Best Buy 2002 Annual Report Download - page 22

Overview
Best Buy Co., Inc. is North America’s No. 1 specialty
retailer of consumer electronics, home office equipment,
entertainment software and appliances. In November of
fiscal 2002, we acquired Future Shop Ltd. (Future Shop).
Future Shop currently operates 95 stores and is Canada’s
largest specialty retailer of name-brand consumer electronics,
home office equipment, entertainment software and appli-
ances. During the fourth quarter of fiscal 2001, we
acquired Musicland Stores Corporation (Musicland) and
Magnolia Hi-Fi, Inc. (Magnolia Hi-Fi). Musicland is pri-
marily a mall-based national retailer of prerecorded music,
movies and other entertainment-related products with
1,321 stores. Magnolia Hi-Fi is a Seattle-based retailer of
high-end consumer electronics with 13 stores. All three
acquisitions were accounted for using the purchase
method. Under this method, the net assets and results of
operations of those businesses are included in our
consolidated financial statements from their respective
dates of acquisition. We currently operate three reportable
segments: Best Buy, Musicland and International. The
Best Buy segment aggregates all operations exclusive of
Musicland and International operations. The International
segment was established in the third quarter of fiscal 2002
in connection with our acquisition of Future Shop.
Our fiscal year ended March 2, 2002, contained 52
weeks. Fiscal 2001 and 2000 contained 53 weeks and
52 weeks, respectively.
20 MD&A
Management’s Discussion and Analysis of Results of
Operations and Financial Condition
Results of Operations
Consolidated
The following table presents selected consolidated financial data for each of the past three fiscal years ($ in millions,
except per share amounts):
Pro forma
2002 2001 2001(1) 2000
Revenues $ 19,597 $ 15,327 $ 17,621 $ 12,494
Revenues % change 28% 23% — 24%
Comparable stores sales % gain(2) 1.9% 4.9% 4.9% 11.1%
Gross profit as a % of revenues 22.6% 20.0% 21.8% 19.2%
SG&A as a % of revenues 17.8% 16.0% 17.8% 14.8%
Operating income $ 937 $ 604 $ 703 $ 539
Operating income as a % of revenues 4.8% 3.9% 4.0% 4.3%
Net earnings $ 570 $ 396 $ 425 $ 347
Diluted earnings per share(3) $1.77 $ 1.24 $ 1.33 $ 1.09
(1) Pro forma information reflects combined results of operations at Best Buy, Musicland and Future Shop. Musicland’s results of operations
are presented as if it had been acquired at the beginning of fiscal 2001 and include amortization of goodwill. Future Shop’s results of
operations are presented as if it had been acquired at the beginning of November in fiscal 2001 and do not include amortization
of goodwill. Pro forma results are unaudited.
(2) Comparable stores are stores open at least 14 full months, include remodeled and expanded locations and, for all periods presented,
reflect Best Buy stores only. Relocated stores are excluded from the comparable store sales calculation until at least 14 full months after
reopening. Acquired stores will be included in the comparable store sales calculation beginning with the first full quarter following the
first anniversary of the date of acquisition.
(3) The diluted earnings per share amounts above have been restated to reflect a three-for-two stock split effective on May 10, 2002.