1,000] | [added: | | |] 1,228 | | | | 897 | | | | 1,235 | | | | 523 | | | [removed: | (420 | | ) |]

| Net earnings [removed: (loss)] attributable to Best Buy Co., Inc. shareholders | [added: 1,000] | [added: | | |] 1,228 | | | | 897 | | | | 1,233 | | | | 532 | | | [removed: | (441 | | ) |]

| Per Share Data | | | | | | | | | | | | | | | | | | | | [removed: |]

| Net earnings [removed: (loss)] from continuing operations | [removed: |] $ | [removed: 3.74] [added: 3.26] | | | $ | [removed: 2.30] [added: 3.74] | | | $ | [removed: 3.53] [added: 2.30] | | | $ | [removed: 2.00] [added: 3.53] | | | $ | [removed: (0.76] [added: 2.00] | [removed: )] |

| Net gain (loss) from discontinued operations | [added: —] | [added: | | |] 0.07 | | | | 0.26 | | | | (0.04 | | ) | | (0.47 | | ) | [removed: | (0.54 | | ) |]

| Net earnings [removed: (loss)] | [added: 3.26] | [added: | | |] 3.81 | | | | 2.56 | | | | 3.49 | | | | 1.53 | | | [removed: | (1.30 | | ) |]

| Cash dividends declared and paid | [added: 1.36] | [added: | | |] 1.57 | | | | 1.43 | | | | 0.72 | | | | 0.68 | | | [removed: | 0.66 | | |]

| Common stock price: | | | | | | | | | | | | | | | | | | | | [removed: |]

| High | [added: 78.59] | [added: | | |] 49.40 | | | | 42.00 | | | | 40.03 | | | | 44.66 | | | [removed: | 27.95 | | |]

| Low | [added: 41.67] | [added: | | |] 26.10 | | | | 25.31 | | | | 22.30 | | | | 13.83 | | | [removed: | 11.20 | | |]

| Operating Statistics | | | | | | | | | | | | | | | | | | | | [removed: |]

| Comparable sales gain (decline)(7) | [removed: | 0.3] [added: 5.6] | | % | | [removed: 0.5] [added: 0.3] | | % | | 0.5 | | % | | [removed: (1.0] [added: 0.5] | | [removed: )%] [added: %] | | [removed: (2.7] [added: (1.0] | | )% |

| Gross profit rate | [removed: | 24.0] [added: 23.4] | | % | | [removed: 23.3] [added: 24.0] | | % | | [removed: 22.4] [added: 23.3] | | % | | [removed: 23.1] [added: 22.4] | | % | | [removed: 23.6] [added: 23.1] | | % |

| Selling, general and administrative expenses rate | [removed: | 19.2] [added: 19.0] | | % | | [removed: 19.3] [added: 19.2] | | % | | [removed: 18.8] [added: 19.3] | | % | | [removed: 20.0] [added: 18.8] | | % | | [removed: 20.7] [added: 20.0] | | % |

| Operating income rate | [removed: | 4.7] [added: 4.4] | | % | | [removed: 3.5] [added: 4.7] | | % | | [removed: 3.6] [added: 3.5] | | % | | [removed: 2.8] [added: 3.6] | | % | | [removed: 0.2] [added: 2.8] | | % |

| Year-End Data | | | | | | | | | | | | | | | | | | | | [removed: |]

| Current ratio(8) | [added: 1.3] | [added: | | |] 1.5 | | | | 1.4 | | | | 1.5 | | | | 1.4 | | | [removed: | 1.1 | | |]

| Total assets | [removed: |] $ | [removed: 13,856] [added: 13,049] | | | $ | [removed: 13,519] [added: 13,856] | | | $ | [removed: 15,245] [added: 13,519] | | | $ | [removed: 13,990] [added: 15,245] | | | $ | [removed: 16,774] [added: 13,990] | |

| Debt, including current portion | [added: 1,355] | [added: | | |] 1,365 | | | | 1,734 | | | | 1,613 | | | | 1,647 | | | [removed: | 2,290 | | |]

| Total equity | [added: 3,612] | [added: | | |] 4,709 | | | | 4,378 | | | | 5,000 | | | | 3,989 | | | [removed: | 3,715 | | |]

| Number of stores | | | | | | | | | | | | | | | | | | | | [removed: |]

| Domestic | [added: 1,293] | [added: | | |] 1,363 | | | | 1,415 | | | | 1,448 | | | | 1,495 | | | [removed: | 1,503 | | |]

| International | [added: 216] | [added: | | |] 212 | | | | 216 | | | | 283 | | | | 284 | | | [removed: | 276 | | |]

| Total | [removed: | 1,575] [added: 1,509] | | | | [removed: 1,631] [added: 1,575] | | | | [removed: 1,731] [added: 1,631] | | | | [removed: 1,779] [added: 1,731] | | | | 1,779 | | |

| Retail square footage [removed: (000s) |] [added: (in thousands)] | | | | | | | | | | | | | | | | | | | |

| Domestic | [added: 40,179] | [added: | | |] 40,828 | | | | 41,216 | | | | 41,716 | | | | 42,051 | | | [removed: | 42,232 | | |]

| International | [added: 4,602] | [added: | | |] 4,511 | | | | 4,543 | | | | 6,470 | | | | 6,636 | | | [removed: | 6,613 | | |]

| Total | [added: 44,781] | [added: | | |] 45,339 | | | | 45,759 | | | | 48,186 | | | | 48,687 | | | [removed: | 48,845 | | |]

| [removed: (1)] [added: (3)] | Included within net earnings [removed: (loss)] from continuing operations and net earnings [removed: (loss)] attributable to Best Buy Co., Inc. shareholders for fiscal 2017 includes $161 million ($100 million net of taxes) due to cathode ray tube [removed: (CRT)] [added: ("CRT")] and LCD litigation settlements reached, net of related legal fees and costs. Settlements relate to products purchased and sold in prior fiscal years. Refer to Note 12, Contingencies and Commitments, in the Notes to the Consolidated Financial [removed: Statements] [added: Statements,] included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. |

| [removed: (2)] [added: (4)] | Included within operating income and net earnings [removed: (loss)] from continuing operations for fiscal 2016 is $201 million ($159 million net of taxes) of restructuring charges from continuing operations recorded in fiscal 2016 related to measures we took to restructure our business. Net earnings [removed: (loss)] attributable to Best Buy Co., Inc. shareholders for fiscal 2016 includes restructuring charges (net of tax and noncontrolling interest) from continuing operations. Refer to Note 4, Restructuring Charges, in the Notes to the Consolidated Financial [removed: Statements] [added: Statements,] included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. |

| [removed: (3)] [added: (5)] | Included within net earnings [removed: (loss)] from continuing operations and net earnings [removed: (loss)] attributable to Best Buy Co., Inc. shareholders for fiscal 2015 includes $353 million due to a discrete benefit related to reorganizing certain European legal entities. |

| [removed: (4)] [added: (6)] | Included within operating income and net earnings [removed: (loss)] from continuing operations for fiscal 2014 is $149 million ($95 million net of taxes) of restructuring charges from continuing operations recorded in fiscal 2014 related to measures we took to restructure our business. Net earnings [removed: (loss)] attributable to Best Buy Co., Inc. shareholders for fiscal 2014 includes restructuring charges (net of [removed: tax and noncontrolling interest)] [added: tax)] from continuing operations. |

| [removed: (5)] [added: (2)] | Fiscal [removed: 2013 (11-month)] [added: 2018] included [removed: 48] [added: 53] weeks. All other periods presented included 52 weeks. |

| (7) | Our comparable sales calculation compares revenue from stores, websites and call centers operating for at least 14 full months, as well as revenue related to certain other comparable sales channels for a particular period to the corresponding period in the prior year. Relocated stores, as well as remodeled, expanded and downsized stores closed more than 14 days, are excluded from the comparable sales calculation until at least 14 full months after reopening. Acquisitions are included in the comparable sales calculation beginning with the first full quarter following the first anniversary of the date of the acquisition. The Canadian brand consolidation, which included the permanent closure of 66 Future Shop stores, the conversion of 65 Future Shop stores to Best Buy stores and the elimination of the Future Shop website, had a material impact on a year-over-year basis on the remaining Canadian retail stores and the website. As such, from the first quarter of fiscal 2016 through the third quarter of fiscal 2017, all Canadian store and website revenue was removed from the comparable sales base and the International segment no longer had a comparable metric. Therefore, Consolidated comparable sales equaled the Domestic segment comparable sales. Beginning in the fourth quarter of fiscal 2017, we resumed reporting International comparable sales as revenue in the International segment was once again deemed to be comparable and, as such, Consolidated comparable sales are once again equal to the aggregation of Domestic and International comparable sales. [added: Comparable sales also exclude the impact of the extra week in fiscal 2018.] |

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| (1) | Included within operating income, net earnings from continuing operations and net earnings attributable to Best Buy Co., Inc. shareholders for fiscal 2018 is $80 million ($51 million net of taxes) related to a one-time bonus for certain employees and $20 million ($13 million net of taxes) related to a one-time contribution to the Best Buy Foundation in response to future tax savings created by the Tax Cuts and Jobs Act ("tax reform" or "Tax Act") enacted into law in fiscal 2018. Also included in net earnings from continuing operations and net earnings attributable to Best Buy Co., Inc. shareholders for fiscal 2018 is $283 million of charges resulting from the Tax Act. Refer to Note 10, Income Taxes, in the Notes to the Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. |

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| | | 12-Month | | | | | | | | | | | | | | | | 11-Month | | |

| (6) | Included within our operating income and net earnings (loss) from continuing operations for fiscal 2013 (11-month) is $415 million ($268 million net of taxes) of restructuring charges from continuing operations recorded in fiscal 2013 (11-month) related to measures we took to restructure our business. Also included in net earnings (loss) from continuing operations for fiscal 2013 (11-month) is $614 million (net of taxes) of goodwill impairment charges primarily related to Best Buy Canada. Included in gain (loss) from discontinued operations is $23 million (net of taxes) of restructuring charges primarily related to Best Buy Europe and $207 million (net of taxes) of goodwill impairment charges related to Five Star. Net earnings (loss) attributable to Best Buy Co., Inc. shareholders for fiscal 2013 (11-month) includes restructuring charges (net of tax and noncontrolling interest) from continuing operations and the net of tax goodwill impairment. |

The independent registered public accounting firm's responsibility is to express an opinion as to whether such consolidated financial statements present fairly, in all material [removed: respects] [added: respects,] our financial position, results of operations and cash flows in accordance with GAAP.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we assessed the effectiveness of our internal control over financial reporting as of [removed: January 28, 2017,] [added: February 3, 2018,] using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013).

Based on our assessment, we have concluded that our internal control over financial reporting was effective as of [removed: January 28, 2017.][added: February 3, 2018.]

Deloitte & Touche LLP, the independent registered public accounting firm that audited our consolidated financial statements for the year ended [removed: January 28, 2017,] [added: February 3, 2018,] included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K, has issued an unqualified attestation report on our internal control over financial reporting as of [removed: January 28, 2017.][added: February 3, 2018.]

| [removed: ] [added: ] | | [removed: ] [added: ] |

We have audited the accompanying consolidated balance sheets of Best Buy Co., Inc. and subsidiaries (the [removed: “Company”)] [added: "Company")] as of [removed: January 28, 2017] [added: February 3, 2018] and January [removed: 30, 2016, and] [added: 28, 2017,] the related consolidated statements of earnings, comprehensive income, [added: cash flows, and] changes in shareholders’ [removed: equity, and cash flows] [added: equity] for each of the three years in the period ended [removed: January 28, 2017.][added: February 3, 2018, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").]

These financial statements [removed: and financial statement schedule] are the responsibility of the [removed: Company’s] [added: Company's] management.

Our responsibility is to express an opinion on the [added: Company's] financial statements [removed: and financial statement schedule] based on our audits.

We conducted our audits in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material [removed: misstatement.][added: misstatement, whether due to error or fraud.]

[removed: An audit includes] [added: Such procedures included] examining, on a test basis, evidence [removed: supporting] [added: regarding] the amounts and disclosures in the financial statements.

[removed: An audit] [added: Our audits] also [removed: includes assessing] [added: included evaluating] the accounting principles used and significant estimates made by management, as well as evaluating the overall [added: presentation of the] financial [removed: statement presentation.][added: statements.]

In our opinion, [removed: such consolidated] [added: the] financial statements present fairly, in all material respects, the financial position of [removed: Best Buy Co., Inc. and subsidiaries] [added: the Company] as of [removed: January 28, 2017] [added: February 3, 2018] and January [removed: 30, 2016,] [added: 28, 2017,] and the results of [removed: their] [added: its] operations and [removed: their] [added: its] cash flows for each of the three years in the period ended [removed: January 28, 2017,] [added: February 3, 2018,] in conformity with accounting principles generally accepted in the United States of America.