Best Buy 2016 Annual Report Download - page 53

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45
At January 30, 2016 and January 31, 2015, we had $178 million and $69 million, respectively, outstanding under financing
lease obligations. The increase in financing lease obligations was primarily due to renewals on existing leases.
Share Repurchases and Dividends
We repurchase our common stock in the open market pursuant to programs approved by our Board. We may repurchase our
common stock for a variety of reasons, such as acquiring shares to offset dilution related to equity-based incentives, including
stock options and our employee stock purchase plan, and optimizing our capital structure. We consider several factors in
determining whether to make share repurchases including, among other things, our cash needs, the availability of funding, our
future business plans and the market price of our stock. If we decide to make future share repurchases, we expect that cash
provided by future operating activities, as well as available cash and cash equivalents, will be the sources of funding for our
share repurchases.
We have a $5.0 billion share repurchase program that was authorized by our Board in June 2011. There is no expiration date
governing the period over which we can repurchase shares under the June 2011 share repurchase program.
At the end of fiscal 2015, $4.0 billion under this program was available for share repurchases. In fiscal 2016 we repurchased
and retired 32.8 million shares at a cost of $1.0 billion, which included the use of an accelerated share repurchase ("ASR")
contract. Refer to Note 7, Shareholders' Equity, of the Notes to Consolidated Financial Statements, included in Item 8,
Financial Statements and Supplementary Data, of this Annual Report on Form 10-K for further information regarding the ASR.
At the end of fiscal 2016, $3.0 billion of the $5.0 billion share repurchase program authorized by our Board in June 2011 was
available for future share repurchases. Repurchased shares have been retired and constitute authorized but unissued shares.
In fiscal 2004, our Board initiated the payment of a regular quarterly cash dividend on our common stock. A quarterly cash
dividend has been paid in each subsequent quarter. The payment of cash dividends is subject to customary legal and contractual
restrictions. During fiscal 2016, we made four cash dividend payments totaling $1.43 per share, or $499 million in the
aggregate. During fiscal 2015, we made four cash dividend payments totaling $0.72 per share, or $251 million in the aggregate.
On February 25, 2016, we announced a plan to return capital to shareholders. The plan includes a special dividend of $0.45 per
share, or approximately $145 million, and a 22% increase in our regular quarterly dividend to $0.28 per share. We plan to
continue share repurchases under the June 2011 program, with the intent to repurchase $1.0 billion in shares over the next two
years.
Other Financial Measures
Our current ratio, calculated as current assets divided by current liabilities, was 1.4 as of January 30, 2016, compared to 1.5 at
the end of fiscal 2015. The lower current ratio in fiscal 2016 was driven by an increase in current liabilities due to our 2016
Notes being due in fiscal 2017 and a decrease in current assets due to a lower cash balance.
Our debt to earnings ratio was 2.1 as of January 30, 2016, compared to 1.3 as of January 31, 2015, due primarily to a decrease
in net earnings from continuing operations in fiscal 2016 compared to the same period in the prior year. Our adjusted debt to
EBITDAR ratio, which includes capitalized operating lease obligations in its calculation, was 2.6 and 2.8 as of January 30,
2016 and January 31, 2015, respectively. The decrease in the ratio was due to a decrease in capitalized operating lease
obligations and an increase in EBITDAR.
Our adjusted debt to EBITDAR ratio is considered a non-GAAP financial measure and should be considered in addition to,
rather than as a substitute for, the most directly comparable ratio determined in accordance with GAAP. We have included this
information in our MD&A as we view the adjusted debt to EBITDAR ratio as an important indicator of our creditworthiness.
Furthermore, we believe that our adjusted debt to EBITDAR ratio is important for understanding our financial position and
provides meaningful additional information about our ability to service our long-term debt and other fixed obligations and to
fund our future growth. We also believe our adjusted debt to EBITDAR ratio is relevant because it enables investors to compare
our indebtedness to that of retailers who own, rather than lease, their stores. Our decision to own or lease real estate is based on
an assessment of our financial liquidity, our capital structure, our desire to own or to lease the location, the owner’s desire to
own or to lease the location, and the alternative that results in the highest return to our shareholders.
Our adjusted debt to EBITDAR ratio is calculated as follows: