Best Buy 2013 Annual Report Download - page 13

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Future downgrades to our credit ratings and outlook could negatively impact our access to capital markets and the perception of
our credit risk by lenders and other third parties. Our credit ratings are based upon information furnished by us or obtained by a
rating agency from its own sources and are subject to revision, suspension or withdrawal by one or more rating agencies at any
time. Rating agencies may review the ratings assigned to us due to developments that are beyond our control, including the
introduction of new standards requiring the agencies to re-assess rating practices and methodologies.
Any downgrade to our debt securities may result in higher interest costs for certain of our credit facilities and other debt
financings, and could result in higher interest costs on future financings. Further, downgrades may impact our ability to obtain
adequate financing, including via trade payables with our vendors. Customers' inclination to shop with us or purchase gift cards
or extended warranties may also be affected by the publicity associated with deterioration of our credit ratings.
Failure to effectively manage existing and initiate new strategic ventures or acquisitions could have a negative impact on
our business.
From time to time, our strategy may involve entering into new business ventures, strategic alliances and making acquisitions.
Assessing a potential opportunity can be based on assumptions that might not ultimately prove to be correct. In addition, the
amount of information we can obtain about a potential opportunity may be limited, and we can give no assurance that new
business ventures, strategic alliances and acquisitions will positively affect our financial performance or will perform as
planned. The success of these opportunities is also largely dependent on the current and future participation, working
relationship and strategic vision of the business venture or strategic alliance partners, which can change following a transaction.
Integrating new businesses, stores and concepts can be a difficult task. Cultural differences in some markets into which we may
expand or into which we may introduce new retail concepts may not be as well received by customers as originally anticipated.
These types of transactions may divert our capital and our management's attention from other business issues and opportunities
and may also negatively impact our return on invested capital. Further, implementing new strategic alliances or business
ventures may also impair our relationships with our vendors or other strategic partners. We may not be able to successfully
assimilate or integrate companies that we acquire, including their personnel, financial systems, distribution, operations and
general operating procedures. We may also encounter challenges in achieving appropriate internal control over financial
reporting and deficiencies in information technology systems in connection with the integration of an acquired company. If we
fail to assimilate or integrate acquired companies successfully, our business, reputation and operating results could suffer
materially. Likewise, our failure to integrate and manage acquired companies successfully may lead to impairment of the
associated goodwill and intangible asset balances.
Failure to protect the integrity, security and use of our customers' information and media could expose us to litigation
costs and materially damage our standing with our customers.
The use of individually identifiable data by our business, our business associates and third parties is regulated at the state,
federal and international levels. Increasing costs associated with information security, such as increased investment in
technology, the costs of compliance with consumer protection laws and costs resulting from consumer fraud, could cause our
business and results of operations to suffer materially. Additionally, the success of our online operations depends upon the
secure transmission of confidential information over public networks, including the use of cashless payments. While we take
significant steps to protect customer and confidential information, lapses in our controls or the intentional or negligent actions
of employees, business associates or third parties may undermine our security measures. As a result, unauthorized parties may
obtain access to our data systems and misappropriate confidential data. There can be no assurance that advances in computer
capabilities, new discoveries in the field of cryptography or other developments will prevent the compromise of our customer
transaction processing capabilities and personal data. Furthermore, because the methods used to obtain unauthorized access
change frequently and may not be immediately detected, we may be unable to anticipate these methods or promptly implement
preventative measures. If any such compromise of our security or the security of information residing with our business
associates or third parties were to occur, it could have a material adverse effect on our reputation and may expose us to material
penalties or compensation claims. Any compromise of our data security may materially increase the costs we incur to protect
against such breaches and could subject us to additional legal risk.
Our reliance on key vendors subjects us to various risks and uncertainties which could affect our operating results.
The products we sell are sourced from a wide variety of domestic and international vendors. In fiscal 2013 (11-month), our 20
largest suppliers accounted for just under 70% of the merchandise we purchased, with 5 suppliers – Apple, Samsung, Hewlett-
Packard, Sony and LG Electronics – representing approximately 45% of total merchandise purchased. We generally do not
have long-term written contracts with our major suppliers that would require them to continue supplying us with merchandise.
The loss of or disruption in supply from any of our key vendors, or if any of our key vendors fail to develop new technologies
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