Best Buy 2012 Annual Report Download - page 19

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Specifically, significant concerns exist surrounding the ability of certain governments of member states of the European Union
to meet their financial obligations and the indirect impacts this could have on the macroeconomic environment in Europe.
In addition, foreign currency exchange rates and fluctuations may have an impact on our future earnings and cash flows from
our International segment's operations, and could materially adversely affect our financial performance. Moreover, the
economies of some of the countries in which we have operations have in the past suffered from high rates of inflation and
currency devaluations, which, if they were to occur again, could materially adversely affect our financial performance. Other
factors which may materially adversely impact our International segment's operations include foreign trade, monetary, tax and
fiscal policies both of the U.S. and of other countries; laws, regulations and other activities of foreign governments, agencies
and similar organizations; and maintaining facilities in countries which have historically been less stable than the U.S.
Additional risks inherent in our International segment's operations generally include, among others, the costs and difficulties of
managing international operations, adverse tax consequences and greater difficulty in enforcing intellectual property rights in
countries other than the U.S. The various risks inherent in doing business in the U.S. generally also exist when doing business
outside of the U.S., and may be exaggerated by the difficulty of doing business in numerous sovereign jurisdictions due to
differences in culture, laws and regulations.
We rely heavily on our management information systems for inventory management, distribution and other functions.
If our systems fail to perform these functions adequately or if we experience an interruption in their operation, our
business and results of operations could be materially adversely affected.
The efficient operation of our business is dependent on our management information systems. We rely heavily on our
management information systems to manage our order entry, order fulfillment, pricing, point-of-sale and inventory
replenishment processes. The failure of our management information systems to perform as we anticipate, or to meet the
continuously evolving needs of our business, could disrupt our business and could result in decreased revenue, increased
overhead costs and excess or out-of-stock inventory levels, causing our business and results of operations to suffer materially.
A disruption in relationships with key third-party business partners could materially adversely affect our business and
results of operations.
We have engaged Accenture LLP (“Accenture”), a global management consulting, technology services and outsourcing
company, to manage significant portions of our information technology and human resources operations. We rely heavily on
our management information systems for inventory management, distribution and other functions. We also rely heavily on
human resources support to attract, develop and retain a sufficient number of qualified employees. Furthermore, we have
engaged other key third-party business partners to manage various functions of our business, including but not limited to,
customer loyalty programs, promotional financing and customer loyalty credit cards, customer warranty and insurance
programs, and other outsourced functions. Any material disruption in our relationship with Accenture or other key third-party
business partners could result in decreased revenue and increased overhead costs, causing our business and results of operations
to suffer materially.
We are highly dependent on the cash flows and net earnings we generate during our fourth fiscal quarter, which
includes the majority of the holiday selling season.
Approximately one-third of our revenue and more than one-half of our net earnings are historically generated in our fourth
fiscal quarter, which includes the majority of the holiday shopping season in the U.S., Europe and Canada. Although our results
for the fourth quarter of fiscal 2012 included certain impacts arising from the buy-out of a profit share agreement and from
restructuring activities, we remain highly dependent on cash flows and net earnings generated during our fourth fiscal quarter.
Unexpected events or developments such as natural or man-made disasters, product sourcing issues or adverse economic
conditions in our fourth fiscal quarter could have a material adverse effect on our annual results of operations.
Item 1B. Unresolved Staff Comments.
Not applicable.