Best Buy 2016 Annual Report Download - page 35

27
comprised of all operations within the U.S. and its districts and territories. The International segment is comprised of all
operations outside the U.S. and its territories.
Throughout this MD&A, we refer to comparable sales. Our comparable sales calculation compares revenue from stores,
websites and call centers operating for at least 14 full months, as well as revenue related to certain other comparable sales
channels for a particular period to the corresponding period in the prior year. Relocated stores, as well as remodeled, expanded
and downsized stores closed more than 14 days, are excluded from the comparable sales calculation until at least 14 full
months after reopening. Acquisitions are included in the comparable sales calculation beginning with the first full quarter
following the first anniversary of the date of the acquisition. The calculation of comparable sales excludes the impact of
revenue from discontinued operations and the effect of fluctuations in foreign currency exchange rates (applicable to our
International segment only). The Canadian brand consolidation, which includes the permanent closure of 66 Future Shop
stores, the conversion of 65 Future Shop stores to Best Buy stores and the elimination of the Future Shop website, has a
material impact on a year-over-year basis on the remaining Canadian retail stores and the website. As such, all Canadian store
and website revenue has been removed from the comparable sales base and the International segment no longer has a
comparable metric in fiscal 2016 and the Enterprise comparable sales equals the Domestic segment comparable sales.
Enterprise comparable sales for periods presented prior to fiscal 2016 include revenue from our International segment.
The method of calculating comparable sales varies across the retail industry. As a result, our method of calculating comparable
sales may not be the same as other retailers' methods.
In our discussions of the operating results of our consolidated business and our International segment, we sometimes refer to
the impact of changes in foreign currency exchange rates or the impact of foreign currency exchange rate fluctuations, which
are references to the differences between the foreign currency exchange rates we use to convert the International segment’s
operating results from local currencies into U.S. dollars for reporting purposes. The impact of foreign currency exchange rate
fluctuations is typically calculated as the difference between current period activity translated using the current period’s
currency exchange rates and the comparable prior-year period’s currency exchange rates. We use this method to calculate the
impact of changes in foreign currency exchange rates for all countries where the functional currency is not the U.S. dollar.
In our discussions of the operating results below, we sometimes refer to the impact of net new stores on our results of
operations. The key factors that dictate the impact that the net new stores have on our operating results include: (i) store
opening and closing decisions; (ii) the size and format of new stores, as we operate stores ranging from approximately 1,000
square feet to approximately 50,000 square feet; (iii) the length of time the stores were open during the period; and (iv) the
overall success of new store launches.
When assessing our performance in consumer electronics categories against other retailers, we often reference The NPD
Group's ("NPD") Weekly Tracking Service for the appropriate period. NPD defines the consumer electronics industry as
including televisions, desktop and notebook computers, tablets not including Kindle, digital imaging and other categories. Sales
of these products represent approximately 65% of our Domestic segment revenue in fiscal 2016. The data does not include
mobile phones, appliances, services, gaming, Apple watch, movies or music.
This MD&A includes financial information prepared in accordance with accounting principles generally accepted in the United
States ("GAAP"), as well as certain adjusted or non-GAAP financial measures such as non-GAAP operating income, non-
GAAP effective tax rate, non-GAAP net earnings from continuing operations, non-GAAP diluted earnings per share from
continuing operations and adjusted debt to earnings before goodwill impairment, interest, income taxes, depreciation,
amortization and rent ("EBITDAR") ratio. Generally, a non-GAAP financial measure is a numerical measure of financial
performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the
most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP financial measures
should be viewed as a supplement to, and not a substitute for, financial measures presented in accordance with GAAP. Non-
GAAP measures as presented herein may not be comparable to similarly titled measures used by other companies.
We believe that the non-GAAP measures described above provide meaningful supplemental information to assist shareholders
in understanding our financial results and assessing our prospects for future performance. Management believes adjusted
operating income, adjusted effective tax rate, adjusted net earnings from continuing operations and adjusted diluted earnings
per share from continuing operations are important indicators of our operations because they exclude items that may not be
indicative of, or are unrelated to, our core operating results and provide a baseline for analyzing trends in our underlying
businesses. Management makes standard adjustments for items such as restructuring charges, goodwill impairments, non-
restructuring asset impairments and gains or losses on investments, as well as adjustments for other items that may arise during
the period and have a meaningful impact on comparability. Refer to the Non-GAAP Financial Measures section below for the
detailed reconciliation of items that impacted the non-GAAP measures in the presented periods. Management believes our