Best Buy 2016 Annual Report Download - page 80

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Foreign Currency Derivative Instruments. Comprised primarily of foreign currency forward contracts and foreign currency
swap contracts, our foreign currency derivative instruments were 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 were classified as Level 2 as these instruments are custom, over-the-counter contracts with various bank
counterparties that are not traded in an active market.
Interest Rate Swap Derivative Instruments. Our interest rate swap contracts were measured at fair value using readily
observable inputs, such as the LIBOR interest rate. Our interest rate swap derivative instruments were classified as Level 2
as these instruments are custom, over-the-counter contracts with various bank counterparties that are not traded in an active
market.
Auction Rate Securities. Our investments in auction rate securities ("ARS") were classified as Level 3 as quoted prices
were unavailable. Due to limited market information, we utilized a DCF model to derive an estimate of fair value. The
assumptions we used in preparing the DCF model include estimates with respect to the amount and timing of future
interest and principal payments, forward projections of the interest rate benchmarks, the probability of full repayment of
the principal considering the credit quality and guarantees in place, and the rate of return required by investors to own such
securities given the current liquidity risk associated with ARS.
Marketable Securities that Fund Deferred Compensation. The assets that fund our deferred compensation consist of
investments in mutual funds. These investments were 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 operating income in our Consolidated Statements of Earnings.
The following table summarizes the fair value remeasurements for non-restructuring property and equipment impairments and
restructuring activities recorded in fiscal 2016 and 2015 ($ in millions):
2016 2015
Impairments
Remaining Net
Carrying Value(1) Impairments
Remaining Net
Carrying Value (1)
Continuing operations
Property and equipment (non-restructuring) $ 61 $ 15 $ 42 $ 19
Restructuring activities(2)
Property and equipment 30 — 1 —
Tradename 40———
Total $ 131 $ 15 $ 43 $ 19
Discontinued operations(3)
Property and equipment $ — $ — $ 1 $ —
Total $ — $ — $ 1 $ —
(1) Remaining net carrying value approximates fair value.
(2) See Note 4, Restructuring Charges, for additional information.
(3) Property and equipment and tradename impairments associated with discontinued operations are recorded within loss from discontinued operations in our
Consolidated Statements of Earnings.
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 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