Best Buy Fiscal 2006 Fourth-Quarter Diluted EPS From Continuing Operations Increases 24 Percent.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) ): Consumer Electronics Retailer Delivers $1.29 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 Fiscal Fourth Quarter; Best Buy Expects Approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 20% 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. Growth for Fiscal 2007
Fourth-Quarter Performance Summary
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(U.S. dollars in millions, except per share amounts)
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Three Months Ended
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Feb. 25, 2006 Feb. 26, 2005 Feb. 26, 2005
(As Reported) (As Adjusted)(1)
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Revenue $10,693 $9,227 $9,292
----------------------------------------------------------------------
Comparable store sales
% gain(2) 7.3% 2.8% 2.8%
----------------------------------------------------------------------
Gross profit as % of
revenue 25.0% 23.5% 23.5%
----------------------------------------------------------------------
SG&A as % of revenue 16.0% 15.0% 15.3%
----------------------------------------------------------------------
Operating income as %
of revenue 8.9% 8.5% 8.2%
----------------------------------------------------------------------
Diluted EPS from
continuing operations $1.29 $1.03 $1.04
----------------------------------------------------------------------
(1) The company has provided non-GAAP financial data in this news
release. The non-GAAP financial data adjusts for the effect of
expensing stock-based compensation as if the company had applied
Statement of Financial Accounting Standards No. 123, Accounting
for Stock-Based Compensation, in fiscal 2005 and excludes fiscal
2005 lease and sales return liability accounting adjustments as
described on the company's Web site, www.BestBuy.com. The adjusted
financial data is considered a non-GAAP financial measure and is
not in accordance with, or preferable to, the financial data
determined in accordance with GAAP. However, the company believes
the adjusted financial data provides comparability of its fiscal
2006 financial results with the results for the prior year. A
reconciliation of these non-GAAP measures to the applicable GAAP
financial measures is provided on the company's Web site.
(2) 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 Co., Inc. (NYSE:BBY) today reported earnings 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 of $644 million, or $1.29 per diluted share, for its fiscal fourth quarter ended on Feb. 25, 2006. Earnings from continuing operations increased 24 percent from $521 million, or $1.04 per diluted share on an adjusted basis(3), for the prior-year fourth quarter. Fourth-Quarter Highlights --Earnings per diluted share from continuing operations grew 24 percent to $1.29, compared with $1.04 for the prior year's fourth quarter on an adjusted basis(3). --Total revenue increased 15 percent to $10.7 billion, fueled by new store openings and a comparable store sales gain of 7.3 percent. The company's domestic segment reported a comparable store sales gain of 7.4 percent, and its international segment posted a 6.4-percent comparable store sales gain. --Gross profit dollars increased by 22 percent on higher revenue and a 150-basis-point improvement in the gross profit rate. --Best Buy's 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 increased by 70 basis points due to strong revenue and gross profit performance, which was partially offset by higher incentive compensation for retail and corporate employees. "I'm I'm Contraction of I am. Our Living Language Speakers of some scattered varieties of American English sometimes use I'm instead of I've or I have in present perfect constructions, as in very proud of our employees and the outstanding results they delivered for the quarter and the year," 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. "I'd I'd 1. Contraction of I had. 2. Contraction of I would. I'd I had or I would I'd have ~would like to thank our entire team for their unwavering commitment to meeting customers' needs. As a result of their efforts, we're we're Contraction of we are. we're we are growing our business even as we refine our model for the future. This past year was our tipping point The point in time in which a technology, procedure, service or philosophy has reached critical mass and becomes mainstream. See network effect. See also tip and ring. , and it has opened highways to the future. In the coming year, it's it's 1. Contraction of it is. 2. Contraction of it has. See Usage Note at its. it's it is or it has it's be ~have our goal to expand through new store openings, 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 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, Best Buy For Business and a more focused approach to running the business that's rooted in customer centricity Customer centricity refers to the orientation of a company to the needs and behaviours of its customers, rather than internal drivers (such as the quest for short term profit). ." Fourth-Quarter Results Post Strong Year-Over-Year Gains For the fiscal 2006 fourth quarter, Best Buy's revenue increased 15 percent to $10.7 billion, compared with revenue of $9.3 billion for the fourth quarter of fiscal 2005 on an adjusted basis(3). The revenue increase reflected the net addition of 103 new stores in the past 12 months and a comparable store sales gain of 7.3 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 the shift toward higher-ticket items. Segmented stores led the company with a comparable store sales gain nearly 200 basis points higher than the balance of the U.S. Best Buy stores in the fiscal quarter. Additionally, an improvement in labor productivity, compared to the fiscal third quarter, and solid execution offset slightly lower customer traffic year over year. The gross profit rate for the fourth quarter was 25.0 percent of revenue, up from a gross profit rate of 23.5 percent of revenue for the prior-year fourth quarter on an adjusted basis. The rate increase was fueled by more cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. promotional strategies and growth in higher-margin services and accessories. Furthermore, progress in the company's supply chain transformation, improvements from price optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. , an increase in private-label product sales and better product transition management also added to the rate increase. Best Buy's SG&A expense rate was 16.0 percent of revenue for the fourth quarter, compared with 15.3 percent of revenue for the prior year on an adjusted basis. The year-over-year increase in the SG&A rate was primarily due to a 70-basis-point increase in incentive compensation expense. The increase in incentive compensation expense was driven by the company's strong fiscal 2006 results, new field-driven programs and more plan participants Plan participants Employees or other beneficiaries who are eligible to receive benefits from a company's employee benefit plan. , as well as a comparison with modest incentive costs in the prior year's fourth quarter. However, U.S. productivity gains, cost-reduction efforts and leverage from revenue growth more than offset higher operating costs operating costs npl → gastos mpl operacionales from specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. labor and the expansion of the company's services business. Operating income dollars grew 25 percent for the quarter. The operating income rate improved to 8.9 percent of revenue for the fourth quarter, compared with 8.2 percent of revenue in the prior year's fourth quarter on an adjusted basis, due to the improvement in the gross profit rate. The company reported net interest income of $32 million, up from $15 million in the prior year's fourth quarter on an adjusted basis. The increase was driven by higher investment yields and higher average investment balances. Consistent with the seasonality of Best Buy's cash balances, net interest income was at its peak in the fiscal fourth quarter. 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 of finance and CFO See Chief Financial Officer. , said, "The combination of robust sales, continued gross profit gains and focused operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. reduction paid off in our most important quarter of the year. This outcome encourages us, yet we have further work ahead of us. Operating an efficient and effective, customer-centric enterprise is a key focus for Best Buy in fiscal 2007." Fourth-Quarter Revenue Rises Across All Channels U.S. Best Buy stores reported fourth-quarter revenue of $9.4 billion, an increase of 14 percent, supported by a comparable store sales gain of 7.3 percent and the opening of new stores. In addition, 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 nearly 50 percent. Total online revenue, including 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. Web sites, grew 45 percent for the quarter. 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. stores, 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. consumer electronics, had revenue of $55 million for the fourth quarter (excluding the results of Magnolia Home Theater, which is reported as part of U.S. Best Buy stores). Magnolia Audio Video reported a comparable store sales gain of 30.3 percent due to consumer interest in audio and video products, as well as custom installation services. Best Buy's international segment--comprised of Future Shop and Best Buy operations in Canada--generated fourth-quarter revenue of $1.3 billion, an increase of 24 percent, reflecting 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 increase of 6.4 percent. Brian The name Brian (sometimes spelled Bryan) comes from an Irish backround. It is of Celtic origin and its meaning may be "hill" or "strong, noble, and high"[1]. Dunn Dunn may refer to: Places
Bob Willett, CEO of Best Buy International and CIO CIO: see American Federation of Labor and Congress of Industrial Organizations. (Chief Information Officer) The executive officer in charge of information processing in an organization. , commented, "In addition to the strength we're seeing domestically, we had solid fourth-quarter revenue growth in 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 . We've we've Contraction of we have. we've have been rapidly opening stores in Canada and growing our marketshare; these results encourage us, as we now focus on optimizing our operating model Operating Model is a term that is used in many contexts. In essence an operating model describes how an organization operates across both business and technology domains. The Operating Model describes what is important for the organization. and differentiating both brands in Canada going forward." Dunn finished, "We understand that the company's long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. success hinges Hinges may refer to:
Contraction of I have. I've I have I've have never been more confident in our marketplace position. As the connection and integration of products becomes more complex, customers increasingly require the expert advice and service they know they can get from our employees." Electronics Lead Revenue Mix; Sales of Flat-Panel TVs Accelerate During the 2006 fiscal fourth quarter, Best Buy's comparable store sales gain was driven by higher sales of 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 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. hardware. These gains more than offset comparable store sales declines in tube and projection TVs See rear-projection TV and front-projection TV. , DVDs and CDs. Best Buy's revenue mix for the fiscal 2006 fourth quarter reflected continued growth in the consumer electronics product group. Consumer electronics, which represented 45 percent of fourth-quarter revenue, posted a 17.7-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 as higher volumes and increased screen sizes more than offset the impact of declining prices. Total television comparable store sales grew in the solid double digits Double Digits was a pricing game on the American television game show, The Price Is Right. Played from April 20, 1973 through May 18, 1973's show, it was played for a car and used small prizes. as flat-panel TV growth was partially offset by declines in tube and projection TVs. MP3 products generated a strong double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. comparable store sales gain as customers continued to adopt, upgrade and add accessories to 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. . Home office products, which accounted for 30 percent of fiscal 2006 fourth-quarter revenue, had a comparable store sales increase of 2.5 percent. A low double-digit comparable store sales increase for notebook computers and a strong double-digit increase in computer service revenue fueled the growth. At the end of fiscal 2006, Best Buy employed more than 12,000 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. agents, supporting the company's computer services Data processing (timesharing, batch processing), software development and consulting services. See service bureau, SaaS and ASP. business. The gains from notebook computers and computer services were partially offset by declines in comparable store sales of printers and telephones. Appliances, which were 4 percent of fiscal 2006 fourth-quarter revenue, had a comparable store sales gain of 5.5 percent for the quarter. This product group continued to benefit from an expanded product 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. and an increase in average selling prices The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. for 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. . The entertainment software product group, which comprised 21 percent of fourth-quarter revenue, declined 4.5 percent on a comparable store sales basis. A strong double-digit gain in comparable store sales of gaming hardware was more than offset by expected declines in DVDs and CDs. The video gaming strength was fueled by two platforms that were new this past holiday season, Xbox A video game console from Microsoft that was designed to compete with Sony's PlayStation and Nintendo's GameCube. Introduced in 2001 with a 733 MHz Pentium III CPU, 5x DVD drive and custom-designed graphics processor, the Xbox also includes four game controller ports, Ethernet networking 360 and PlayStation A video game console from Sony that was introduced in the U.S. in 1995. CD-ROM based and using a 32-bit MIPS CPU, the original PlayStation was the first of a family of desktop and handheld units. Portable. The comparable store sales decline in video gaming software and accessories partially offset the gain in video gaming hardware. During the fourth quarter, the company opened nine U.S. Best Buy stores, including two 45,000-square-foot stores, three 30,000-square-foot stores and four 20,000-square-foot stores. The company closed one U.S. Geek Squad store during the quarter. In addition, the company's Canadian operations opened one Best Buy store and one Geek Squad store, and closed one Future Shop store. At the end of the fourth quarter, the company operated 742 Best Buy stores, 20 Magnolia Audio Video stores 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 118 Future Shop stores, 44 Best Buy stores and five Geek Squad stores in Canada. For the trailing 12 months, the company opened 105 new stores 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 $338 Million in Common Stock During the fourth quarter of fiscal 2006, Best Buy repurchased approximately 7.1 million shares of its common stock at an average price of $47.34 per share, for a total of approximately $338 million. At the end of the fiscal 2006 fourth quarter, the company had $790 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. In fiscal 2006, the company repurchased approximately $772 million in common stock, up from $200 million for fiscal 2005. On Jan. 24, 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 fourth quarter. For the fiscal year, dividends paid totaled 31 cents per share, or $150 million in the aggregate, which was an 11-percent increase from fiscal 2005.
Earnings Per Diluted Share from Continuing Operations Rose 30
Percent For Fiscal 2006(3)
Fiscal Year Performance Summary
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(U.S. dollars in millions, except per share amounts)
----------------------------------------------------------------------
Year Ended
----------------------------------------------------------------------
Feb. 26, 2005 Feb. 26, 2005
Feb. 25, 2006 (As Reported) (As Adjusted)(1)
----------------------------------------------------------------------
Revenue $30,848 $27,433 $27,498
----------------------------------------------------------------------
Comparable store sales
% gain(2) 4.9% 4.3% 4.3%
----------------------------------------------------------------------
Gross profit as % of
revenue 25.0% 23.7% 23.7%
----------------------------------------------------------------------
SG&A as % of revenue 19.7% 18.4% 18.9%
----------------------------------------------------------------------
Operating income as %
of revenue 5.3% 5.3% 4.8%
----------------------------------------------------------------------
Diluted EPS from
continuing operations $2.27 $1.86 $1.75
----------------------------------------------------------------------
(1) The company has provided non-GAAP financial data in this news
release. The non-GAAP financial data adjusts for the effect of
expensing stock-based compensation as if the company had applied
Statement of Financial Accounting Standards No. 123, Accounting
for Stock-Based Compensation, in fiscal 2005 and excludes fiscal
2005 lease and sales return liability accounting adjustments as
described on the company's Web site, www.BestBuy.com. The adjusted
financial data is considered a non-GAAP financial measure and is
not in accordance with, or preferable to, the financial data
determined in accordance with GAAP. However, the company believes
the adjusted financial data provides comparability of its fiscal
2006 financial results with the results for the prior year. A
reconciliation of these non-GAAP measures to the applicable GAAP
financial measures is provided on the company's Web site.
(2) 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.
Fiscal 2006 Highlights --Fiscal 2006 earnings per diluted share from continuing operations grew 30 percent to $2.27, compared with $1.75 per diluted share one year ago on an adjusted basis(3). --Fiscal 2006 revenue increased 12 percent to $30.8 billion, fueled by 103 net new store openings in the past 12 months and a comparable store sales gain of 4.9 percent. --Annual gross profit dollars increased 19 percent, driven by strong revenue growth and a 130-basis-point rate improvement. Driving this rate improvement were more cost-effective promotional strategies, expansion of the company's services business and supply chain improvements. The improvement also included a 10-basis-point benefit related to the initial and ongoing revenue recognition of gift card breakage (or $43 million of pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta income for the fiscal year). --Total share repurchases and dividends paid during the fiscal year were $922 million, an 80-percent payout pay·out n. 1. The act or an instance of paying out. 2. A percentage of corporate earnings that is paid as dividends to shareholders. of net earnings to shareholders. --In fiscal 2006, Best Buy and The Best Buy Children's Foundation contributed approximately $30 million to local Best Buy communities; these included contributions for the communities and people affected by Hurricanes Katrina KATRINA Keeping All the Resources in New Orleans Alive KATRINA Krewe Aiding Trash Removal In the New Orleans Area , Wilma and Rita. Company Poised To Take Customer Centricity To Next Level Said Dunn, "We are energized by our outstanding results in fiscal 2006. For the coming year, we're putting resources on the key drivers of both near-term near-term adj. Of, for, or involving a short period of time in the near future. and long-term growth, and we're focused on optimizing our customer-centric operating model across the company. This work will require changes in our stores, in our field leadership and within the corporate campus--and we're committed to making those changes." The company plans to add its Magnolia Home Theater store-within-a-store A store within a store is an agreement in which the owner of a shop lets a part of the shop site to be used by different company to run another shop. This agreement is popular among filling stations and supermarkets. experience to approximately 200 stores and elements of Best Buy For Business to at least 120 stores in fiscal 2007. Best Buy believes that Magnolia Home Theater--with its high-end brands, home-like displays and specially trained employees--offers a unique solution for customers. Additionally, the company plans to grow its opportunities with the under-served small and medium business markets through its strong retail presence and expanded direct reseller An organization that sells hardware and software to the general public. Resellers purchase products from software publishers and hardware manufacturers. channel. The company also expects significant benefit from further expansion of its services business in fiscal 2007. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Dunn, Best Buy anticipates high-double-digit Geek Squad revenue growth with only modest increases in the number of agents. It expects to accomplish this goal by installing new systems to support and boost productivity, as it benefits from volume and scale. Additionally, up to 1,000 new home theater installers are expected to join the 1,500 installers Best Buy currently employs, as part of an effort to provide full-solution offerings to customers in this growing area. Dunn said, "We intend to push further into areas that we've identified as growth opportunities, and at the same time bring greater discipline to our customer-centric model. For fiscal 2007, we've clearly defined our priorities. This focus and discipline comes with trade-offs and tough choices, but we're committed to driving strong growth while streamlining our cost structure to further improve our competitive position. We'll we'll Contraction of we will. we'll we will or we shall we'll will ~shall redeploy re·de·ploy tr.v. re·de·ployed, re·de·ploy·ing, re·de·ploys 1. To move (military forces) from one combat zone to another. 2. resources as well as eliminate redundant Repetitive. See redundancy. and non-strategic work, which, unfortunately, means changing or eliminating certain positions. But we'll add jobs in those areas that directly support our growth." Best Buy Expects Fiscal 2007 Diluted EPS 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're in the midst Adv. 1. in the midst - the middle or central part or point; "in the midst of the forest"; "could he walk out in the midst of his piece?" midmost of a strong product cycle. Sales of flat-panel televisions and the excitement around the high-definition High-definition refers to an increase in display or visual resolution such as in:
"With clear growth priorities, a single operating model, expanded service capabilities and our focus on customers, we plan to maximize In a graphical environment, to enlarge a window to the full size of the screen. See Win Maximize windows. the strong product cycle and deliver a differentiated dif·fer·en·ti·ate v. dif·fer·en·ti·at·ed, dif·fer·en·ti·at·ing, dif·fer·en·ti·ates v.tr. 1. To constitute the distinction between: experience for consumers. We believe this combination will drive our results and growth in fiscal 2007 and beyond." According to Jackson, the company is forecasting total fiscal 2007 revenue of $34 billion to $35 billion, which represents 10-percent to 13-percent growth. It anticipates opening nearly 90 new stores and a comparable store sales gain of 3 percent to 5 percent. The outlook also includes the recently completed acquisition of Pacific Sales Kitchen and Bath Centers. Best Buy anticipates that its gross profit rate will modestly improve by up to 10 basis points, on top of benefits from structural changes made in fiscal 2006. The company expects to lower its SG&A rate by 30 to 40 basis points as it implements and refines its single operating model. As a result, the company anticipates improving its operating income rate by approximately 40 basis points for the year. The company expects its net interest income and effective income tax rate to be relatively stable, year over year. The company expects fiscal 2007 earnings to be in the range of $2.65 to $2.80 per diluted share, which represents an average growth rate of approximately 20 percent. The company's guidance includes anticipated 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 related reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. costs of $0.03 to $0.05 per diluted share in the first half of the fiscal year. These costs are directly related to the company's efforts to increase productivity and redeploy resources to support its strategic priorities. Best Buy's fiscal 2007 reporting period includes 53 weeks; the company estimates the additional week of business will add approximately 2 percent to annual revenue, which is reflected in its annual guidance. Best Buy is updating its guidance practices and plans to continue providing annual guidance, including revenue and earnings per share expectations. The company no longer expects to provide a specific forecast for quarterly earnings per share, which is consistent with management's focus on long-term revenue and earnings growth generation. Best Buy does not expect its business' seasonality to change, and anticipates that each of the first three quarters of fiscal 2007 will contribute 12 percent to 15 percent of the year's earnings, respectively. Additionally, as stated in February February: see month. , the company expects fiscal 2007 first-quarter earnings to show a modest improvement over the very strong prior-year period, which generated earnings growth of 85 percent. The company intends to update its earnings guidance if annual results are expected to change materially. Best Buy is scheduled to conduct an earnings conference call at 10 a.m. Eastern Standard Time on March 30, 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." 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 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 Current Report on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. filed with the Securities and Exchange Commission on March 18, 2004, 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. (3) The company has provided non-GAAP financial data in this news release. The company has provided a reconciliation of these non-GAAP measures on the company's Web site, www.BestBuy.com. 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 940 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 BestBuyCanada.ca), Future Shop (FutureShop.ca), Geek Squad (GeekSquad.com and GeekSquad.ca) and Magnolia Audio Video (Magnoliaav.com). 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.
Domestic Fourth-Quarter Performance Summary from Continuing Operations
----------------------------------------------------------------------
(U.S. dollars in millions)
----------------------------------------------------------------------
Three Months
Ended
----------------------------------------------------------------------
Feb. 25, 2006 Feb. 26, 2005 Feb. 26, 2005
(As Reported) (As Adjusted)(1)
----------------------------------------------------------------------
Revenue $9,425 $8,212 $8,268
----------------------------------------------------------------------
Comparable store sales
% gain(2) 7.4% 3.1% 3.1%
----------------------------------------------------------------------
Gross profit as % of
revenue 25.2% 23.7% 23.7%
----------------------------------------------------------------------
SG&A as % of revenue 15.7% 14.7% 15.1%
----------------------------------------------------------------------
Operating income $893 $735 $708
----------------------------------------------------------------------
Operating income as %
of revenue 9.5% 8.9% 8.6%
----------------------------------------------------------------------
(1) The company has provided non-GAAP financial data in this news
release. The non-GAAP financial data adjusts for the effect of
expensing stock-based compensation as if the company had applied
Statement of Financial Accounting Standards No. 123, Accounting
for Stock-Based Compensation, in fiscal 2005 and excludes fiscal
2005 lease and sales return liability accounting adjustments as
described on the company's Web site, www.BestBuy.com. The adjusted
financial data is considered a non-GAAP financial measure and is
not in accordance with, or preferable to, the financial data
determined in accordance with GAAP. However, the company believes
the adjusted financial data provides comparability of its fiscal
2006 financial results with the results for the prior year. A
reconciliation of these non-GAAP measures to the applicable GAAP
financial measures is provided on the company's Web site.
(2) 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.
International Fourth-Quarter Performance Summary from Continuing
Operations
----------------------------------------------------------------------
(U.S. dollars in millions)
----------------------------------------------------------------------
Three Months Ended
----------------------------------------------------------------------
Feb. 26, 2005 Feb. 26, 2005
Feb. 25, 2006 (As Reported) (As Adjusted)(1)
----------------------------------------------------------------------
Revenue $1,268 $1,015 $1,024
----------------------------------------------------------------------
Comparable store sales
% gain(2) 6.4% 0.5% 0.5%
----------------------------------------------------------------------
Gross profit as % of
revenue 23.0% 22.4% 22.5%
----------------------------------------------------------------------
SG&A as % of revenue 18.1% 17.7% 17.3%
----------------------------------------------------------------------
Operating income $62 $48 $53
----------------------------------------------------------------------
Operating income as %
of revenue 4.9% 4.7% 5.2%
----------------------------------------------------------------------
(1) The company has provided non-GAAP financial data in this news
release. The non-GAAP financial data adjusts for the effect of
expensing stock-based compensation as if the company had applied
Statement of Financial Accounting Standards No. 123, Accounting
for Stock-Based Compensation, in fiscal 2005 and excludes fiscal
2005 lease and sales return liability accounting adjustments as
described on the company's Web site, www.BestBuy.com. The adjusted
financial data is considered a non-GAAP financial measure and is
not in accordance with, or preferable to, the financial data
determined in accordance with GAAP. However, the company believes
the adjusted financial data provides comparability of its fiscal
2006 financial results with the results for the prior year. A
reconciliation of these non-GAAP measures to the applicable GAAP
financial measures is provided on the company's Web site.
(2) 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.
Comparable Store Sales % Gain By Segment
----------------------------------------------------------------------
Three Months Ended Year Ended
----------------------------------------------------------------------
Feb. 25, Feb. 26, Feb. 25, Feb. 26,
Segment 2006 2005 2006 2005
----------------------------------------------------------------------
U.S. Best Buy 7.3% 3.1% 5.1% 4.4%
----------------------------------------------------------------------
Magnolia Audio Video 30.3% 1.8% 15.2% 4.5%
----------------------------------------------------------------------
Domestic Segment 7.4% 3.1% 5.1% 4.4%
----------------------------------------------------------------------
International Segment 6.4% 0.5% 2.8% 3.3%
----------------------------------------------------------------------
Total 7.3% 2.8% 4.9% 4.3%
----------------------------------------------------------------------
Revenue Mix Comparable Store
Summary Sales
----------------------------------------------------------------------
Three Months
Three Months Ended Ended
----------------------------------------------------------------------
Feb. 25, Feb. 26, Feb. 25, Feb. 26,
Product Group 2006 2005 2006 2005
----------------------------------------------------------------------
Consumer Electronics 45% 41% 17.7% 7.4%
----------------------------------------------------------------------
Home Office 30% 32% 2.5% 1.0%
----------------------------------------------------------------------
Entertainment Software 21% 23% (4.5%) (2.7%)
----------------------------------------------------------------------
Appliances 4% 4% 5.5% 10.1%
----------------------------------------------------------------------
Total 100% 100% 7.3% 2.8%
----------------------------------------------------------------------
Revenue Mix Comparable Store
Summary Sales
----------------------------------------------------------------------
Year Ended Year Ended
----------------------------------------------------------------------
Feb. 25, Feb. 26, Feb. 25, Feb. 26,
Product Group 2006 2005 2006 2005
----------------------------------------------------------------------
Consumer Electronics 43% 39% 14.3% 7.9%
----------------------------------------------------------------------
Home Office 32% 34% 0.3% 2.4%
----------------------------------------------------------------------
Entertainment Software 19% 21% (5.9%) 1.5%
----------------------------------------------------------------------
Appliances 6% 6% 7.2% 6.1%
----------------------------------------------------------------------
Total 100% 100% 4.9% 4.3%
----------------------------------------------------------------------
BEST BUY CO., INC.
CONSOLIDATED STATEMENTS OF EARNINGS
($ in millions, except per share amounts)
(Unaudited)
Three Months Ended
------------------------------------------
Feb. 25, Feb. 26, 2005 Feb. 26, 2005
2006 (As Reported) (As Adjusted)(1)
--------- -------------- ----------------
Revenue $10,693 $9,227 $9,292
Cost of goods sold 8,024 7,056 7,106
--------- -------------- ----------------
Gross profit 2,669 2,171 2,186
Gross profit % 25.0% 23.5% 23.5%
Selling, general and
administrative expenses 1,714 1,388 1,425
SG&A % 16.0% 15.0% 15.3%
--------- -------------- ----------------
Operating income 955 783 761
Net interest income
(expense) 32 (6) 15
--------- -------------- ----------------
Earnings from continuing
operations before income
tax expense 987 777 776
Income tax expense 343 255 255
Effective tax rate 34.7% 32.8% 32.8%
--------- -------------- ----------------
Earnings from continuing
operations 644 522 521
Gain on disposal of
discontinued operations -- 50 50
--------- -------------- ----------------
Net earnings $644 $572 $571
========= ============== ================
Basic earnings per share:
Continuing operations $1.32 $1.06 $1.06
Gain on disposal of
discontinued operations -- 0.10 0.10
--------- -------------- ----------------
Basic earnings per share $1.32 $1.16 $1.16
========= ============== ================
Diluted earnings per share:
Continuing operations $1.29 $1.03 $1.04
Gain on disposal of
discontinued operations -- 0.10 0.10
--------- -------------- ----------------
Diluted earnings per
share $1.29 $1.13 $1.14
========= ============== ================
Dividends declared per
common share $0.08 $0.07 $0.07
Basic weighted average
common shares outstanding
(in millions) 487.7 492.5 492.5
Diluted weighted average
common shares outstanding
(in millions) 502.9 507.6 501.3
(1) The company has provided non-GAAP financial data in this news
release. The non-GAAP financial data adjusts for the effect of
expensing stock-based compensation as if the company had applied
Statement of Financial Accounting Standards No. 123, Accounting
for Stock-Based Compensation, in fiscal 2005 and excludes fiscal
2005 lease and sales return liability accounting adjustments as
described on the company's Web site, www.BestBuy.com. The adjusted
financial data is considered a non-GAAP financial measure and is
not in accordance with, or preferable to, the financial data
determined in accordance with GAAP. However, the company believes
the adjusted financial data provides comparability of its fiscal
2006 financial results with the results for the prior year. A
reconciliation of these non-GAAP measures to the applicable GAAP
financial measures is provided on the company's Web site.
BEST BUY CO., INC.
CONSOLIDATED STATEMENTS OF EARNINGS
($ in millions, except per share amounts)
(Unaudited)
Twelve Months Ended
------------------------------------------
Feb. 25, Feb. 26, 2005 Feb. 26, 2005
2006 (As Reported) (As Adjusted)(1)
--------- -------------- ----------------
Revenue $30,848 $27,433 $27,498
Cost of goods sold 23,122 20,938 20,988
--------- -------------- ----------------
Gross profit 7,726 6,495 6,510
Gross profit % 25.0% 23.7% 23.7%
Selling, general and
administrative expenses 6,082 5,053 5,200
SG&A % 19.7% 18.4% 18.9%
--------- -------------- ----------------
Operating income 1,644 1,442 1,310
Net interest income 77 1 22
--------- -------------- ----------------
Earnings from continuing
operations before income
tax expense 1,721 1,443 1,332
Income tax expense 581 509 470
Effective tax rate 33.7% 35.3% 35.3%
--------- -------------- ----------------
Earnings from continuing
operations 1,140 934 862
Gain on disposal of
discontinued operations -- 50 50
--------- -------------- ----------------
Net earnings $1,140 $984 $912
========= ============== ================
Basic earnings per share:
Continuing operations $2.33 $1.91 $1.76
Gain on disposal of
discontinued operations -- 0.10 0.10
--------- -------------- ----------------
Basic earnings per share $2.33 $2.01 $1.87
========= ============== ================
Diluted earnings per share:
Continuing operations $2.27 $1.86 $1.75
Gain on disposal of
discontinued operations -- 0.10 0.10
--------- -------------- ----------------
Diluted earnings per
share $2.27 $1.96 $1.85
========= ============== ================
Dividends declared per
common share $0.31 $0.28 $0.28
Basic weighted average
common shares outstanding
(in millions) 490.3 488.9 488.9
Diluted weighted average
common shares outstanding
(in millions) 504.8 505.0 497.7
(1) The company has provided non-GAAP financial data in this news
release. The non-GAAP financial data adjusts for the effect of
expensing stock-based compensation as if the company had applied
Statement of Financial Accounting Standards No. 123, Accounting
for Stock-Based Compensation, in fiscal 2005 and excludes fiscal
2005 lease and sales return liability accounting adjustments as
described on the company's Web site, www.BestBuy.com. The adjusted
financial data is considered a non-GAAP financial measure and is
not in accordance with, or preferable to, the financial data
determined in accordance with GAAP. However, the company believes
the adjusted financial data provides comparability of its fiscal
2006 financial results with the results for the prior year. A
reconciliation of these non-GAAP measures to the applicable GAAP
financial measures is provided on the company's Web site.
BEST BUY CO., INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
($ in millions)
(Unaudited)
Subject to Reclassification
Feb. 25, Feb. 26,
2006 2005
--------- ---------
ASSETS
Current assets
Cash & cash equivalents $681 $354
Short-term investments 3,051 2,994
Receivables 506 375
Merchandise inventories 3,338 2,851
Other current assets 409 329
--------- ---------
Total current assets 7,985 6,903
Net property & equipment 2,712 2,464
Goodwill 557 513
Other intangible assets 44 40
Long-term investments 218 148
Other assets 348 226
--------- ---------
TOTAL ASSETS $11,864 $10,294
========= =========
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $3,234 $2,824
Accrued liabilities 2,404 2,063
Current portion of long-term debt 418 72
--------- ---------
Total current liabilities 6,056 4,959
Long-term liabilities 373 358
Long-term debt 178 528
Shareholders' equity 5,257 4,449
--------- ---------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $11,864 $10,294
========= =========
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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