Best Buy 2015 Annual Report Download - page 58

Table of Contents
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Valuation techniques used require management to make assumptions and to apply judgment to determine the fair value of our
awards. These assumptions and judgments include estimating the future volatility of our stock price, expected dividend yield,
future employee turnover rates and future employee stock option exercise behaviors and correlations between our returns and
peer company returns. Changes in these assumptions could materially affect the fair value estimate.
Estimation of awards that will ultimately vest requires judgment of the amounts that will be forfeited due to failure to fulfill
service conditions. To the extent actual results or updated estimates differ from our current estimates, such amounts are
recorded as a cumulative adjustment in the period estimates are revised. Changes in estimates can materially affect
compensation expense within individual periods.
Estimates and assumptions are based upon information currently available, including historical experience and current business
and economic conditions. However, if actual results are not consistent with our estimates or assumptions, we may be exposed
to changes in stock-based compensation expense that could be material. A 10% change in our stock-based compensation
expense for the year ended January 31, 2015, would have affected net earnings by approximately $5 million in fiscal 2015.
Self-Insured Liabilities
We are self-insured for certain losses related to health, workers' compensation and general liability claims, as well as customer
warranty programs, although we obtain third-party insurance coverage to limit our exposure to certain of these claims. When
estimating our self-insured liabilities, we consider a number of factors, including historical claims experience, demographic
factors, severity factors and valuations provided by independent third-party actuaries. Our self-insured liabilities involve
uncertainty because management is required to make assumptions and to apply judgment to estimate the ultimate cost to settle
reported claims and claims incurred, but not reported at the balance sheet date.
We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions we use to
calculate our self-insured liabilities. However, if actual results are not consistent with our estimates or assumptions, we may be
exposed to losses or gains that could be material. A 10% change in our self-insured liabilities at January 31, 2015, would have
affected net earnings by approximately $7 million in fiscal 2015.
New Accounting Pronouncements
In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-08,
Reporting Discontinued Operations and Disclosures of Components of an Entity. The new guidance amends the definition of a
discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not
meet the definition of a discontinued operation. The new guidance is effective prospectively beginning in the first quarter of
fiscal 2016. We do not expect adoption of the new guidance to have a material impact on our consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, as a new Topic, Accounting Standards
Codification (ASC) Topic 606. The new guidance provides a comprehensive framework for the analysis of revenue transactions
and will apply to all of our revenue streams. Based on the current effective dates, the new guidance would first apply in the first
quarter of fiscal 2018. While we are still in the process of evaluating the effect of adoption on our financial statements, we do
not currently expect a material impact on our results of operations, cash flows or financial position.