Best Buy 2014 Annual Report Download - page 33

Download and view the complete annual report

Please find page 33 of the 2014 Best Buy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 112

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112

28
In the first three quarters of fiscal 2015, we expect the following business drivers to have a net negative impact on our
operating income rate: (1) ongoing price investments; (2) incremental Renew Blue SG&A investments; (3) the increase in our
product warranty-related costs due to higher mobile phone claims frequency; (4) the negative impact of our credit card
agreement with Citibank, as described above; and (5) the offsetting positive impact of the realization of Renew Blue cost
savings. We expect the net negative impact of these factors to be greatest in the first quarter of fiscal 2015, as we expect to
realize greater cost savings in the second and third quarters of fiscal 2015.
In addition, we anticipate reorganizing certain European legal entities to simplify our overall structure in the first quarter of
fiscal 2015. We currently expect this reorganization to accelerate a non-cash tax benefit of approximately $310 million to $365
million. As a result of this acceleration, we are expecting a lower annual effective tax rate for fiscal 2015.
Results of Operations
In order to align our fiscal reporting periods and comply with statutory filing requirements in certain foreign jurisdictions, we
consolidate the financial results of our Europe, China and Mexico operations on a lag. Consistent with such consolidation, the
financial and non-financial information presented in our MD&A relative to these operations is also presented on a lag. Our
policy is to accelerate the recording of events occurring in the lag period that significantly affect our consolidated financial
statements. There were no significant intervening events which would have materially affected our financial condition, results
of operations, liquidity or other factors had they been recorded during fiscal 2014 (12-month).
On November 2, 2011, our Board approved a change in our fiscal year-end from the Saturday nearest the end of February to the
Saturday nearest the end of January, effective beginning with our fiscal year 2013. As a result of this change, our fiscal year
2013 transition period was 11 months and ended on February 2, 2013, and we began consolidating the results of our Europe,
China and Mexico operations on a one-month lag, compared to a two-month lag in fiscal year 2012, to continue aligning our
fiscal reporting periods with statutory filing requirements in certain foreign jurisdictions. As a result of our change in fiscal
year-end and resulting change in our lag period, the month of January 2012 was not captured in our consolidated fiscal 2013
(11-month) results for those entities reported on a one-month lag. Refer to Note 2, Fiscal Year-end Change, 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.
In this MD&A, when financial results for fiscal 2014 are compared to financial results for fiscal 2013, the results for the 12-
month fiscal 2014 are compared to the results for the 11-month transition period from fiscal 2013. When financial results for
fiscal 2013 are compared to financial results for fiscal 2012, the results for the 11-month transition period are compared to the
results of the comparable 11-month recast period from fiscal 2012. Fiscal 2014 (12-month) included 52 weeks, and fiscal 2013
(11-month) and fiscal 2012 (11-month recast) included 48 weeks. The following tables show the fiscal months included within
the various comparison periods in our MD&A:
Fiscal 2014 (12-month) Results Compared With Fiscal 2013 (11-month)(1)
2014 (12-month) 2013 (11-month)
February 2013 - January 2014 March 2012 - January 2013
(1) For entities reported on a lag, the fiscal months included in fiscal 2014 (12-month) were January through December and for fiscal 2013 (11-month) were
February through December.
Fiscal 2013 (11-month) Results Compared With Fiscal 2012 (11-month recast)(1)
2013 (11-month) 2012 (11-month recast)
March 2012 - January 2013 March 2011 - January 2012
(1) For entities reported on a lag, the fiscal months included in fiscal 2013 (11-month) and fiscal 2012 (11-month recast) were February through December.
The month of February 2012, which was the last month of fiscal 2012 (12-month), is excluded from the comparison periods
shown above. As such, there is no discussion of February 2012 throughout the remainder of this MD&A. Other than an extra
week of activity in February 2012, which generated additional revenue, gross profit and operating income, we do not believe
there were any unusual events or transactions or any significant economic changes or trends that materially affected the month
of February 2012.