Best Buy 2011 Annual Report Download - page 51

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Operating Activities
The decrease in cash provided by operating activities in fiscal 2011 compared to fiscal 2010 was due primarily to an
increase in cash used for accounts payable, as well as a decrease in cash provided by accounts receivable. The increase
in cash used for accounts payable was due primarily to the timing and level of inventory receipts compared to vendor
payments as we approached fiscal 2011 year-end. As we reduced inventory receipts in January and February 2011 in
response to lower holiday sales trends, our total accounts payable declined. Cash used for inventory was also lower in
fiscal 2011 compared to fiscal 2010 because the fiscal 2011 year-over-year increase in inventory was lower than in the
prior year due to focused efforts to manage inventory levels in light of comparable store sales declines. The decrease in
cash provided by accounts receivable was due primarily to the timing of several large payments due from our vendors at
the end of fiscal 2011. Other fluctuations in cash from operating activities were due primarily to higher incentive
compensation payments in fiscal 2011 (relating to our fiscal 2010 performance) and other miscellaneous timing
differences.
The increase in cash provided by operating activities in fiscal 2010 compared to 2009 was due primarily to increases in
cash provided by net earnings, accounts receivable, other liabilities and accrued income taxes, partially offset by an
increase in cash used for merchandise inventories. The increase in cash provided by accounts receivable was due primarily
to the timing of receipt of customer and network carrier receivables in our Europe business, as well as network carrier
receivables associated with Best Buy Mobile in the U.S. The increases in cash provided by other liabilities were due
primarily to the timing and magnitude of transaction taxes payable in various jurisdictions, as well as accrued bonuses.
Finally, the increase in cash provided by accrued income taxes was due to the timing and magnitude of tax accruals as a
result of higher net earnings. These changes were largely offset by the increase in cash used for merchandise inventories
due to increased inventory levels in fiscal 2010, notably in notebook computers and flat-panel televisions, as a result of
increased consumer demand and a strengthening economy, compared to fiscal 2009 when we tightened inventory levels
amidst a weaker economy and lower holiday sales.
Investing Activities
Cash used in investing activities was relatively flat in fiscal 2011 compared to fiscal 2010, as an increase in cash used for
capital expenditures was offset by an increase in cash provided by the sale of a portion of our auction rate securities
(‘‘ARS’’) during fiscal 2011. See Auction Rate Securities and Restricted Cash and Capital Expenditures below for additional
information.
The decrease in cash used in investing activities in fiscal 2010 compared to fiscal 2009 was due primarily to the
$2.2 billion of net cash associated with the acquisition of businesses in fiscal 2009, largely Best Buy Europe. Also
contributing to the decrease was a decrease in capital expenditures to $615 million in fiscal 2010, compared to
$1.3 billion in fiscal 2009.
Financing Activities
The increase in cash used in financing activities in fiscal 2011 compared to fiscal 2010 was primarily the result of
$1.2 billion of cash we used to repurchase our common stock in fiscal 2011. We had no repurchases in fiscal 2010.
The change in cash used in financing activities in fiscal 2010, compared to cash provided by financing activities in fiscal
2009, was primarily the result of a $1.1 billion decrease in borrowings, net of repayments, compared to the prior year.
Larger borrowings in the prior year were associated with the acquisition of Best Buy Europe and normal working capital
needs. In addition, our increased operating cash flows in fiscal 2010 allowed us to reduce our short-term borrowings.
Sources of Liquidity
Funds generated by operating activities, available cash and cash equivalents, and our credit facilities continue to be our
most significant sources of liquidity. We believe our sources of liquidity will be sufficient to sustain operations and to
finance anticipated expansion plans and strategic initiatives in fiscal 2012. However, in the event our liquidity is
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