Best Buy 2016 Annual Report Download - page 54

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46
Adjusted debt to EBITDAR = Adjusted debt
EBITDAR
The most directly comparable GAAP financial measure to our adjusted debt to EBITDAR ratio is our debt to net earnings ratio,
which excludes capitalized operating lease obligations from debt in the numerator of the calculation and does not adjust net
earnings in the denominator of the calculation.
The following table presents a reconciliation of our debt to net earnings ratio to our adjusted debt to EBITDAR ratio for
continuing operations ($ in millions):
2016(1) 2015(1)
Debt (including current portion) $ 1,734 $ 1,613
Capitalized operating lease obligations (8 times rental expense)(2) 6,266 6,653
Adjusted debt $ 8,000 $ 8,266
Net earnings from continuing operations $ 807 $ 1,246
Interest expense, net 65 63
Income tax expense 503 141
Depreciation and amortization expense(3) 656 689
Rental expense 783 832
Restructuring charges and other(4) 263 —
EBITDAR $ 3,077 $ 2,971
Debt to net earnings ratio 2.1 1.3
Adjusted debt to EBITDAR ratio 2.6 2.8
(1) Debt is reflected as of the balance sheet dates for each of the respective fiscal periods, while rental expense and the other components of EBITDAR
represent activity for the 12 months ended January 30, 2016 and January 31, 2015.
(2) 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 rate our creditworthiness, and we consider it to be an appropriate multiple for our lease
portfolio.
(3) Depreciation and amortization expense includes impairments of fixed assets, investments and intangible assets (including impairments associated with
our fiscal restructuring activities).
(4) Includes the impact of restructuring charges, non-restructuring asset impairments and CRT litigation settlements.
Off-Balance-Sheet Arrangements and Contractual Obligations
Other than operating leases, we do not have any off-balance-sheet financing. A summary of our operating lease obligations by
fiscal year is included in the "Contractual Obligations" table below. Additional information regarding our operating leases is
available in Item 2, Properties, and Note 8, Leases, of the Notes to Consolidated Financial Statements, included in Item 8,
Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.