Best Buy 2011 Annual Report Download - page 18

including labor and environmental laws, and otherwise be certified as meeting our required vendor standards of conduct.
Our ability to find qualified vendors who meet our standards and supply products in a timely and efficient manner is a
significant challenge, especially with respect to goods sourced from outside the U.S. Political or financial instability,
merchandise quality issues, product safety concerns, trade restrictions, work stoppages, tariffs, foreign currency exchange
rates, transportation capacity and costs, inflation, civil unrest, natural disasters, outbreaks of pandemics and other factors
relating to foreign trade are beyond our control. These and other issues affecting our vendors could materially adversely
affect our revenue and gross profit.
Our exclusive brands products are subject to several additional product, supply chain and legal risks, which
could have a material adverse impact on our business.
Sales of our exclusive brands, which primarily include Insignia, Dynex, Init, Geek Squad and Rocketfish branded products,
represent a growing component of our revenue. Most of these products are manufactured under contract by vendors
based in southeastern Asia. This arrangement exposes us to the following additional potential risks, which could materially
adversely affect our reputation, financial condition and operating results:
• We have greater exposure and responsibility to the consumer for warranty replacements and repairs as a result of
product defects, as we generally have no recourse to contracted manufacturers for such warranty liabilities;
• We may be subject to regulatory compliance and/or product liability claims relating to personal injury, death or
property damage caused by such products, some of which may require us to take significant actions such as
product recalls;
• We may experience disruptions in the manufacturing or the logistics within the manufacturing environment in
southeastern Asia caused by inconsistent and unanticipated order patterns or if we are unable to develop long-term
relationships with key factories;
• 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 owners if we inadvertently infringe upon their patents or other
intellectual property rights, or if we fail to pay royalties owed on our products; and
• We may be unable to obtain or adequately protect our patents and other intellectual property rights on our
products, the new features of our products and/or our processes.
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 environment exposes us to complex compliance and litigation risks that could
materially adversely affect our operations and financial results. 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;
• The impact of new or changing statutes and regulations including, but not limited to, financial reform,
environmental requirements, labor reform, health care reform, corporate governance matters and/or other as yet
unknown legislation, that could affect how we operate and execute our strategies as well as alter our expense
structure;
• The impact of changes in tax laws (or interpretations thereof by courts and taxing authorities) and accounting
standards; and
• The impact of litigation trends, including class action lawsuits involving consumers and shareholders, and labor and
employment matters.
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