Best Buy 2016 Annual Report Download - page 111

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The following table includes the calculation of Non-GAAP ROIC for total operations, which includes both continuing and
discontinued operations (non-GAAP financial measures), along with a reconciliation to the calculation of return on total
assets ("ROA") (GAAP financial measure) for the periods presented.
Calculation of Non-GAAP Return on Invested Capital
1
February 2, 2013
2
January 30, 2016
2
Net Operating Profit After Taxes (NOPAT)
Operating income - continuing operations $ 162 $ 1,375
Operating income (loss) - discontinued operations (7) 90
Total operating income $ 155 $ 1,465
Add: Operating lease interest
3
587 397
Add: Investment income 32 14
Less: Net loss attributable to noncontrolling interest (NCI) (16) -
Less: Income taxes
4
(763) (771)
NOPAT $ (5) $ 1,105
Add: Restructuring charges, impairments and other adjustments
5
1,340 193
Add: NCI impact of BBYM profit share buyout, restructuring
charges and impairments
(3)
-
Non-GAAP NOPAT $ 1,332 $ 1,298
Average Invested Capital
Total assets $ 16,551 $ 13,995
Less: Excess cash
6
(554) (3,068)
Add: Capitalized operating lease obligations
7
9,397 6,345
Total liabilities (12,485) (9,365)
Exclude: Debt
8
2,140 1,648
Less: Noncontrolling interests (627) -
Average invested capital $ 14,422 $ 9,555
Non-GAAP return on invested capital (ROIC) 9.2% 13.6%
Calculation of Return on Assets
1
February 2, 2013
2
January 30, 2016
2
Net earnings including noncontrolling interests $ (233) $ 897
Total assets 16,551 13,995
Return on assets (ROA) (1.4%) 6.4%
(1) The calculations of return on invested capital and return on assets use total operations, which includes both continuing and
discontinued operations.
(2) Income statement accounts represent the activity for the 12 months ended as of each of the balance sheet dates. Balance sheet
accounts represent the average account balances for the 4 quarters ended as of each of the balance sheet dates.
(3) Operating lease interest represents the add-back to operating income driven by the capitalization of our lease obligations using the
multiple of eight times annual rent expense and represents 50 percent of our annual rental expense, which we consider to be
appropriate for our lease portfolio.
(4) Income taxes are calculated using a blended statutory rate at the enterprise level based on statutory rates from the countries in which
we do business.
(5) Includes all restructuring charges in costs of goods sold and operating expenses, goodwill and trade name impairments and non-
restructuring impairments.
(6) Cash and cash equivalents and short-term investments are capped at the greater of 1% of revenue or actual amounts on hand. The
cash and cash equivalents and short-term investments in excess of the cap are subtracted from our calculation of average invested
capital to show their exclusion from total assets.
(7) The multiple of eight times annual rental expense in the calculation of our capitalized operating lease obligations is the multiple used
for the retail sector by one of the nationally recognized credit rating agencies that rates our creditworthiness, and we consider it to be an
appropriate multiple for our lease portfolio.
(8) Debt includes short-term debt, current portion of long-term debt and long-term debt and is added back to our calculation of average
invested capital to show its exclusion from total liabilities.