Best Buy 2016 Annual Report Download - page 55

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The following table presents information regarding our contractual obligations by fiscal year ($ in millions):
Payments Due by Period
Contractual Obligations Total
Less Than
1 Year 1-3 Years 3-5 Years
More Than
5 Years
Long-term debt obligations(1) $ 1,518 $ 350 $ 513 $ — $ 655
Capital lease obligations 46 14 15 5 12
Financing lease obligations 212 42 64 40 66
Interest payments 242 59 107 76 —
Operating lease obligations(2) 3,363 813 1,280 749 521
Purchase obligations(3) 2,033 1,944 73 16 —
Unrecognized tax benefits(4) 469
Deferred compensation(5) 34
Total $ 7,917 $ 3,222 $ 2,052 $ 886 $ 1,254
Note: For additional information refer to Note 5, Debt; Note 8, Leases; Note 10, Income Taxes; and Note 12, Contingencies and Commitments, of the Notes to
Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.
(1) Represents principal amounts only and excludes interest rate swap valuation adjustments.
(2) Operating lease obligations do not include payments to landlords covering real estate taxes and common area maintenance. These charges, if included,
would increase total operating lease obligations by $1.1 billion at January 30, 2016.
(3) Purchase obligations include agreements to purchase goods or services that are enforceable, are legally binding and specify all significant terms,
including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction.
Purchase obligations do not include agreements that are cancelable without penalty. Additionally, although they are not legally binding agreements, we
included open purchase orders in the table above. Substantially all open purchase orders are fulfilled within 30 days.
(4) Unrecognized tax benefits relate to uncertain tax positions. As we are not able to reasonably estimate the timing of the payments or the amount by which
the liability will increase or decrease over time, the related balances have not been reflected in the "Payments Due by Period" section of the table.
(5) Included in Long-term liabilities on our Consolidated Balance Sheet at January 30, 2016, was a $34 million obligation for deferred compensation. As the
specific payment dates for the deferred compensation are unknown, the related balances have not been reflected in the "Payments Due by Period" section
of the table.
Additionally, we have $1.25 billion in undrawn capacity on our credit facilities at January 30, 2016, which if drawn upon,
would be included as short-term debt in our Consolidated Balance Sheets.
Critical Accounting Estimates
Our consolidated financial statements are prepared in accordance with GAAP. The preparation of our financial statements
requires us to make assumptions and estimates about future events, and apply judgments that affect the reported amounts of
assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates and judgments on
historical experience, current trends and other factors that management believes to be relevant at the time our consolidated
financial statements are prepared. On a regular basis, we review the accounting policies, assumptions, estimates and judgments
to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and
their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such
differences could be material.
Our significant accounting policies are discussed in Note 1, Summary of Significant Accounting Policies, of the Notes to
Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report
on Form 10-K. We believe that the following accounting estimates are the most critical to aid in fully understanding and
evaluating our reported financial results. These estimates require our most difficult, subjective or complex judgments, because
they relate to matters that are inherently uncertain. We have reviewed these critical accounting estimates and related disclosures
with the Audit Committee of our Board.
Except where noted, we have not made any material changes to the accounting methodologies for the areas described below.
Inventory
We value our inventory at the lower of cost or market through the establishment of markdown and inventory loss adjustments.
Markdown adjustments reflect the excess of cost over the net proceeds we expect to realize from the ultimate sale or other