Best Buy 2008 Annual Report Download - page 20

Financial Condition and Results of Operations, of this investments and cash flows generated from operations. In
Annual Report on Form 10-K. addition, our revolving credit facilities are available for
additional working capital needs or investment
Intellectual Property opportunities.
We believe we own valuable intellectual property including Customers
trademarks, service marks and tradenames, some of which
are of material importance to our business, and include We do not have a significant concentration of sales with
‘‘Best Buy,’’ the ‘‘Yellow Tag’’ logo, ‘‘Best Buy Mobile,’’ any individual customer and, therefore, the loss of any one
‘‘Dynex,’’ ‘‘Five Star,’’ ‘‘Future Shop,’’ ‘‘Geek Squad,’’ customer would not have a material impact on our
‘‘Insignia,’’ ‘‘Magnolia Audio Video,’’ ‘‘Pacific Sales,’’ business. No single customer has accounted for 10% or
‘‘Rocketfish’’ and ‘‘Speakeasy.’’ Some of our intellectual more of our total revenue.
property is the subject of numerous U.S. and foreign
trademark and service mark registrations. Our trademark Backlog
and service mark registrations in the U.S. generally have Our stores, call centers and online shopping sites do not
10 year renewable terms. We believe our intellectual have a material amount of backlog orders.
property has significant value and is an important factor in
the marketing of our company, our stores and our Web Government Contracts
sites. We also believe we own valuable intellectual
No material portion of our business is subject to
property for which we have patents pending. We are not
renegotiation of profits or termination of contracts or
aware of any facts that could negatively impact our
subcontracts at the election of any government or
continuing use of any of our intellectual property.
government agencies or affiliates.
In accordance with accounting principles generally
accepted in the United States (‘‘GAAP’’), our balance Competition
sheets include the cost of acquired intellectual property
Our stores compete against other consumer electronics
only. The only material acquired intellectual properties
retailers, specialty home office retailers, mass merchants,
presently included in our balance sheets are the Future
home-improvement superstores and a number of
Shop, Five Star, Pacific Sales and Speakeasy tradenames,
direct-to-consumer alternatives. Our stores also compete
which had a total carrying value of $97 million at the end
against independent dealers, regional chain discount
of fiscal 2008. The values of these tradenames are based
stores, wholesale clubs, video rental stores and other
on the continuation of the Future Shop, Five Star, Pacific
specialty retail stores. Mass merchants continue to increase
Sales and Speakeasy brands. We currently classify these
their assortment of consumer electronics products,
tradenames as indefinite-lived intangible assets. If we were
primarily those that are less complex to sell, install and
to abandon the Future Shop, Five Star, Pacific Sales or
operate, and have been expanding their product offerings
Speakeasy brand, we would incur an impairment charge
into higher-end categories. Similarly, large
based on the then-carrying value of the associated
home-improvement retailers are expanding their
tradename.
assortment of appliances. In addition, consumers are
increasingly downloading entertainment and computer
Seasonality
software directly via the Internet.
Our business, like that of many U.S. retailers, is seasonal.
We compete principally on the basis of customer service;
Historically, we have realized more of our revenue and
installation and support services; store environment,
earnings in the fiscal fourth quarter, which includes the
location and convenience; product assortment and
majority of the holiday shopping season in the U.S. and
availability; value pricing; and financing alternatives.
Canada, than in any other fiscal quarter.
We believe our store experience, broad product
Working Capital assortment, store formats and brand marketing strategies
differentiate us from most competitors by positioning our
We fund our business operations through a combination
stores as the preferred destination for new technology and
of available cash and cash equivalents, short-term
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