Best Buy 2000 Annual Report Download - page 39

Download and view the complete annual report

Please find page 39 of the 2000 Best Buy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 52

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52

37
$ in thousands, except per share amounts
Best Buy Co., Inc. Fiscal 2000 Annual Report
Stock Splits
The Company completed two-for-one stock splits effected in the form of 100% stock dividends distributed
on March 18, 1999 and May 26, 1998. All share and per share information reflects these stock splits.
Revenue Recognition
The Company recognizes revenues from the sales of merchandise at the time the merchandise is sold. Service
revenues are recognized at the time the service is provided.
The Company sells extended service contracts, called Performance Service Plans, on behalf of an unrelated
third party. The Company recognizes net commission revenues for extended service contracts sold in states
where the Company is deemed the obligor ratably over the terms of the service contracts, generally two to
five years. The Company recognizes net commission revenues for extended service contracts sold in states
where the Company is not deemed the obligor at the time of sale.
Pre-Opening Costs
In fiscal 1999, the Company adopted Statement of Position (SOP) 98-5, Reporting on the Cost of Start-Up
Activities. The SOP requires the costs of start-up activities, including store opening costs, to be expensed as
incurred. The Company historically deferred and amortized those costs over interim periods in the year the
store opened. Annual results were not materially impacted by the adoption.
Advertising Costs
Advertising costs, included in selling, general and administrative expenses, are expensed as incurred.
Earnings per Share
Basic earnings per share is computed based on the weighted average number of common shares outstanding
during each period. Diluted earnings per share includes the incremental shares assumed issued on the exercise
of stock options. Convertible preferred securities were assumed to be converted into common stock and any
related interest expense, net of income taxes, was added back to net earnings when the assumed conversion
resulted in lower earnings per share.
Stock Options
The Company applies Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
Employees, in accounting for stock options and presents in Note 5 pro forma net earnings and earnings per
share as if the Company had adopted SFAS No. 123, Accounting for Stock-Based Compensation.
Reclassifications
Certain previous-year amounts have been reclassified to conform to the current-year presentation. These
reclassifications had no impact on net earnings or total shareholders’ equity.
Notes to Consolidated Financial Statements