Best Buy 2015 Annual Report Download - page 19

Table of Contents
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effectively to our customers or fail to meet our customers’ expectations in the execution of these services, our revenues and
income could be adversely affected.
Natural disasters, changes in climate and geo-political events could adversely affect our operating results.
The threat or occurrence of one or more natural disasters or other extreme weather events, whether as a result of climate change
or otherwise, the threat or outbreak of terrorism, civil unrest or other hostilities or conflicts, could materially adversely affect
our financial performance. These events may result in damage to or destruction or closure of, our stores, distribution centers
and other properties. Such events can also adversely affect our work force and prevent employees and customers from reaching
our stores and other properties, can modify consumer purchasing patterns and decrease disposable income, and can disrupt or
disable portions of our supply chain and distribution network.
Our exclusive brands products are subject to several additional product, supply chain and legal risks that could affect
our operating results.
Sales of our exclusive brands products, which primarily include Insignia, Modal, Dynex, Init, Platinum and Rocketfish branded
products, represent an important component of our revenue. Most of these products are manufactured by contracted
manufacturers based in southeastern Asia. This arrangement exposes us to the following additional potential risks, which could
materially adversely affect our reputation, financial condition and operating results:
• We have greater exposure and responsibility to consumers for warranty replacements and repairs as a result of
exclusive brand product defects, and our recourse to contracted manufacturers for such warranty liabilities may be
limited in foreign jurisdictions;
• We may be subject to regulatory compliance and/or product liability claims relating to personal injury, death or
property damage caused by exclusive brand products, some of which may require us to take significant actions such as
product recalls;
• We may experience disruptions in manufacturing or logistics due to inconsistent and unanticipated order patterns, our
inability to develop long-term relationships with key factories or unforeseen natural disasters;
• We may not be able to locate manufacturers that meet our internal standards, whether for new exclusive brand
products or for migration of the manufacturing of products from an existing manufacturer;
• We are subject to developing and often-changing labor and environmental laws for the manufacture of products in
foreign countries, and we may be unable to conform to new rules or interpretations in a timely manner;
• We may be subject to claims by technology or other intellectual property owners if we inadvertently infringe upon
their patents or other intellectual property rights, or if we fail to pay royalties owed on our exclusive brand products;
• We may be unable to obtain or adequately protect patents and other intellectual property rights on our exclusive brand
products or manufacturing processes; and
• Regulations regarding disclosure of efforts to identify the country of origin of “conflict minerals” in certain portions of
our supply chain could increase the cost of doing business and, depending on the findings of our country of origin
inquiry, could have an adverse effect on our reputation.
Maintaining consistent quality, availability and competitive pricing of our exclusive brands products helps us build and
maintain customer loyalty, generate sales and achieve acceptable margins. Failure to maintain these factors could have a
significant adverse impact on the demand for exclusive brand products and the margins we are able to generate from them.
We are subject to certain statutory, regulatory and legal developments which could have a material adverse impact on
our business.
Our statutory, regulatory and legal environments expose us to complex compliance and litigation risks that could materially
adversely affect our operations and financial results. The most significant compliance and litigation risks we face are:
• The difficulty of complying with sometimes conflicting statutes and regulations in local, national or international
jurisdictions;
• The potential for unexpected costs related to new or compliance with existing environmental legislation or
international agreements affecting energy, carbon emissions, electronics recycling and water or product materials;
• The impact of new regulations governing data privacy and security, whether imposed as a result of increased cyber-
security risks or otherwise;
• The impact of other new or changing statutes and regulations including, but not limited to, financial reform, National
Labor Relations Board rule changes, health care reform, corporate governance matters and/or other as yet unknown
legislation, that could affect how we operate and execute our strategies as well as alter our expense structure;