Best Buy 2014 Annual Report Download - page 51

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46
Our adjusted debt to EBITDAR ratio is calculated as follows:
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 ($ in
millions):
2014(1) 2013(1)
Debt (including current portion)(2) $ 1,657 $ 1,694
Capitalized operating lease obligations (8 times rental expense)(3) 7,484 7,664
Adjusted debt $ 9,141 $ 9,358
Net earnings (loss) from continuing operations including noncontrolling interests(4) $ 689 $ (270)
Goodwill impairment — 822
Interest expense, net 53 90
Income tax expense 398 349
Depreciation and amortization expense(5) 692 1,235
Rental expense 935 958
EBITDAR $ 2,767 $ 3,184
Debt to net earnings ratio 2.4 (6.3)
Adjusted debt to EBITDAR ratio 3.3 2.9
(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 February 1, 2014 and February 2, 2013.
(2) Excludes debt related to our Best Buy Europe operations. As described in Note 4, Discontinued Operations, of the Notes to Consolidated Financial
Statements, included in Item 8, Financial Statements and Supplementary Data, we sold our interest in Best Buy Europe on June 26, 2013.
(3) 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.
(4) We utilize net earnings including noncontrolling interests within our calculation; as such, net earnings and related cash flows attributable to
noncontrolling interests are available to service our debt and operating lease commitments.
(5) Depreciation and amortization expense includes impairments of fixed assets, investments and intangible assets (including impairments associated with
our fiscal restructuring activities) and excludes LCD-related legal settlements that occurred in the second quarter of fiscal 2014.
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 9, 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.