Best Buy 2012 Annual Report Download - page 17

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Our exclusive brands products are subject to several additional product, supply chain and legal risks, which could have
a material adverse impact on our business.
Sales of our exclusive brands, which primarily include Insignia, Dynex, Init, Geek Squad and Rocketfish branded products,
represent an important component of our revenue. Most of these products are manufactured under contract by vendors based in
southeastern Asia. This arrangement exposes us to the following additional potential risks, which could materially adversely
affect our reputation, financial condition and operating results:
• We have greater exposure and responsibility to the consumer for warranty replacements and repairs as a result of
product defects, as we generally have less recourse to contracted manufacturers for such warranty liabilities;
• We may be subject to regulatory compliance and/or product liability claims relating to personal injury, death or
property damage caused by such products, some of which may require us to take significant actions such as product
recalls;
• We may experience disruptions in the manufacturing or the logistics within the manufacturing environment in
southeastern Asia caused by inconsistent and unanticipated order patterns, our inability to develop long-term
relationships with key factories or unforeseen natural disasters;
• We are subject to developing and often-changing labor and environmental laws for the manufacture of products in
foreign countries, and we may be unable to conform to new rules or interpretations in a timely manner;
• We may be subject to claims by technology owners if we inadvertently infringe upon their patents or other intellectual
property rights, or if we fail to pay royalties owed on our products; and
• We may be unable to obtain or adequately protect our patents and other intellectual property rights on our products,
the new features of our products and/or our processes.
Maintaining consistent product quality, availability and competitive pricing of our exclusive brands products for our customers
is critical to building and maintaining customer and brand loyalty. Changes in consumer acceptance or confidence relating to
our exclusive brands products could materially reduce our overall revenues and negatively affect operating results.
We are subject to certain statutory, regulatory and legal developments which could have a material adverse impact on
our business.
Our statutory, regulatory and legal environment exposes us to complex compliance and litigation risks that could materially
adversely affect our operations and financial results. The most significant compliance and litigation risks we face are:
• The difficulty of complying with sometimes conflicting statutes and regulations in local, national or international
jurisdictions;
• The impact of new or changing statutes and regulations including, but not limited to, financial reform, environmental
requirements, National Labor Relations Board rule changes, health care reform, corporate governance matters and/or
other as yet unknown legislation, that could affect how we operate and execute our strategies as well as alter our
expense structure;
• The impact of changes in tax laws (or interpretations thereof by courts and taxing authorities) and accounting
standards; and
• The impact of litigation trends, including class action lawsuits involving consumers and shareholders, and labor and
employment matters.
Defending against lawsuits and other proceedings may involve significant expense and divert management's attention and
resources from other matters. Furthermore, pending regulatory rules regarding requirements to disclose efforts to identify the
origin of “conflict minerals” in certain portions of our supply chain could increase the cost of doing business, adversely
affecting our results of operations.
Changes to the National Labor Relations Act or other labor-related statutes or regulations could have a material
adverse impact on our business.
The National Labor Relations Board continually considers changes to labor regulations, many of which could significantly
impact the nature of labor relations in the U.S. and how union elections and contract negotiations are conducted. In 2011, the
definition of a bargaining unit changed, making it possible for smaller groups of employees to organize labor unions.
Furthermore, new representation election rules – which became effective on April 30, 2012 – have streamlined the election