Best Buy 2015 Annual Report Download - page 53

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Table of Contents
46
The following table presents a reconciliation of our debt to net earnings ratio to our adjusted debt to EBITDAR ratio for
continuing operations ($ in millions):
2015(1) 2014(1)
Debt (including current portion)(2) $ 1,621 $ 1,657
Capitalized operating lease obligations (8 times rental expense)(3) 6,653 6,781
Adjusted debt $ 8,274 $ 8,438
Net earnings from continuing operations $ 1,246 $ 695
Interest expense, net 63 61
Income tax expense 141 388
Depreciation and amortization expense(4) 689 667
Rental expense 832 848
EBITDAR $ 2,971 $ 2,659
Debt to net earnings ratio 1.3 2.4
Adjusted debt to EBITDAR ratio 2.8 3.2
(1) Debt is reflected as of the balance sheet dates for each of the respective fiscal periods, while rental expense and the other components of EBITDAR
represent activity for the 12 months ended January 31, 2015 and February 1, 2014.
(2) Excludes debt related to our Best Buy Europe operations. As described in Note 2, Discontinued Operations, of the Notes to Consolidated Financial
Statements, included in Item 8, Financial Statements and Supplementary Data, we sold our interest in Best Buy Europe on June 26, 2013.
(3) The multiple of eight times annual rental expense in the calculation of our capitalized operating lease obligations is the multiple used for the retail sector
by one of the nationally recognized credit rating agencies that rate our creditworthiness, and we consider it to be an appropriate multiple for our lease
portfolio.
(4) Depreciation and amortization expense includes impairments of fixed assets, investments and intangible assets (including impairments associated with
our fiscal restructuring activities) and includes $229 million of net LCD-related legal settlements that occurred in the second quarter of fiscal 2014.
Amounts exclude the impact of net proceeds from LCD settlements of $44 million reached in the first quarter of fiscal 2014. We did not exclude LCD
settlements prior to the material settlements reached in the second quarter of fiscal 2014.
Off-Balance-Sheet Arrangements and Contractual Obligations
Other than operating leases, we do not have any off-balance-sheet financing. A summary of our operating lease obligations by
fiscal year is included in the "Contractual Obligations" table below. Additional information regarding our operating leases is
available in Item 2, Properties, and Note 8, Leases, of the Notes to Consolidated Financial Statements, included in Item 8,
Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.
The following table presents information regarding our contractual obligations by fiscal year ($ in millions):
Payments Due by Period
Contractual Obligations Total Less Than
1 Year 1-3 Years 3-5 Years More Than
5 Years
Long-term debt obligations(1) $ 1,500 $ — $ 350 $ 500 $ 650
Capital lease obligations 52 20 16 5 11
Financing lease obligations 69 21 27 12 9
Interest payments 349 81 135 90 43
Operating lease obligations(2) 3,876 873 1,412 864 727
Purchase obligations(3) 2,656 2,004 493 103 56
Unrecognized tax benefits(4) 410
Deferred compensation(5) 44
Total $ 8,956 $ 2,999 $ 2,433 $ 1,574 $ 1,496
Note: For additional information refer to Note 5, Debt; Note 8, Leases; Note 10, Income Taxes; and Note 12, Contingencies and Commitments, of the Notes to
Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.
(1) Represents principal amounts only and excludes interest rate swap valuation adjustments.