Best Buy 2015 Annual Report Download - page 59

Download and view the complete annual report

Please find page 59 of the 2015 Best Buy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 111

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111

Table of Contents
52
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
In addition to the risks inherent in our operations, we are exposed to certain market risks.
Foreign Currency Exchange Rate Risk
We have market risk arising from changes in foreign currency exchange rates related to our International segment operations.
On a limited basis, we utilize foreign exchange forward contracts to manage foreign currency exposure to certain forecast
inventory purchases, recognized receivable and payable balances and our investment in our Canadian operations. Our primary
objective in holding derivatives is to reduce the volatility of net earnings and cash flows, as well as of the net asset value
associated with changes in foreign currency exchange rates. Our foreign currency risk management strategy includes both
hedging instruments and derivatives that are not designated as hedging instruments, which generally have terms of up to 12
months. The aggregate notional amount related to our foreign exchange forward contracts outstanding at January 31, 2015, and
February 1, 2014, was $409 million and $157 million, respectively. The fair value recorded on our Consolidated Balance Sheets
related to our foreign exchange forward contracts outstanding at January 31, 2015, and February 1, 2014, $30 million and $(3)
million, respectively. The amount recorded in our Consolidated Statements of Earnings related to all contracts settled and
outstanding was a gain of $12 million in fiscal 2015 and a gain of $5 million in fiscal 2014.
The strength of the U.S. dollar compared to the Canadian dollar and Mexican peso since the end of fiscal 2014 had a negative
overall impact on our revenue as these currencies translated into fewer U.S. dollars. We estimate that foreign currency
exchange rate fluctuations had a net unfavorable impact on our revenue in fiscal 2015 of approximately $308 million and a net
unfavorable impact on earnings of $4 million. In fiscal 2014, the impact of foreign currency exchange rate fluctuations had an
unfavorable impact on our revenue of approximately $203 million and an unfavorable impact on earnings of $6 million.