Best Buy's First-Quarter Net Earnings Rise 38% to $234 Million, or $0.47 per Diluted Share.MINNEAPOLIS Minneapolis (mĭn'ēăp`əlĭs), city (1990 pop. 368,383), seat of Hennepin co., E Minn., at the head of navigation on the Mississippi River, at St. Anthony Falls; inc. 1856. -- Best Buy Co., Inc. (NYSE NYSE See: New York Stock Exchange :BBY BBY Best Buy (stock symbol) BBY Before Battle of Yavin (Star Wars) BBY BeBeyond (Chinese online community) ):
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Performance Summary
(U.S. dollars in millions, except per share amounts)
Three Months Ended
May 27, 2006 May 28, 2005
----------------------------------------------------------------------
Revenue $6,959 $6,118
----------------------------------------------------------------------
Comparable store sales % gain(1) 4.9% 4.4%
----------------------------------------------------------------------
Gross profit as % of revenue 25.4% 25.5%
----------------------------------------------------------------------
SG&A as % of revenue 20.5% 21.6%
----------------------------------------------------------------------
Operating income as % of revenue 4.8% 3.9%
----------------------------------------------------------------------
Net earnings $234 $170
----------------------------------------------------------------------
Diluted EPS $0.47 $0.34
----------------------------------------------------------------------
(1) Comprised of revenue at stores and Web sites operating for at
least 14 full months, as well as remodeled and expanded locations.
Relocated stores are excluded from the comparable store sales
calculation until at least 14 full months after reopening. Acquired
stores are included in the comparable store sales calculation
beginning with the first full quarter following the first anniversary
of the date of the acquisition. The calculation of the comparable
store sales percentage gain excludes the effect of fluctuations in
foreign currency exchange rates.
Best Buy Co., Inc. (NYSE:BBY) today reported net earnings of $234 million, or $0.47 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, for its fiscal first quarter ended on May 27, 2006. The leading consumer electronics retailer's earnings increased 38 percent from $170 million, or $0.34 per diluted share, for the prior-year first quarter. The mean analyst estimate for the quarter was $0.36 per diluted share as of June June: see month. 12, 2006. First-Quarter Highlights --Earnings per diluted share grew 38 percent, fueled by solid revenue growth and a 90-basis-point operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. rate improvement. Best Buy's international segment expanded its operating income rate by 100 basis points, supported by a strong comparable store sales gain and SG&A leverage related to its expense reduction efforts in the prior quarter. --Total revenue for the quarter increased 14 percent to $7.0 billion, fueled by new store openings and a comparable store sales gain of 4.9 percent. The company's domestic and international segments reported comparable store sales gains of 4.6 percent and 7.1 percent, respectively. --Best Buy's first-quarter SG&A rate improved by 110 basis points, compared with the prior year's first quarter. The improvement was driven by more efficient advertising spending, leverage on revenue growth, and broad-based broad-based Of or relating to an index or average that provides a good representation of the overall market. The S&P 500 and NYSE Composite are generally regarded as broad-based stock indexes, while the popular Dow Jones Industrial Average is biased productivity gains and expense savings. The quarter's results included approximately $0.03 per diluted share of after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. costs related to severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and reorganization, as expected. --The retailer completed the acquisition of Pacific Sales Kitchen and Bath Centers on March 7. --The company repurchased $238 million in common stock during the quarter. "These results can only come from an engaged and energized group of employees," said Brad Anderson Anderson, river, Canada Anderson, river, c.465 mi (750 km) long, rising in several lakes in N central Northwest Territories, Canada. It meanders north and west before receiving the Carnwath River and flowing north to Liverpool Bay, an arm of the Arctic , vice chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Best Buy. "Our employees showed amazing a·maze v. a·mazed, a·maz·ing, a·maz·es v.tr. 1. To affect with great wonder; astonish. See Synonyms at surprise. 2. Obsolete To bewilder; perplex. v.intr. focus in improving our cost structure--but never lost sight of the customers' needs, as evidenced by our top-line performance." First-Quarter Results Show Strong Year-Over-Year Gains For the fiscal 2007 first quarter, Best Buy's revenue increased 14 percent to $7.0 billion, compared with revenue of $6.1 billion for the first quarter of fiscal 2006. The revenue increase reflected the net addition of 117 new stores in the past 12 months (including 14 acquired Pacific Sales showrooms, which will not be included in Best Buy's comparable stores sales calculation until the second quarter of fiscal 2008) and a comparable store sales gain of 4.9 percent. The comparable store sales gain was driven by an increase in the average transaction size, as the company's revenue mix continues to reflect a shift toward higher-ticket items. Best Buy also noted that consumers made more purchases online, as the company continues to add features and capabilities to its Web sites; total first-quarter online revenue grew more than 30 percent as compared to the same quarter of the prior year. The gross profit rate for the first quarter was 25.4 percent of revenue, a slight decrease from a gross profit rate of 25.5 percent of revenue for the prior-year first quarter. The quarter reflects a tough year-over-year comparison as the rate expanded by 160 basis points in the first quarter of fiscal 2006. The 10-basis-point decline was primarily due to both an increased competitive environment and higher year-over-year product costs (primarily related to steel) in appliances. This decline was partially offset by benefits related to growth in the computer services Data processing (timesharing, batch processing), software development and consulting services. See service bureau, SaaS and ASP. business. Best Buy's SG&A expense rate was 20.5 percent of revenue for the first quarter, compared with 21.6 percent of revenue for the prior year. The year-over-year improvement in the SG&A rate was primarily due to a short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. reduction in advertising spending, increased expense leverage from revenue growth, and reduced spending on travel and outside services costs. Darren Jackson Darren Jackson (born 25 July 1966 in Edinburgh) is a former Scottish professional footballer. Career Jackson played for Meadowbank Thistle, Newcastle United, Dundee United, Hibernian, Celtic, Coventry City, Hearts, Livingston, St. Johnstone and Clydebank. , Best Buy's executive vice president of finance and CFO See Chief Financial Officer. , said, "Our employees exceeded our expectations and delivered sharp cost reductions all across the company. We'll we'll Contraction of we will. we'll we will or we shall we'll will ~shall remain focused on our cost structure while also increasing investments in our key strategic priorities, such as home theater An audio/video entertainment center that has a large-screen TV and hi-fi system with three speakers in the front (left, right and center) and left and right speakers in the rear. Starting in the early 1990s, video inputs were added to stereo receivers and preamplifiers. , services and Best Buy For Business. We will make a majority of these investments in the fiscal second and third quarter, ahead of our peak holiday season." The company reported net interest income of $23 million, up from $13 million in the prior year's first quarter, due to higher investment yields. Reiterates Fiscal 2007 Diluted EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. of $2.65 to $2.80 Jackson Jackson. 1 City (1990 pop. 37,446), seat of Jackson co., S Mich., on the Grand River; inc. 1857. It is an industrial and commercial center in a farm region. said, "We are off to a terrific start--laying the foundation for strong earnings growth for this year and beyond. While we still have work to do in implementing an integrated customer-centric model, these results buttress buttress, mass of masonry built against a wall to strengthen it. It is especially necessary when a vault or an arch places a heavy load or thrust on one part of a wall. our projected 20-percent earnings growth for fiscal 2007." Jackson added, "We remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the outlook for the year, yet we acknowledge that we have the majority of fiscal 2007 earnings ahead of us. We're we're Contraction of we are. we're we are excited about the continuing demand for flat-panel televisions, coupled with the upcoming gaming product cycle and the launch of Microsoft Vista See Windows Vista. . Our revenue growth was stronger than anticipated early in the quarter, and finished above expectations. We reiterate re·it·er·ate tr.v. re·it·er·at·ed, re·it·er·at·ing, re·it·er·ates To say or do again or repeatedly. See Synonyms at repeat. re·it our $2.65 to $2.80 diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of guidance for the fiscal year." Strong Performance Across the Chain
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Domestic Performance Summary
(U.S. dollars in millions)
Three Months Ended
May 27, 2006 May 28, 2005
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Revenue $6,162 $5,492
----------------------------------------------------------------------
Comparable store sales % gain(1) 4.6% 4.5%
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Gross profit as % of revenue 25.6% 25.7%
----------------------------------------------------------------------
SG&A as % of revenue 20.2% 21.3%
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Operating income $333 $242
----------------------------------------------------------------------
Operating income as % of revenue 5.4% 4.4%
----------------------------------------------------------------------
(1) Comprised of revenue at stores and Web sites operating for at
least 14 full months, as well as remodeled and expanded locations.
Relocated stores are excluded from the comparable store sales
calculation until at least 14 full months after reopening. Acquired
stores are included in the comparable store sales calculation
beginning with the first full quarter following the first anniversary
of the date of the acquisition.
Best Buy's domestic segment--comprised of U.S. Best Buy, Geek Squad The Geek Squad is a subsidiary of the Best Buy Company and is based in Richfield, Minnesota [1]. Originally founded in 1994 by Robert Stephens, it offers various computer-related services and accessories for residential and commercial clients. , Magnolia Audio Video Magnolia Audio Video is a specialty consumer electronics retailer in the United States. It currently operates 13 standalone stores throughout Washington, Oregon, and California. and Pacific Sales stores--reported first-quarter revenue of $6.2 billion, an increase of 12 percent. The revenue increase included a comparable store sales gain of 4.6 percent, the opening of new stores and the acquisition of Pacific Sales. U.S. Best Buy stores reported a comparable store sales gain of 4.5 percent. The U.S. Best Buy revenue results were bolstered bol·ster n. A long narrow pillow or cushion. tr.v. bol·stered, bol·ster·ing, bol·sters 1. To support or prop up with or as if with a long narrow pillow or cushion. 2. by growth in online revenue of approximately 35 percent. Pacific Sales, a retailer of high-end high-end adj. Informal 1. Appealing to sophisticated and discerning customers: a high-end department store; high-end video equipment. 2. home improvement products, contributed revenue of $64 million for the period during the quarter that it operated under Best Buy ownership. Magnolia Audio Video reported revenue of $37 million and a comparable store sales gain of 21.7 percent, noting increased consumer interest in flat-panel TVs, and audio and video products. In the quarter, the company expanded the presence of Best Buy For Business to 145 stores, up from 119 stores at fiscal 2006 year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. . The company now has 340 employees who are Microsoft-certified professionals, further enhancing the company's capabilities in catering to small business customers. Additionally, the company added the Magnolia Magnolia, city, United States Magnolia (măgnō`lyə), city (1990 pop. 11,151), seat of Columbia co., SW Ark.; inc. 1855. Its oil industry has been important since 1938. Home Theater store-within-a-store experience to 20 Best Buy stores in order to enhance the customer experience in the growing flat-panel TV and home theater category. The company employs nearly 1,600 home theater installers, who provide customers with end-to-end end-to-end a pattern of anastomosis in which severed ends are matched and united, in contrast with other patterns such as end-to-side or side-to-side. Usually applied to anastomosis of the intestine. home theater solutions. Brian Dunn, Best Buy's president and COO (Cell Of Origin) See mobile positioning. , said, "As always, our people drove our stellar results for the first quarter. Our results improve every time we remember to slow down and listen to our employees, each of whom brings unique ideas and experiences to work. They came up with the biggest ideas for cost savings, and their efforts paid off."
----------------------------------------------------------------------
International Performance Summary
(U.S. dollars in millions)
Three Months Ended
May 27, 2006 May 28, 2005
----------------------------------------------------------------------
Revenue $797 $626
----------------------------------------------------------------------
Comparable store sales % gain(1) 7.1% 3.0%
----------------------------------------------------------------------
Gross profit as % of revenue 23.4% 23.5%
----------------------------------------------------------------------
SG&A as % of revenue 22.9% 24.0%
----------------------------------------------------------------------
Operating income (loss) $4 ($3)
----------------------------------------------------------------------
Operating income (loss) as % of revenue 0.5% (0.5%)
----------------------------------------------------------------------
(1) Comprised of revenue at stores and Web sites operating for at
least 14 full months, as well as remodeled and expanded locations.
Relocated stores are excluded from the comparable store sales
calculation until at least 14 full months after reopening. The
calculation of the comparable store sales percentage gain excludes the
effect of fluctuations in foreign currency exchange rates.
Best Buy's international segment--comprised of Future Shop, Best Buy and Geek Squad operations in Canada--generated first-quarter revenue of $797 million, an increase of 27 percent. The revenue increase reflected new store openings, favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. foreign currency exchange rates and a comparable store sales gain of 7.1 percent. The international segment benefited from strong consumer interest in flat-panel TVs and audio products, and improvements in how the company differentiated its brands in Canada for consumers. In addition, the international segment significantly improved its SG&A rate as a result of increased labor productivity and reductions in Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. headquarter head·quar·ter v. head·quar·tered, head·quar·ter·ing, head·quar·ters Usage Problem v.tr. To provide with headquarters: costs, which were implemented late in fiscal 2006. Bob Willett, CEO of Best Buy International, commented, "For the first time since we acquired Future Shop, our team in Canada reported a first-quarter profit. The team is establishing a solid market position, and we're leveraging that investment to expand the overall profitability of the business. Both Best Buy and Future Shop stores improved year over year, as we continue our work to optimize optimize - optimisation this business and differentiate our two brands." Additionally, on June 8, 2006, Best Buy completed its acquisition of a majority interest in Jiangsu Five Star, a Chinese retailer of appliances and consumer electronics. The Five Star results are expected to be reflected in Best Buy's international segment, beginning with the second fiscal quarter. Willet added, "We're pleased to have the opportunity to work with Five Star to learn about the Chinese customer and marketplace. We expect to pursue a careful and controlled growth strategy in China. Currently, we are working with the Five Star management team to determine the optimal number of stores to open during the fiscal year. We also continue to work toward the opening of our first Best Buy store in Shanghai Shanghai (shăng`hī`, shäng`hī`), city (1994 est. pop. 12,980,000), in, but independent of, Jiangsu prov., E China, on the Huangpu (Whangpoo) River where it flows into the Chang (Yangtze) estuary. , which is anticipated later this year." Electronics Lead Revenue Mix As Sales of Flat-Panel TVs Continue Strong Gain
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Revenue Mix Summary Comparable Store Sales
Three Months Ended Three Months Ended
Product Group May 27, 2006 May 28, 2005 May 27, 2006 May 28, 2005
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Consumer
Electronics 43% 40% 12.1% 9.9%
----------------------------------------------------------------------
Home Office 32% 34% 2.2% 0.5%
----------------------------------------------------------------------
Entertainment
Software 18% 20% (4.3%) 0.3%
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Appliances 7% 6% 0.9% 4.5%
----------------------------------------------------------------------
Total 100% 100% 4.9% 4.4%
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During the first quarter of fiscal 2007, Best Buy's comparable store sales gain was driven by higher revenue from flat-panel televisions, MP3 players A digital music player that supports the MP3 format, which was the audio format that started a revolution in online music downloads and distribution. All portable music players, the iPod being the most popular, support MP3 along with one or more other audio formats. and accessories, notebook computers A laptop computer that weighs in a range from five to seven pounds. The term originated when laptops were routinely more than 10 pounds, and those that became lighter were placed in a special "notebook" category. In practice, notebook computer and laptop computer are synonymous. , and computer services. These gains more than offset comparable store sales declines in tube and projection TVs See rear-projection TV and front-projection TV. , CDs, desktop computers and printers. Best Buy's revenue mix for the first quarter of fiscal 2007 reflected continued growth in the consumer electronics product group. Consumer electronics, which represented 43 percent of first-quarter revenue, posted a 12.1-percent comparable store sales gain and again led the company's results. Within consumer electronics, flat-panel TVs experienced a triple-digit comparable store sales gain due to higher volumes, improved assortments of TVs in larger screen sizes and the addition of 104 Magnolia Home Theater store-within-store-a-store experiences in the last 15 months. These factors more than offset the impact of declining prices on flat-panel TVs. Total television comparable store sales grew by solid-double-digits as flat-panel TV growth was partially offset by declines in comparable store sales of tube and projection TVs. MP3 products generated a double-digit comparable store sales gain as customers continued to adopt and upgrade their digital music players Hardware or software that plays audio files encoded in MP3, AAC, WMA or other audio formats. There are several software-based music players that play audio files in a desktop or laptop computer, including iTunes, RealPlayer and Windows Media Player. . Improved assortments in MP3 player accessories contributed to the gain as well. Home office products, which accounted for 32 percent of fiscal 2007 first-quarter revenue, had a comparable store sales increase of 2.2 percent. A double-digit comparable store sales increase for notebook computers and a strong double-digit increase in computer services revenue fueled the growth. The gains from notebook computers and computer services were partially offset by declines in comparable store sales of desktop computers and printers. Appliances, which totaled 7 percent of fiscal 2007 first-quarter revenue, had a comparable store sales increase of 0.9 percent for the quarter. The modest gain in comparable store sales of major appliances A major appliance is usually defined as a large machine which accomplishes some routine housekeeping task, which includes purposes such as cooking, food preservation, or cleaning, whether in a household, institutional, commercial or industrial setting. was the result of an expanded assortment assortment /as·sort·ment/ (ah-sort´ment) the random distribution of nonhomologous chromosomes to daughter cells in metaphase of the first meiotic division. as·sort·ment n. , which was muted mut·ed adj. 1. a. Muffled; indistinct: a muted voice. b. Mute or subdued; softened: muted colors. 2. by a difficult comparable store sales gain comparison and increased competitive pressure. The entertainment software product group, which comprised 18 percent of first-quarter revenue, declined 4.3 percent on a comparable store sales basis. A low-single-digit gain in comparable store sales of gaming hardware and software was more than offset by expected declines from CDs and DVDs. The video gaming video gaming n. 1. Gambling by means of interactive games of chance played on a video screen. 2. The playing of video games. strength was fueled by increased availability of the Xbox 360 console in conjunction with a successful April gaming campaign. This result was on top of the strong double-digit gain in fiscal 2006 first quarter, when the PlayStation Portable console launched. During the first quarter, the company opened 12 U.S. Best Buy stores, including three 45,000-square-foot stores, eight 30,000-square-foot stores and one 20,000-square-foot store. In addition, the company's Canadian operations opened one Future Shop store and one Geek Squad store. At the end of the first quarter, the company operated 754 Best Buy stores, 20 Magnolia Audio Video stores, 14 Pacific Sales showrooms and 12 Geek Squad stores in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . It also operated 119 Future Shop stores, 44 Best Buy stores and six Geek Squad stores in Canada. For the trailing 12 months, the company opened 119 new stores (including 14 acquired Pacific Sales showrooms) and closed two stores. More details regarding historical store counts and square footage are available on the company's Web site under "For Our Investors." Company Repurchases $238 Million in Common Stock During the first quarter of fiscal 2007, Best Buy repurchased approximately 4.4 million shares of its common stock at an average price of $54.54 per share, for a total of approximately $238 million. At the end of the fiscal 2007 first quarter, the company had $552 million remaining under the $1.5 billion authorization The right or permission to use a system resource; the process of granting access. See access control. for share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. announced in April 2005. On May 11, 2006, the company paid a dividend of 8 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , or $39 million in the aggregate, which was a 9-percent increase compared with the dividend per share paid in the prior year's first quarter. Best Buy is scheduled to conduct an earnings conference call at 10 a.m. Eastern Daylight Time on June 13, 2006. The call is expected to be available on its Web site both live and after the call, at www.BestBuy.com. The public may access the call by clicking on "For Our Investors." The company's annual meeting of shareholders is scheduled for June 21, 2006, at the corporate campus in Richfield, MN. Forward-Looking and Cautionary Statements: This news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that reflect management's current views and estimates regarding future market conditions, company performance and financial results, business prospects, new strategies, the competitive environment and other events. You can identify these statements by the fact that they use words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," and other words and terms of similar meaning. These statements involve a number of risks and uncertainties and are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Among the factors that could cause actual results and outcomes to differ materially from those contained in such forward-looking statements are the following: general economic conditions, acquisitions and development of new businesses, product availability, sales volumes, profit margins, weather, foreign currency fluctuation Fluctuation A price or interest rate change. , availability of suitable real estate locations, our ability to react to a disaster recovery situation, and the impact of labor markets labor market A place where labor is exchanged for wages; an LM is defined by geography, education and technical expertise, occupation, licensure or certification requirements, and job experience and new product introductions on our overall profitability. A further list and description of these risks, uncertainties and other matters can be found in the company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed with the Securities and Exchange Commission on May 10, 2006, and in our other periodic reports filed from time to time with the SEC. Best Buy cautions that the foregoing list of important factors is not complete and assumes no obligation to update any forward-looking statements that it may make. About Best Buy Co., Inc. Best Buy Co., Inc. (NYSE:BBY) is an innovative Fortune 100 growth company that continually con·tin·u·al adj. 1. Recurring regularly or frequently: the continual need to pay the mortgage. 2. strives to create superior customer experiences. Through more than 960 retail stores across the United States and in Canada, our employees connect customers with technology and entertainment products and services that make life easier and more fun. We sell consumer electronics, home-office products, entertainment software, appliances and related services. A Minneapolis-based company, our operations include: Best Buy (BestBuy.com and BestBuy.ca), Future Shop (FutureShop.ca), Geek Squad (GeekSquad.com and GeekSquad.ca), Pacific Sales Kitchen and Bath Centers (PacificSales.com), Magnolia Audio Video (Magnoliaav.com) and Jiangsu Five Star Appliance A stand-alone hardware device or software environment dedicated to a specific task. See hardware appliance and software appliance. Co. (Five-Star.cn). We support our communities through employee volunteerism vol·un·teer·ism n. Use of or reliance on volunteers, especially to perform social or educational work in communities. volunteerism and grants from The Best Buy Children's Foundation.
BEST BUY CO., INC.
CONSOLIDATED STATEMENTS OF EARNINGS
($ in millions, except per share amounts)
(Unaudited)
Three Months Ended
-------------------------
May 27, May 28,
2006 2005
------------ ------------
Revenue $6,959 $6,118
Cost of goods sold 5,194 4,560
------------ ------------
Gross profit 1,765 1,558
Gross profit % 25.4% 25.5%
Selling, general and administrative expenses 1,428 1,319
SG&A % 20.5% 21.6%
------------ ------------
Operating income 337 239
Net interest income 23 13
------------ ------------
Earnings before income tax expense 360 252
Income tax expense 126 82
Effective tax rate 35.0% 32.5%
------------ ------------
Net earnings $234 $170
============ ============
Basic earnings per share $0.48 $0.35
============ ============
Diluted earnings per share(1) $0.47 $0.34
============ ============
Dividends declared per common share $0.08 $0.07
Basic weighted average common shares
outstanding (in millions) 484.6 491.2
Diluted weighted average common shares
outstanding (in millions)(1) 500.8 505.3
(1) The calculation of diluted earnings per share assumes the
conversion of our convertible debentures due in 2022 into 8.8 million
shares of common stock and adds back the related after-tax interest
expense of $1.7 for all periods presented.
BEST BUY CO., INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
($ in millions)
(Unaudited)
Subject to Reclassification
May 27, May 28,
2006 2005
------------ ------------
ASSETS
Current assets
Cash & cash equivalents $772 $458
Short-term investments 1,554 2,148
Receivables 409 350
Merchandise inventories 3,737 3,266
Other current assets 406 383
------------ ------------
Total current assets 6,878 6,605
Net property & equipment 2,712 2,456
Goodwill 955 507
Other intangible assets 63 40
Long-term investments 302 113
Other assets 359 178
------------ ------------
TOTAL ASSETS $11,269 $9,899
============ ============
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $3,055 $3,047
Accrued liabilities 1,824 1,504
Current portion of long-term debt 418 14
------------ ------------
Total current liabilities 5,297 4,565
Long-term liabilities 383 373
Long-term debt 180 530
Shareholders' equity 5,409 4,431
------------ ------------
TOTAL LIABILITIES &
SHAREHOLDERS' EQUITY $11,269 $9,899
============ ============
Note: Certain amounts have been reclassified to conform to the current
presentation. These reclassifications had no effect on operating
income or net earnings.
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