Best Buy 2016 Annual Report Download - page 21

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security may materially increase the costs we incur to protect against such breaches and could subject us to additional legal
risk.
Natural disasters, changes in climate, geo-political events or other catastrophes could adversely affect our operating
results.
The risk or actual occurrence of various catastrophic events could materially adversely affect our financial performance. Such
events may be caused by, for example:
• natural disasters or extreme weather events;
• diseases or epidemics that may affect our employees, customers or partners;
• floods, fire or other catastrophes affecting our properties; or
• terrorism, civil unrest or other conflicts.
Such events can adversely affect our work force and prevent employees and customers from reaching our stores and properties
and can disrupt or disable portions of our supply chain and distribution network. As a consequence of these or other
catastrophic events, we may endure interruption to our operations or losses of property, equipment or inventory, which would
adversely affect our revenue and profitability.
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 include Insignia, Modal, Dynex, Init, Platinum and Rocketfish branded products,
represent an important component of our revenue. Most of these products are manufactured by contract manufacturers based in
southeastern Asia. This arrangement exposes us to the following additional potential risks, which could materially adversely
affect our 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 contract 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 manufacturers 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 revenue and achieve acceptable margins. Failure to maintain these factors could have a
significant adverse impact on the demand for exclusive brand products and the profits 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. 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;