Best Buy 2008 Annual Report Download - page 99

$ in millions, except per share amounts or as otherwise noted
estimates, will approximate $72 annually over the initial
10. Contingencies and Commitments
lease terms. These minimum rentals are reported in the
Contingencies future minimum lease payments included in Note 6,
On December 8, 2005, a purported class action lawsuit Leases.
captioned, Jasmen Holloway, et al. v. Best Buy Co., Inc.,In April 2008, CompUSA, Inc. accepted our offer to
was filed in the U.S. District Court for the Northern District acquire the rights to 17 leases for $13.5. Pending
of California alleging we discriminate against women and approval from the landlords, we expect to take possession
minority individuals on the basis of gender, race, color of all sites by June 2008. The total square footage related
and/or national origin with respect to our employment to these leases is approximately 453,000 square feet, or
policies and practices. The action seeks an end to an average of approximately 27,000 square feet per site.
discriminatory policies and practices, an award of back The remaining minimum lease terms range from 3 to
and front pay, punitive damages and injunctive relief, 14 years, however, all leases include renewal options for
including rightful place relief for all class members. At an additional 5 to 20 years. The sites are located
March 1, 2008, no accrual had been established as it throughout the U.S., primarily in western states, and we
was not possible to estimate the possible loss or range of anticipate utilizing these sites over the next two fiscal years
loss because this matter had not advanced to a stage for planned new stores for both Best Buy and Pacific Sales.
where we could make any such estimate. We believe the
allegations are without merit and intend to defend this 11. Related Party Transactions
action vigorously.
Elliot S. Kaplan, a director, is a partner with the law firm of
We are involved in various other legal proceedings arising Robins, Kaplan, Miller & Ciresi L.L.P. (‘‘RKMC’’), which
in the normal course of conducting business. We believe serves as our primary outside general counsel. Our Board
the amounts provided in our consolidated financial periodically reviews the fees paid to RKMC to ensure that
statements, as prescribed by GAAP, are adequate in light they are competitive with fees charged by other law firms
of the probable and estimable liabilities. The resolution of comparable in size and expertise. We paid legal fees of
those other proceedings is not expected to have a material $8, $9 and $7 to RKMC during fiscal 2008, 2007 and
impact on our results of operations or financial condition. 2006, respectively. Theses amounts exclude legal fees of
$8 and $4 paid to RKMC by our insurer in fiscal 2008
Commitments and 2007, respectively. There were no legal fees paid to
We engage Accenture LLP (‘‘Accenture’’) to assist us with RKMC by our insuser in fiscal 2006. The Board has
improving our operational capabilities and reducing our approved the transactions and our continued business
costs in the information systems, procurement and human dealings with RKMC.
resources areas. Our future contractual obligations to We purchase certain store fixtures from Phoenix
Accenture are expected to range from $76 to $272 per Fixtures, Inc. (‘‘Phoenix’’), a company owned by the
year through 2012, the end of the periods under contract. brother of Richard M. Schulze, our Chairman of the
Prior to our engagement of Accenture, a significant portion Board. The decision to conduct business with Phoenix was
of these costs were incurred as part of normal operations. based on both qualitative and quantitative factors
We had outstanding letters of credit for purchase including product quality, pricing, customer service and
obligations with a fair value of $90 at March 1, 2008. design flexibility. Our Board reviewed our transactions with
Phoenix and has approved the transactions and our
At March 1, 2008, we had commitments for the purchase
continued business dealings with Phoenix. The total
and construction of facilities valued at approximately $45.
amounts paid to Phoenix during fiscal 2008, 2007 and
Also, at March 1, 2008, we had entered into lease
2006 were $20, $19 and $18, respectively.
commitments for land and buildings for 104 future
locations. These lease commitments with real estate We lease two of our U.S. Best Buy stores from Mr. Schulze.
developers provide for minimum rentals ranging from 5 to Aggregate rents paid for the two stores leased from
20 years, which if consummated based on current cost Mr. Schulze during fiscal 2008, 2007 and 2006 were $1,
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