Best Buy 2012 Annual Report Download - page 48

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48
The increase in net loss from discontinued operations attributable to noncontrolling interests in fiscal 2012 compared to fiscal
2011 was the result of increased losses from our large-format Best Buy branded stores in the U.K. due to restructuring activities
undertaken to close the stores. The U.K. stores are part of Best Buy Europe, our consolidated subsidiary in which Carphone
Warehouse Group plc ("Carphone Warehouse") holds a 50% noncontrolling interest. The increase in net loss from discontinued
operations attributable to noncontrolling interest in fiscal 2011 compared to fiscal 2010 was the result of increased operating
losses from our large-format Best Buy branded stores in the U.K.
Net Earnings from Continuing Operations Attributable to Noncontrolling Interests
The increase in net earnings from continuing operations attributable to noncontrolling interests in fiscal 2012 compared to
fiscal 2011 was due to the strategic changes in respect of Best Buy Europe announced in November 2011. The strategic changes
included the Mobile buy-out, which was completed during the fourth quarter of fiscal 2012. The $1.3 billion payment related to
the Mobile buy-out was presented within the Net (earnings) from continuing operations attributable to noncontrolling interests
line in the Consolidated Statements of Earnings. In the Consolidated Statement of Cash Flows, the payment to Carphone
Warehouse is included within the Payment to noncontrolling interest line, as part of cash flows from financing activities. Refer
to Note 2, Profit Share Buy-Out, 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 about the Mobile buy-out.
The increase in net earnings attributable to noncontrolling interests in fiscal 2011 compared to fiscal 2010 was due to higher net
earnings of Best Buy Europe.
Impact of Inflation and Changing Prices
Highly competitive market conditions and the general economic environment minimized inflation's impact on the selling prices
of our products and services, and on our expenses. In addition, price deflation and the continued commoditization of key
technology products limited our ability to increase our gross profit rate.
Liquidity and Capital Resources
Summary
We continue to closely manage our liquidity and capital resources. The key variables we use to manage our liquidity
requirements are the level of investment to support our growth strategies, discretionary SG&A spending, capital expenditures,
credit facilities and short-term borrowing arrangements, working capital management and our share repurchase program.
Capital expenditures, particularly with respect to opening new stores and remodeling existing stores, is a component of our
cash flow and capital management strategy which, to a large extent, we can adjust in response to economic and other changes
in our business environment. Our capital expenditures in fiscal 2012 remained relatively consistent with capital expenditures in
fiscal 2011, and we expect this trend to continue in fiscal 2013. We plan to continue to invest in existing businesses and
facilities, with a focus on profitable growth areas such as Best Buy Mobile and our Five Star operations in China, as well as
modifying certain existing stores to our new pilot Connected Store format. We also plan to to continue upgrading our
information technology systems and capabilities throughout fiscal 2013.
We ended fiscal 2012 with $1.2 billion of cash and cash equivalents and short-term investments, compared to $1.1 billion at the
end of fiscal 2011. The increase in cash and cash equivalents was due primarily to increased cash generated from operations
and the issuance of $1.0 billion of long-term debt securities in the first quarter of fiscal 2012, partially offset by the $1.5 billion
of cash utilized in fiscal 2012 to repurchase shares of our common stock, as well as the $1.3 billion payment for the Mobile
buy-out. Working capital, the excess of current assets over current liabilities, was $1.4 billion at the end of fiscal 2012, a
decrease from $1.8 billion at the end of fiscal 2011. Operating cash flow increased $2.1 billion to $3.3 billion in fiscal 2012
compared to fiscal 2011, while capital expenditures remained relatively consistent.