Best Buy Actively Marketing Musicland Businesses.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--March 31, 2003 Separately, Company Adopts New Accounting Guidance for Vendor Allowances (EITF EITF Emerging Issues Task Force EITF Edinburgh International Television Festival EITF Europe International Taekwon-Do Federation No. 02-16), Resulting in a $42 Million Non-Cash Charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. 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) ) reported today that the Company has begun marketing its interest in its Musicland
Musicland is an entertainment company which runs Sam Goody and Suncoast Motion Picture Company and ran the former Media Play Superstore Chain. subsidiary in order to concentrate on the Company's core business and assets. The Company has hired an investment banking firm to assist with the sale process, as well as additional professionals to assist in other areas of the plan. "Over the last year, Musicland has suffered from further declines in CD sales and a continued slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in traffic in traditional shopping centers shopping center, a concentration of retail, service, and entertainment enterprises designed to serve the surrounding region. The modern shopping center differs from its antecedents—bazaars and marketplaces—in that the shops are usually amalgamated into nationwide. In addition, it has been less successful than we had hoped in selling consumer electronics in its mall mall: see shopping center. (World-Wide Web) mall - A collection of World-Wide Web documents featuring commercial products and services, usually served by one particualr Internet access provider. stores. As a result of a strategic study that commenced a few months ago, it was determined that Musicland would not be capable of meeting our original expectations," said Best Buy 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. 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 . "In an effort to derive de·rive v. 1. To obtain or receive from a source. 2. To produce or obtain a chemical compound from another substance by chemical reaction. the best outcome for all of our constituencies -- including our shareholders, employees, vendors, landlords and communities -- we have concluded that we should seek a buyer for our interest in Musicland." Anderson confirmed that sales talks for the Company's interest in Musicland are proceeding. He said that the Company's intent in the interim is to help maximize In a graphical environment, to enlarge a window to the full size of the screen. See Win Maximize windows. Musicland's value in preparation for any outcomes remaining under consideration. He added that the Company expects to provide a further update on Musicland's status in June June: see month. . "We are working diligently dil·i·gent adj. Marked by persevering, painstaking effort. See Synonyms at busy. [Middle English, from Old French, from Latin d to complete a sale of Musicland," Anderson said. "However, Musicland's management team and store employees remain committed to serving Musicland customers during this transition period. To underscore The underscore character (_) is often used to make file, field and variable names more readable when blank spaces are not allowed. For example, NOVEL_1A.DOC, FIRST_NAME and Start_Routine. (character) underscore - _, ASCII 95. the importance of continuing to maximize the potential of this business, the board of directors of Musicland Stores Corporation has promoted Connie
Connie is a British television drama made for ITV by Central Television and shown in 1985. Fuhrman to the position of President. We believe that Connie, who most recently served as executive vice president of Musicland, will do an excellent job guiding Musicland in these challenging times." In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. or Disposal of Long-Lived long-lived adj. 1. Having a long life: a long-lived aunt. 2. Lasting a long time; persistent: a long-lived rumor. 3. Assets, the Company's fiscal 2003 consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge will report Musicland's operating results separately as discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. . The Company will reclassify Verb 1. reclassify - classify anew, change the previous classification; "The zoologists had to reclassify the mollusks after they found new species" class, classify, sort out, assort, sort, separate - arrange or order by classes or categories; "How would you prior-period financial results to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" this accounting treatment. Musicland's revenue, gross profit and SG&A expenses will be netted into a single line item in the financial statements. The change will reduce fourth-quarter 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 from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the by $0.03 and increase fiscal 2003 diluted earnings per share from continuing operations by $0.15. The changes by quarter for fiscal 2003 are summarized in the table below:
Financial Impact on Continuing Operations as a
Result of Classifying Musicland as Discontinued Operations
Increase (decrease)
($ in millions, except
per share amounts) Diluted EPS
Operating from continuing
Revenue income(1) Operations(1,2)
----------- ----------- --------------
First quarter $(384) $21 $0.04
Second quarter (384) 26 0.05
Third quarter (374) 44 0.08
Fourth quarter (585) (19) (0.03)
----------- ----------- --------------
Total fiscal 2003 $(1,727) $72 $0.15
=========== =========== ==============
(1) Excludes non-cash charge for impairment of long-lived assets and
includes the impact of adopting new accounting guidance for vendor
allowances.
(2) Excludes $25 million tax benefit resulting from the classification
of the Musicland business as discontinued operations.
For fiscal 2003, the net loss from discontinued operations of $441 million, net of tax, is comprised of Musicland's $308 million goodwill impairment charge, $8 million after tax non-cash charge related to the cumulative change in accounting for vendor allowances, $102 million after tax loss (as previously disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). in the Company's fourth-quarter sales release, dated March 6) related to impairment of Musicland's long-lived assets and a $23 million after tax loss ($78 million loss before tax) from Musicland store operations. The loss on discontinued operations excludes future operating results and any future gains or losses resulting from the potential sale of the Company's interest in Musicland. The final financial impact of the planned sale of the Musicland subsidiary is dependent upon the results of negotiations with the ultimate buyer(s). The average lease life for the Sam Goody Sam Goody is a music and entertainment retailer in the United States and formerly in the United Kingdom. It is owned and operated by Musicland, which itself is owned by former rival Trans World Entertainment which also runs Suncoast Motion Picture Company and, until January 2006, and Suncoast
Separately, the Company today reported that during fiscal 2003, it changed its method of accounting for vendor allowances. The new method is consistent with final guidance issued by the Financial Accounting Standards Board's Emerging Issues Task Force in March 2003 regarding accounting for vendor allowances (EITF No. 02-16), Accounting by a Customer (including a Reseller An organization that sells hardware and software to the general public. Resellers purchase products from software publishers and hardware manufacturers. ) for Certain Consideration Received from a Vendor. In adopting the new guidance, the Company changed its previous method of accounting, which was consistent with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . Under the new accounting guidance, vendor allowances are considered a reduction in the price of a vendor's product and recognized as a reduction in cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold when the related product is sold, unless the allowance represents a reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. of a specific, incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. and identifiable cost incurred to sell the vendor's products. This new practice also will change the timing of recognizing allowances in net earnings. The Company adopted the new guidance on a retroactive Having reference to things that happened in the past, prior to the occurrence of the act in question. A retroactive or retrospective law is one that takes away or impairs vested rights acquired under existing laws, creates new obligations, imposes new duties, or attaches a basis to the beginning of fiscal 2003, which resulted in a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. , non-cash, 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. charge of $42 million, which was classified as a "cumulative effect of a change in accounting principle." The impact on continuing operations in fiscal 2003 is to increase fourth-quarter diluted earnings per share by $0.08 and to reduce full-year diluted earnings per share by $0.01. The changes and related reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. for each quarter in fiscal 2003 are summarized in the table below:
Financial Impact on Continuing Operations as a Result
of Adopting New Accounting Guidance for Vendor Allowances
(EITF No. 02-16)
Increase (decrease)
Selling, Diluted EPS
($ in millions, except Cost of general & from
per share amounts) goods administrative Operating continuing
sold expense income operations
--------- --------------- --------- -----------
First quarter $(144) $155 $(11) $(0.02)
Second quarter (155) 154 1 -
Third quarter (176) 214 (38) (0.07)
Fourth quarter (243) 198 45 0.08
--------- --------------- --------- -----------
Total fiscal 2003 $(718) $721 $(3) $(0.01)
========= =============== ========= ===========
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. , executive vice president -- Finance and CFO See Chief Financial Officer. of Best Buy, added, "We support and commend com·mend tr.v. com·mend·ed, com·mend·ing, com·mends 1. To represent as worthy, qualified, or desirable; recommend. 2. To express approval of; praise. See Synonyms at praise. 3. the EITF for the approach it has taken, which aligns well with how leading manufacturers have approached this issue. We believe this accounting change provides the maximum transparency (1) The quality of being able to see through a material. The terms transparency and translucency are often used synonymously; however, transparent would technically mean "seeing through clear glass," while translucent would mean "seeing through frosted glass." See alpha blending. for investors, while continuing Best Buy's history of conservative accounting practices." To help investors understand how the two changes affect the Company's financial statements, following are comparative financial statements for the Company's first three quarters of fiscal 2003, and the fourth quarter and fiscal year of fiscal 2002. Similar comparative statements for the fourth quarter and full year of fiscal 2003 will be included with the fourth-quarter earnings release on April 1. These exhibits separately show the impact of the discontinued operations classification, as well as the impact of adopting EITF No. 02-16. The Company will release its fourth-quarter earnings on April 1 and will conduct a conference call for analysts, institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. and news media at 10 a.m. eastern time that day. Individuals may access the live call via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the on the Company's Web site at www.BestBuy.com by clicking on the "Investor Relations Investor relations The process by which the corporation communicates with its investors. " link. Following the live event, the call will be posted on the Audio Archive (1) A file that contains one or more compressed files. Most archive formats are also capable of storing folders in order to reconstruct the file/folder relationship when decompressed. See archive formats. page of the Web site and may be accessed at any time. Best Buy's quarterly financial results and news releases can be found on the Internet at the Company's Web site, www.BestBuy.com, or accessed via Business Wire's Web site at www.businesswire.com. The Company is expected to announce its first-quarter sales on June 5, 2003, and its first-quarter earnings on June 18, 2003. Statements made in this news release, other than those concerning historical financial information, should be considered forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. and subject to various risks and uncertainties. Such 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. are based on management's beliefs and assumptions regarding information currently available, 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 Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended. The Company's actual results could differ materially from those expressed in the forward-looking statements. Factors that could cause results to vary include, among others, those expressed in the Company's filings with the Securities and Exchange Commission. The Company has no obligation to publicly update or revise any of the forward-looking statements that may be in this news release. About Best Buy Co., Inc. Minneapolis-based Best Buy Co., Inc. is North America's leading specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. retailer of consumer electronics, personal computers, entertainment software and appliances. The Company's subsidiaries operate retail stores and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. web sites under the names: Best Buy (BestBuy.com), Future Shop (FutureShop.ca), 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. Hi-Fi (MagnoliaHiFi.com), 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. (GeekSquad.com), Media Play (MediaPlay.com), Sam Goody (SamGoody.com) and Suncoast (Suncoast.com). The Company's subsidiaries reach consumers through nearly 1,900 retail 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. , Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. and the U.S. Virgin Islands.
BEST BUY CO., INC.
CONSOLIDATED STATEMENTS OF EARNINGS
($ in millions, except per share amounts)
(Unaudited)
First Quarter of Fiscal 2003
Impact of
Change in
As Discontinued Vendor
Previously Operations Allowance As
Reported(1) Effect Accounting Adjusted
----------- ------------ ---------- ----------
Revenue $4,586 $(384) $- $4,202
Cost of goods sold 3,521 (255) (144) 3,122
----------- ------------ ---------- ----------
Gross profit 1,065 (129) 144 1,080
Gross profit % 23.2% (0.9) pp 3.4 pp 25.7%
Selling, general &
administrative
expenses 950 (154) 155 951
SG&A % 20.7% (1.8) pp 3.7 pp 22.6%
----------- ------------ ---------- ----------
Operating income
(loss) 115 25 (11) 129
Net interest income - 1 - 1
----------- ------------ ---------- ----------
Earnings (loss) from
continuing operations
before income tax
expense 115 26 (11) 130
Income tax expense
(benefit) 45 10 (4) 51
Effective tax rate 38.7% 38.7%
----------- ------------ ---------- ----------
Earnings (loss) from
continuing operations 70 16 (7) 79
Loss from discontinued
operations, net of
tax - (324) (6) (330)
Cumulative effect of
change in accounting
principles:
Goodwill impairment,
net of tax (348) 308 - (40)
Vendor allowances,
net of tax - - (42) (42)
----------- ------------ ---------- ----------
Net loss $(278) $- $(55) $(333)
=========== ============ ========== ==========
Diluted earnings
(loss) per share:
Continuing operations
(before impairment) $0.22 $0.05 $(0.02) $0.24
Asset impairment
charge - - - -
----------- ------------ ---------- ----------
Continuing operations 0.22 0.05 (0.02) 0.24
Discontinued
operations:
Operations - (0.05) 0.01 (0.04)
Accounting changes - (0.95) (0.03) (0.97)
Asset impairment
charge - - - -
----------- ------------ ---------- ----------
Discontinued
operations - (0.99) (0.02) (1.01)
Cumulative effect of
accounting changes (1.07) 0.95 (0.13) (0.25)
----------- ------------ ---------- ----------
Diluted loss per
share $(0.85) $- $(0.17) $(1.02)
=========== ============ ========== ==========
Weighted number of
shares (in millions)
Diluted 326.3 326.3 326.3 326.3
Note: Certain totals may not add due to rounding
(1) Includes cumulative effect adjustment related to the Company's
transitional goodwill impairment testing in accordance with SFAS
No. 142 as reported in the fiscal 2003, second-quarter Form 10-Q
BEST BUY CO., INC.
CONSOLIDATED STATEMENTS OF EARNINGS
($ in millions, except per share amounts)
(Unaudited)
Second Quarter of Fiscal 2003
Impact of
Change in
As Discontinued Vendor
Previously Operations Allowance As
Reported Effect Accounting Adjusted
----------- ------------ ---------- ----------
Revenue $5,008 $(384) $- $4,624
Cost of goods sold 3,879 (253) (155) 3,471
----------- ------------ ---------- ----------
Gross profit 1,129 (131) 155 1,153
Gross profit % 22.5% (1.0) pp 3.4 pp 24.9%
Selling, general &
administrative
expenses 1,026 (156) 154 1,024
SG&A % 20.5% (1.7) pp 3.3 pp 22.1%
----------- ------------ ---------- ----------
Operating income 103 25 1 129
Net interest (expense)
income (3) 1 - (2)
----------- ------------ ---------- ----------
Earnings from
continuing operations
before income tax
expense 100 26 1 127
Income tax expense 38 10 - 48
Effective tax rate 38.7% 38.7%
----------- ------------ ---------- ----------
Earnings from
continuing operations 62 16 1 79
Loss from discontinued
operations, net of
tax - (16) (1) (17)
Cumulative effect of
change in accounting
principles:
Goodwill impairment,
net of tax - - - -
Vendor allowances,
net of tax - - - -
----------- ------------ ---------- ----------
Net earnings $62 $- $- $62
=========== ============ ========== ==========
Diluted earnings
(loss) per share:
Continuing operations
(before impairment) $0.19 $0.05 $- $0.24
Asset impairment
charge - - - -
----------- ------------ ---------- ----------
Continuing operations 0.19 0.05 - 0.24
Discontinued
operations:
Operations - (0.05) - (0.05)
Accounting changes - - - -
Asset impairment
charge - - - -
----------- ------------ ---------- ----------
Discontinued
operations - (0.05) - (0.05)
Cumulative effect of
accounting changes - - - -
----------- ------------ ---------- ----------
Diluted earnings per
share $0.19 $- $- $0.19
=========== ============ ========== ==========
Weighted number of
shares (in millions)
Diluted 324.5 324.5 324.5 324.5
Note: Certain totals may not add due to rounding
BEST BUY CO., INC.
CONSOLIDATED STATEMENTS OF EARNINGS
($ in millions, except per share amounts)
(Unaudited)
Third Quarter of Fiscal 2003
Impact of
Change in
As Discontinued Vendor
Previously Operations Allowance As
Reported Effect Accounting Adjusted
----------- ------------ ---------- ----------
Revenue $5,505 $(374) $- $5,131
Cost of goods sold 4,318 (261) (176) 3,881
----------- ------------ ---------- ----------
Gross profit 1,187 (113) 176 1,250
Gross profit % 21.6% (0.6) pp 3.4 pp 24.4%
Selling, general &
administrative
expenses 1,048 (152) 214 1,110
SG&A % 19.0% (1.6) pp 4.2 pp 21.6%
----------- ------------ ---------- ----------
Operating income
(loss) 139 39 (38) 140
Net interest (expense)
income (1) 1 - -
----------- ------------ ---------- ----------
Earnings (loss) from
continuing operations
before income tax
expense 138 40 (38) 140
Income tax expense
(benefit) 53 16 (15) 54
Effective tax rate 38.7% 38.7%
----------- ------------ ---------- ----------
Earnings (loss) from
continuing operations 85 24 (23) 86
Loss from discontinued
operations, net of
tax - (24) (2) (26)
Cumulative effect of
change in accounting
principles:
Goodwill impairment,
net of tax - - - -
Vendor allowances,
net of tax - - - -
----------- ------------ ---------- ----------
Net earnings (loss) $85 $- $(25) $60
=========== ============ ========== ==========
Diluted earnings
(loss) per share:
Continuing operations
(before impairment) $0.26 $0.08 $(0.07) $0.27
Asset impairment
charge - - - -
----------- ------------ ---------- ----------
Continuing operations 0.26 0.08 (0.07) 0.27
Discontinued
operations:
Operations - (0.08) (0.01) (0.08)
Accounting changes - - - -
Asset impairment
charge - - - -
----------- ------------ ---------- ----------
Discontinued
operations - (0.08) (0.01) (0.08)
Cumulative effect of
accounting changes - - - -
----------- ------------ ---------- ----------
Diluted earnings
(loss) per share $0.26 $- $(0.08) $0.18
=========== ============ ========== ==========
Weighted number of
shares (in millions)
Diluted 324.1 324.1 324.1 324.1
Note: Certain totals may not add due to rounding
BEST BUY CO., INC.
CONSOLIDATED STATEMENTS OF EARNINGS
($ in millions, except per share amounts)
(Unaudited)
Fourth Quarter of Fiscal 2002
Impact of
Change in
As Discontinued Vendor
Previously Operations Allowance As
Reported Effect Accounting(1) Adjusted
----------- ------------ ------------- ----------
Revenue $6,980 $(685) $- $6,295
Cost of goods sold 5,372 (447) (220) 4,705
----------- ------------ ------------- ----------
Gross profit 1,608 (238) 220 1,590
Gross profit % 23.0% (1.3) pp 3.5 pp 25.3%
Selling, general &
administrative
expenses 1,038 (171) 184 1,051
SG&A % 14.9% (1.1) pp 2.9 pp 16.7%
----------- ------------ ------------- ----------
Operating income
(loss) 570 (67) 36 539
Net interest income 5 2 - 7
----------- ------------ ------------- ----------
Earnings (loss) from
continuing
operations before
income tax expense 575 (65) 36 546
Income tax expense
(benefit) 225 (29) 14 210
Effective tax rate 39.1% (.7) pp 38.4%
----------- ------------ ------------- ----------
Earnings (loss)
from continuing
operations 350 (36) 22 336
Earnings from
discontinued
operations, net of
tax - 36 3 39
Cumulative effect
of change in
accounting
principles:
Goodwill
impairment, net
of tax - - - -
Vendor allowances,
net of tax - - - -
----------- ------------ ------------- ----------
Net earnings $350 $- $25 $375
=========== ============ ============= ==========
Diluted earnings
(loss) per share:
Continuing
operations
(before
impairment) $1.08 $(0.11) $0.07 $1.04
Asset impairment
charge - - - -
----------- ------------ ------------- ----------
Continuing
operations 1.08 (0.11) 0.07 1.04
Discontinued
operations:
Operations - 0.11 0.01 0.12
Accounting
changes - - - -
Asset impairment
charge - - - -
----------- ------------ ------------- ----------
Discontinued
operations - 0.11 0.01 0.12
Cumulative effect
of accounting
changes - - - -
----------- ------------ ------------- ----------
Diluted earnings
per share $1.08 $- $0.08 $1.16
=========== ============ ============= ==========
Weighted number of
shares (in
millions)
Diluted 325.0 325.0 325.0 325.0
Note: Certain totals may not add due to rounding
(1) Impact of conforming the accounting for vendor allowances to the
2003 method
BEST BUY CO., INC.
CONSOLIDATED STATEMENTS OF EARNINGS
($ in millions, except per share amounts)
(Unaudited)
Fiscal 2002 Pro Forma
Pro Impact of
Forma(1) Change in
As Discontinued Vendor
Previously Operations Allowance As
Reported Effect Accounting(2) Adjusted
----------- ------------ ------------ -----------
Revenue $20,392 $(1,886) $- $18,506
Cost of goods sold 15,771 (1,226) (650) 13,895
----------- ------------ ------------ -----------
Gross profit 4,621 (660) 650 4,611
Gross profit % 22.7% (1.3) pp 3.5 pp 24.9%
Selling, general &
administrative
expenses 3,678 (631) 661 3,708
SG&A % 18.0% (1.6) pp 3.6 pp 20.0%
----------- ------------ ------------ -----------
Operating income
(loss) 943 (29) (11) 903
Net interest
(expense) income (8) 20 - 12
----------- ------------ ------------ -----------
Earnings (loss) from
continuing
operations before
income tax expense 935 (9) (11) 915
Income tax expense
(benefit) 365 (10) (4) 351
Effective tax rate 39.1% 38.4%
----------- ------------ ------------ -----------
Earnings (loss)
from continuing
operations 570 1 (7) 564
Loss (earnings)
from discontinued
operations, net of
tax - (1) 1 -
Cumulative effect
of change in
accounting
Principles:
Goodwill
impairment, net
of tax - - - -
Vendor allowances,
net of tax - - - -
----------- ------------ ------------ -----------
Net earnings
(loss) $570 $- $(6) $564
=========== ============ ============ ===========
Diluted earnings
(loss) per share:
Continuing
operations
(before
impairment) $1.77 $- $(0.02) $1.75
Asset impairment
charge - - - -
----------- ------------ ------------ -----------
Continuing
operations 1.77 - (0.02) 1.75
Discontinued
operations:
Operations - - - -
Accounting
changes - - - -
Asset impairment
charge - - - -
----------- ------------ ------------ -----------
Discontinued
operations - - - -
Cumulative effect
of accounting
changes - - - -
----------- ------------ ------------ -----------
Diluted earnings
(loss) per share $1.77 $- $(0.02) $1.75
=========== ============ ============ ===========
Weighted number of
shares (in
millions)
Diluted 322.5 322.5 322.5 322.5
Note: Certain totals may not add due to rounding
(1) Future Shop was acquired at the beginning of November fiscal 2002.
Pro forma information includes the results of Future Shop as if
Future Shop had been acquired at the beginning of fiscal 2002
(2) Impact of conforming the accounting for vendor allowances to the
2003 method
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