Best Buy 2003 Annual Report Download

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10−K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended March 1, 2003
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 1−9595
BEST BUY CO., INC.
(Exact name of Registrant as specified in its charter)
Minnesota 41−0907483
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
7601 Penn Avenue South
Richfield, Minnesota 55423
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: 612−291−1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, par value $.10 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None

Table of contents

  • Page 1
    ... ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 1, 2003 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1âˆ'9595 (Exact name...

  • Page 2
    ... (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes...

  • Page 3
    ..., sales volumes, profit margins, weather, foreign currency fluctuation, availability of suitable real estate locations, and the impact of labor markets and new product introductions on our overall profitability. Readers should review our Current Report on Form 8âˆ'K filed with the Securities and...

  • Page 4
    .... Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Item 13. Certain Relationships and Related Transactions. Item 14. Controls and Procedures. PART IV Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8âˆ'K. SIGNATURES...

  • Page 5
    ..., homeâˆ'office equipment, entertainment software and appliances with revenue from continuing operations of $20.9 billion for our fiscal year ended March 1, 2003. We operate retail stores and commercial Web sites as part of continuing operations under the brand names Best Buy (BestBuy.com), Future...

  • Page 6
    ... in store environment, product value, selection and service, all of which advance our objectives of enhancing our business model, gaining market share and improving profitability. The Future Shop and Magnolia Hiâˆ'Fi acquisitions provide us with access to new distribution channels and new customers...

  • Page 7
    ... Best Buy stores offer a wide variety of consumer electronics, homeâˆ'office equipment, entertainment software and appliances, and operated 548 stores in 48 states at the end of fiscal 2003. Magnolia Hiâˆ'Fi is a highâˆ'end retailer of audio and video products and had 19 stores in Washington, Oregon...

  • Page 8
    ...provinces and eight Canadian Best Buy stores operating in Ontario. Future Shop and Canadian Best Buy stores offer products similar to those offered by U.S. Best Buy stores. During fiscal 2002, we had three reportable operating segments: Best Buy, Musicland and International. The primary reasons for...

  • Page 9
    ... 481 548 U.S. Best Buy stores offer merchandise in five product categories: consumer electronics, home office, entertainment software, appliances and "other" products. Consumer electronics, the largest product category based on revenue, consists of video and audio equipment. Video products include...

  • Page 10
    ... of Total Revenue Fiscal 2001 Product Category Consumer Electronics Home Office Entertainment Software Appliances Other Total 34% 30% 22% 6% 8% 100% 33% 31% 22% 6% 8% 100% 33% 34% 19% 7% 7% 100% Operations U.S. Best Buy stores follow a standardized and detailed operating procedure called...

  • Page 11
    ... five assistant managers. The average staff in each store ranges from 65 to 150 people, depending on store size and sales volume. Distribution Generally, merchandise is shipped to U.S. Best Buy stores from one of six distribution centers located in California, Georgia, Minnesota, Ohio, Oklahoma and...

  • Page 12
    ... audio equipment, audio accessories, car stereos and car security systems. The home office category includes telephones and wireless communication devices. The "other" product category includes extended service contracts, customer equipment repairs, and inâˆ'home and automobile installation labor...

  • Page 13
    ... offerings, extensively trained sales staff and focus on exceptional customer service both before and after the sale, in combination with the leveraging of U.S. Best Buy stores' core competencies, effectively position Magnolia Hiâˆ'Fi to meet current and future competitive challenges. International...

  • Page 14
    ...: Stores Opened Stores Closed Total Stores at End of Fiscal Year Fiscal Year Balance Forward 2002 2003 n.a. - 8 n.a. - - n.a. - 8 Merchandise International stores generally offer merchandise in five product categories: consumer electronics, home office, entertainment software, appliances and...

  • Page 15
    ... future objectives. International stores are generally open 60 to 75 hours a week, seven days a week. A typical store is staffed by a general manager, several department sales managers, a customer service manager and on average 39 fullâˆ'time staff associates, as well as partâˆ'time associates...

  • Page 16
    ... was acquired in the fourth quarter of fiscal 2001, is a national retailer of movies, prerecorded music, video gaming merchandise and other entertainment-related products. Its mallâˆ'based stores include the Sam Goody and Suncoast brands. Musicland also operates large-format Media Play stores in...

  • Page 17
    ...Sam Goody Mall âˆ' Sam Goody Mall stores generally offer a wide assortment of entertainment products including compact disks, music, DVDs, books, computer software, electronics, video games and musicâˆ'inspired apparel. Suncoast âˆ' Suncoast stores feature newly released and classic movies, special...

  • Page 18
    ..., and inventory policies for Musicland stores are centrally controlled. Distribution The majority of Musicland's inventory is shipped from its distribution center located in Indiana. From time to time, in order to meet release dates for selected products and to improve inventory management, certain...

  • Page 19
    ... Hiâˆ'Fi Stores Stores International Segment Canadian Best Future Shop Buy Stores Stores Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan...

  • Page 20
    Alberta Saskatchewan Manitoba Ontario Quebec Nova Scotia New Brunswick Newfoundland Prince Edward Island Total - - - - - - - - - 548 - - - - - - - - - 19 - - - 8 - - - - - 8 13 3 4 37 20 2 2 1 1 104 - - - - - - - - - 1,195 11

  • Page 21
    ... warehouse in Hayward, California. International Segment At the end of fiscal 2003, we operated 104 Future Shop stores and eight Canadian Best Buy stores totaling approximately 2.4 million retail square feet. The operations of the International segment are serviced by two leased distribution centers...

  • Page 22
    ... stores totaling approximately 8.3 million retail square feet. Musicland's stores are serviced by our distribution facility in Franklin, Indiana. For additional information regarding this facility, refer to the above discussion of U.S. Best Buy Stores. Musicland's corporate offices are located...

  • Page 23
    ... - Public Affairs and Investor Relations Officer Senior Vice President - General Counsel and Assistant Secretary Vice President - Finance/Planning & Performance Management 30 37 19 13 15 18 5 3 4 7 9 4 20 12 1 Bradbury H. Anderson has been a director since 1986 and is currently Best Buy's Vice...

  • Page 24
    ... personal care and grooming products; vice president and general manager of a product category at James River Corporation, a manufacturer and marketer of consumer products, food and packaging; and a general manager at Progressive Insurance. Mr. Linton began his career at The Proctor & Gamble Company...

  • Page 25
    ... 4. Submission of Matters to a Vote of Security Holders. None. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters. The information set forth under the caption "Common Stock Prices" on page 40 of the Annual Report is incorporated herein by reference. The information...

  • Page 26
    ... 2003, March 2, 2002 and March 3, 2001 Consolidated statements of earnings Consolidated statements of cash flows Consolidated statements of changes in shareholders' equity Notes to consolidated financial statements Report of Best Buy Management Independent auditor's report 42âˆ'43 44 45 46 47âˆ'63...

  • Page 27
    ... of Discontinued Operations Investments in Subsidiaries Total Assets Liabilities and Shareholders' Equity Current Liabilities Accounts payable Accrued compensation and related expenses Accrued liabilities Accrued income taxes Current portion of longâˆ'term debt Current liabilities of discontinued...

  • Page 28
    Noncurrent Liabilities of Discontinued Operations Shareholders' Equity (Deficit) Total Liabilities and Shareholders' Equity $ - 2,733 6,012 $ 16 - 1,198 3,434 $ 25 (143) 1,555 $ - (1,058) (3,338) $ 25 2,730 7,663

  • Page 29
    ... of Discontinued Operations Investments in Subsidiaries Total Assets Liabilities and Shareholders' Equity Current Liabilities Accounts payable Accrued compensation and related expenses Accrued liabilities Accrued income taxes Current portion of longâˆ'term debt Current liabilities of discontinued...

  • Page 30
    Condensed Consolidating Statements of Earnings For the Fiscal Year Ended March 1, 2003 $ in millions Best Buy Co., Inc. Guarantor Subsidiary Nonâˆ'Guarantor Subsidiaries Eliminations Consolidated Revenue Cost of goods sold Gross profit Selling, general and administrative expenses Operating (loss)...

  • Page 31
    Income tax (benefit) expense Earnings from continuing operations Earnings from discontinued operations, net of tax Net earnings $ (2) 570 - 570 $ 18 263 423 - 423 $ 95 151 - 151 $ - (574) - (574) $ 356 570 - 570

  • Page 32
    ... Statements of Cash Flows For the Fiscal Year Ended March 1, 2003 $ in millions Best Buy Co., Inc. Guarantor Subsidiary Nonâˆ'Guarantor Subsidiaries Total cash provided by (used in) operating activities from continuing operations Investing activities Additions to property and equipment Acquisition...

  • Page 33
    Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year $ 1,863 $ 19 37 $ 14 $ - $ 1,914

  • Page 34
    ...Statements of Cash Flows For the Fiscal Year Ended March 2, 2002 $ in millions Best Buy Co., Inc. Guarantor Subsidiary Nonâˆ'Guarantor Subsidiaries Total cash provided by operating activities from continuing operations Investing activities Additions to property and equipment Acquisition of business...

  • Page 35
    ... on Accounting and Financial Disclosure. None. PART III Item 10. Directors and Executive Officers of the Registrant. The information provided under the captions "Security Ownership of Certain Beneficial Owners and Management" and "Nominees and Directors" on pages 6 through 10 of the Proxy Statement...

  • Page 36
    Compliance" on page 23 of the Proxy Statement is incorporated herein by reference. Item 11. Executive Compensation. The information set forth under the caption "Executive Compensation" on pages 12 through 20 of the Proxy Statement is incorporated herein by reference. 21

  • Page 37
    ...company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within required time periods. Our Chief Executive Officer and our Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of a date within 90 days...

  • Page 38
    ... Year 2004 Shortâˆ'term Incentive Plan for senior officers 2000 Restricted Stock Award Plan, as amended The Assumed Musicland 1992 Stock Option Plan The Assumed Musicland 1994 Stock Option Plan The Assumed Musicland 1998 Stock Incentive Plan Statements re: Computation of Ratios 2003 Annual Report...

  • Page 39
    ... herein by reference and made a part hereof. (13) Exhibit so marked was filed with the SEC on February 23, 2001, as an exhibit to the Registration Statement on Form Sâˆ'8 (Registration No. 333âˆ'56146) of Best Buy Co., Inc., and is incorporated herein by reference and made a part hereof. 23

  • Page 40
    ... our Musicland business into our domestic Best Buy stores operations; the position of Musicland president has been eliminated; and Kevin Freeland, the former president of Musicland, has left the company, filed on January 10, 2003. (2) Filing of amended and restated cautionary statements for purposes...

  • Page 41
    ..., thereunto duly authorized. BEST BUY CO., INC. (Registrant) By: /s/ Bradbury H. Anderson Vice Chairman and Chief Executive Officer Dated: May 29, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the...

  • Page 42
    /s/ James C. Wetherbe James C. Wetherbe Director 25

  • Page 43
    ... condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules...

  • Page 44
    ... R. Jackson, Executive Vice President - Finance and Chief Financial Officer of Best Buy Co., Inc., certify that: 1. 2. I have reviewed this annual report on Form 10âˆ'K of Best Buy Co., Inc.; Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit...

  • Page 45
    Schedule II Valuation and Qualifying Accounts ($ in millions) Balance at Beginning of Period Charged to Expenses Or Other Accounts Other* Balance at End of period** Fiscal Year Ended March 1, 2003 Allowance for doubtful accounts Fiscal Year Ended March 2, 2002 Allowance for doubtful accounts ...

  • Page 46
    ... Registered Office Address (No. & Street). List a complete street address or rural route and rural route box number. A post office box is not acceptable. 401 Second Avenue South Street 3. Minneapolis City MN State 55401 Zip Code Registered Agent (Registered agents are required for foreign entities...

  • Page 47
    ...defined terms therein in the appropriate alphabetical order: "Cash Flow Leverage Ratio": at any date of determination, the ratio of (a) the Interestâˆ'bearing Indebtedness of the Company and its Subsidiaries, plus eight times Rental and Lease Expense for the Measurement Period ended on such date, to...

  • Page 48
    ... permitted by the terms of the Credit Agreement, and (b) there will exist no Default or Event of Default under the Credit Agreement as amended by this Amendment on such date which has not been waived by the Banks. 4.2 Authority, Validity, No Conflict, No Consent Required. The Company represents and...

  • Page 49
    ... THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS, THEIR HOLDING COMPANIES AND THEIR AFFILIATES. THE REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK. 5 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above...

  • Page 50
    BEST BUY CO., INC. By /s/ Ryan D. Robinson Its VP Finance U.S. BANK NATIONAL ASSOCIATION, as Agent and as a Bank By /s/ Sam Pepper Its Vice President Sâˆ'1 WACHOVIA BANK, NATIONAL ASSOCIATION, f/k/a First Union National Bank By Its /s/ Mark S. Supple Vice President [Signature page to First ...

  • Page 51
    ... Vice President & Manager [Signature page to First Amendment to Credit Agreement] Sâˆ'5 CREDIT SUISSE FIRST BOSTON, CAYMAN ISLANDS BRANCH By /s/ Bill O'Daly Its Director By /s/ Cassandra Droogan Its Associate [Signature page to First Amendment to Credit Agreement] Sâˆ'6 FLEET NATIONAL BANK By...

  • Page 52
    ... have guaranteed payment and performance of the obligations of BEST BUY CO., INC., a Minnesota corporation (the "Company"), to U.S. Bank National Association, as agent (the "Agent") and as a Bank, and certain other Banks (the "Banks") under that certain Amended and Restated Credit Agreement dated as...

  • Page 53
    Its General Partner By /s/ Ryan D. Robinson Its VP Finance BEST BUY INVESTMENT CO. By /s/ Ryan D. Robinson Its VP Finance Bâˆ'1

  • Page 54
    ... information provided by Best Buy Canada Ltd. Magasins Best Buy Ltée. (formerly known as Future Shop Ltd. Future Shop Ltée.) in connection with your request for continued financing, HSBC Bank Canada (the "Bank") has authorized and hereby offers to make available the following credit facilities...

  • Page 55
    ... foreign exchange contract line of credit (the "F/X Facility") under which the Aggregate F/X Credit Risk (as defined below) shall at no time exceed CDN $5,000,000 (the "F/X Credit Limit"). 3.2. A new CDN $13,000,000 electronic funds transfer line (the "EFT Limit") shall be available independent...

  • Page 56
    ... F/X Credit Risk applicable to all F/X Contracts entered into by the Bank and in effect at any given time shall not exceed the F/X Credit Limit specified under the heading "Credit Facilities" above, namely, CDN $5,000,000. For the purposes of this Offer Letter, "Aggregate F/X Credit Risk" means the...

  • Page 57
    ... the EFT Limit, shall, at the option of the Bank, immediately come due and be payable upon the occurrence of an Event of Default (as defined below) provided that: 4 all amounts outstanding under the Operating Loan shall be repaid by no later than the date on which the Operating Term expires; 8.1.

  • Page 58
    ... remaining unpaid from time to time, including, without limitation, all direct advances and amounts outstanding as a result of unpaid liabilities pursuant to paragraphs 8.1 through 8.4 inclusive above, shall be payable on the last day of each month at a rate equal to the Bank's Prime Rate plus one...

  • Page 59
    ...; and 9.2.4 the Bank's prevailing activity fees existing from time to time in respect of such matters as extensions of review dates due to delay in delivery of financial information, late management information systems reporting, and the Bank's additional requirements such as interim applications...

  • Page 60
    ... to Future Shop Acquisition Inc. for so long as no Event of Default has occurred or providing the making of any such interest payments will not create an Event of Default; 10.11. such supporting certificates, opinions and other documentation as the Bank and its solicitors may reasonably require. 10...

  • Page 61
    ... this Offer Letter, the minimum cash flow ratio shall mean the quotient arrived at from time to time when dividing the aggregate of: 12.1.2.5.1 the Borrower's net income plus the aggregate of taxes, depreciation, rental and lease payments, and cash investment in the Borrower made by Best Buy Co.,

  • Page 62
    ... by Best Buy Co. in cash after the date of execution and delivery of the U.S. Credit Agreement to repurchase shares in Best Buy Co.'s common stock pursuant to Best Buy Co.'s stock repurchase programs; 12.1.3 The Cash Flow Leverage Ratio (of Best Buy Co.) shall not (a) at the end of any fiscal year...

  • Page 63
    ... list of accounts receivable of the Borrower; and declaration of inventory of the Borrower in accordance with the Bank's format, together with any supporting data that the Bank may reasonably require; 13.1.3 13.2. quarterly, within 45 days of each calendar quarter year end: internally prepared...

  • Page 64
    ...delivered to the Bank the following promptly after any officer of Best Buy Co. or any Subsidiary becomes aware of the same (all capitalized terms shall have the definitions ascribed to them in the U.S. Credit Agreement. For example, the Company means Best Buy Co.): any Event of Default or Unmatured...

  • Page 65
    ...the financial condition of the Borrower, Best Buy Co. or Stores L.P. or if the conditions precedent hereunder have not been met by October 31, 2002. The Bank shall have the option to at any time, acting reasonably, conduct corporate, personal property registry and Priority Claims searches in respect...

  • Page 66
    ... very truly, HSBC BANK CANADA By: /s/ Bruce Clarke Bruce Clarke Vice President Commercial Financial Services By: /s/ Kerry Hutchinson Kerry Hutchinson Senior Account Manager AGREED TO AND ACCEPTED THIS 13 DAY OF September 2002. THE BORROWER: BEST BUY CANADA LTD. MAGASINS BEST BUY LTÉE. Per: Per...

  • Page 67
    THE GUARANTORS: BEST BUY CO., INC. BEST BUY STORES, L.P by its general partner BBC PROPERTY Per: Per: 14 /s/ Darren R. Jackson CO. Per: Per: /s/ Darren R. Jackson SCHEDULE "A" TO OFFER LETTER FROM HSBC BANK CANADA TO BEST BUY CANADA LTD. MAGASINS BEST BUY LTÉE. DATED SEPTEMBER 13, 2002 1. ...

  • Page 68
    ...information and the above representations and warranties; and 1.5. attached as Schedule "B" hereto is a true, accurate and comprehensive corporate structural chart in respect of the Borrower, Best Buy Co., and their Affiliates; 1.6. the Offer Letter and each of the Loan Documents have been or will...

  • Page 69
    ... interest based on the Bank's Prime Rate and the Bank's U.S. Base Rate, interest shall be compounded and payable on the last day of each month; 2.2. If the Borrower repays any portion of the Loans made available by way of a Bankers' Acceptance on a date other than the maturity date for such Banker...

  • Page 70
    ... are outstanding under the Loans on this basis. For the purpose of the Interest Act (Canada), the annual rate of interest to which interest computed on the basis of a year of 360 days is equivalent is the rate of interest as provided in the Offer Letter multiplied by the number of days in such year...

  • Page 71
    ... employees, officers or directors, and to any nonâˆ'resident of Canada, the amount of all Taxes and other deductions required to be withheld therefrom and pay the same to the appropriate tax authority within the time required under any applicable Legal Requirements; 3.3.2 collect from all Persons...

  • Page 72
    ... Loan as provided under the heading "Credit Facilities" in the Offer Letter, the Bank may, from time to time, in its sole discretion: 3.5. 3.5.1 limit the further utilization of that Loan; convert all or part of the amount outstanding under that Loan to Canadian Dollars in which event, interest...

  • Page 73
    ... Offer Letter and the additional conditions contemplated in this Schedule "A", the Borrower may, by delivering to the Bank notice in form and substance satisfactory to the Bank (the "Required Notice"), make availments of the Operating Loan by way of or convert existing advances remaining outstanding...

  • Page 74
    ..., by at least one Business Day prior to the proposed acceptance date for the Bankers' Acceptance, advised the Borrower that, because general market conditions have caused it to become impracticable to do so, the Bank is no longer making funds available by way of Bankers' Acceptances in the ordinary...

  • Page 75
    ...to be an advance on that date by the Bank to the Borrower under the Operating Loan as the case may be. 4.9. Upon demand for payment being made under any one or more of the Loans, or upon the occurrence of an Event of Default, the Bank will not make funds available by way of Bankers' Acceptances and...

  • Page 76
    ... covenant or condition required to be observed or performed herein, or under any other Loan Document; or 5.1. if an Event of Default (as defined in the U.S. Credit Agreement) occurs under the terms of the U.S. Credit Agreement as amended, supplemented or replaced from time to time provided that if...

  • Page 77
    ... on business or makes or agrees to make a bulk sale of assets or commits an act of bankruptcy; or 5.6. a receiver, receiver and manager, receiverâˆ'manager or any person with like powers of all or a substantial part of the Property is appointed; or 5.7. 8 a distress or analogous process is levied...

  • Page 78
    ... the Bank, U.S. Bank National Association (as agent under the U.S. Credit Agreement), the Borrower and Best Buy Co. in form and content satisfactory to the Bank and its solicitors; 6.1.2 confirmation that the insurance contemplated under the heading "Loan Documents" above has been renewed on terms...

  • Page 79
    ... the Borrower's business premises at all reasonable times, and in any event not less than quarterly; or 6.3. Credit Reporting âˆ' The Borrower consents to the obtaining from any credit reporting agency or from any person all information that the Bank may require at any time. The Bank agrees not to...

  • Page 80
    ... and Best Buy Co. shall promptly notify the Bank of the occurrence of any Event of Default or the occurrence of any event, with the giving of notice, lapse of time, or both, would constitute an Event of Default. 6.11. Legal and Other Expenses âˆ' The Borrower shall pay all reasonable legal fees and...

  • Page 81
    ...: Best Buy Canada Ltd. 8800 Glenlyon Parkway Burnaby, British Columbia V5J 5K3 Attention: Kevin Layden President & Chief Operating Officer Telecopier No. (604) 412âˆ'5240 Notice shall be deemed to have been received by a party within 3 Business Days of delivery to the applicable address contemplated...

  • Page 82
    ... work in process and such materials of the Borrower which are financed by other Persons, and from which the Priority Claims shall be deducted from Acceptable Inventory. As at the date of this Offer Letter (and without limiting the Bank's right at any time to deduct further Priority Claims), it is...

  • Page 83
    ... & Co." and deposited with The Canadian Depository for Securities Limited; 7.6. "Business Day" means a day upon which the branch of Bank issuing the Offer Letter is open for business; 7.7. "Canadian Dollar Equivalent" means at any time on any date in relation to any amount in a currency other than...

  • Page 84
    ... (ii) Rental and Lease Expense, in all cases determined in accordance with US GAAP and as set forth in Best Buy Co.'s consolidated financial statements delivered hereunder; 7.12. "Change of Control" means the acquisition of Capital Stock by any Person or group of Persons, beneficially or otherwise...

  • Page 85
    ... during the applicable period and (b) similar nonâˆ'operating losses (including, without limitation, losses arising from the sale of assets and other nonrecurring losses) of Best Buy Co. and its Subsidiaries during such period; 7.19. 7.20. "Existing Liens" means those Liens described in Schedule...

  • Page 86
    ... limitation, payment in kind interest) or scheduled to be paid in respect of any consolidated Indebtedness of Best Buy Co. and its Subsidiaries, including (a) all but the principal component of payments in respect of conditional sale contracts, capitalized leases and other title retention agreements...

  • Page 87
    ... accrued (including without limitation, payment in kind interest) or scheduled to be received by Best Buy Co. and its Subsidiaries, including (a) all but the principal component of payments in respect of conditional sale contracts, capitalized leases and other title retention agreements, and (b) net...

  • Page 88
    ...quarters ending on the last day of a fiscal quarter of Best Buy Co.; 7.34. "Net Interest Expense" means for any period of determination, Interest Expense minus Interest Income. 7.35. "Offer Letter" means the letter from the Bank to the Borrower to which this Schedule "A" is attached, together with...

  • Page 89
    ... Interest Expense of Best Buy Co. for such period, in each case determined in accordance with US GAAP; "Stock" means all shares, options, warrants, equity interests, equity participations, or other equivalents (regardless of how designated) of or in a corporation, partnership, limited partnership or...

  • Page 90
    ... approved by a significant segment of the accounting profession, which are applicable to the circumstances as of March 21, 2002. 7.48. 19 SCHEDULE "B" TO OFFER LETTER FROM HSBC BANK CANADA TO BEST BUY CANADA LTD. MAGASINS BEST BUY LTÉE. DATED SEPTEMBER 13, 2002 Best Buy Co., Inc. & Directly Owned...

  • Page 91
    BBC Property Co. & BBC Investment Co. Subsidiaries Graphic 2 Musicland Stores Corporation & Subsidiaries Graphic

  • Page 92
    3 Best Buy Concepts, Inc. & Subsidiaries Graphic 4

  • Page 93
    ...) 5 SCHEDULE "C" TO OFFER LETTER FROM HSBC BANK CANADA TO BEST BUY CANADA LTD. MAGASINS BEST BUY LTÉE. DATED SEPTEMBER 13, 2002 Existing Liens Priority claims accorded to suppliers of inventory pursuant to section 81 of the Bankruptcy and Insolvency Act (Canada). 1. 2. (a) Security granted to...

  • Page 94
    ...INDENTURE RELATING TO ADDITIONAL GUARANTEES SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of December 1, 2002, by and among Best Buy Co., Inc. (the "Company"), a Minnesota corporation; Best Buy Stores, L.P., a Delaware limited partnership (the "Existing Guarantor"); BBC Investment...

  • Page 95
    ... CO. By: /s/ Ryan D. Robinson Name: Ryan D. Robinson Title: Vice President - Finance & Treasurer BEST BUY CO., INC. By: /s/ Ryan D. Robinson Name: Ryan D. Robinson Title: Vice President - Finance & Treasurer BEST BUY STORES, L.P. By: BBC PROPERTY CO., its General Partner By: /s/ Ryan D.Robinson...

  • Page 96
    ... NATIONAL ASSOCIATION, as Trustee By: /s/ Michael T. Lechner Name: Michael T. Lechner Title: ASSISTANT VICE PRESIDENT 3 SUPPLEMENTAL INDENTURE RELATING TO RELEASE OF GUARANTORS THIS SUPPLEMENTAL INDENTURE, dated as of December 3, 2001, by and among Best Buy Co., Inc. (the "Company"), a corporation...

  • Page 97
    ... duly executed as of the date first above written. BEST BUY CO., INC. By: /s/ Darren R. Jackson Name: Darren R. Jackson Title: Senior Vice President âˆ' Finance, Treasurer and Chief Financial Officer 5 BBC INSURANCE AGENCY, INC. By: /s/ Darren R. Jackson Name: Darren R. Jackson Title: Senior Vice...

  • Page 98
    ...R. Jackson Title: Senior Vice President âˆ' Finance and Treasurer BEST BUY STORES, L.P. By: BBC PROPERTY CO., its General Partner By: /s/ Darren R. Jackson Name: Darren R. Jackson Title: Senior Vice President 6 BEST BUY PURCHASING LLC By: /s/ Darren R. Jackson Name: Darren R. Jackson Title: Senior...

  • Page 99
    ...Joyce Title: Senior Vice President MEDIA PLAY, INC. By: /s/ Joseph M. Joyce Name: Joseph M. Joyce Title: Senior Vice President MG FINANCING SERVICES, INC. By: /s/ Joseph M. Joyce Name: Joseph M. Joyce Title: Senior Vice President MLG INTERNET, INC. By: /s/ Joseph M. Joyce Name: Joseph M. Joyce Title...

  • Page 100
    ... TMGâˆ'VIRGIN ISLANDS, INC. By: /s/ Joseph M. Joyce Name: Joseph M. Joyce Title: Senior Vice President REDLINE ENTERTAINMENT, INC. By: /s/ Darren R. Jackson Name: Darren R. Jackson Title: Senior Vice President âˆ' Finance, Treasurer 10 WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee

  • Page 101
    By: /s/ Michael T. Lechner Name: Michael T. Lechner Title: Corporate Trust Officer 11

  • Page 102
    ... business, to acquire shares of the common stock of the Company under the terms and conditions and in the manner contemplated by this Plan, thereby increasing their personal involvement in the Companies and enabling the Companies to obtain and retain the services of such employees. Options granted...

  • Page 103
    ...(iii) any sale of common stock of the Company to a person not a shareholder on the date of issuance of the option who thereby acquires majority voting control of the Company, subject to any such transaction actually being consummated, or (b) the close of business on the date ten (10) years after the...

  • Page 104
    ... available for acquisition on the date of such former employee's termination but in no event later than the date ten (10) years after the date of grant of such option. Such thirty (30) day period commences on the date such optionee first ceases regular and active employment with any of the Companies...

  • Page 105
    ... under applicable laws of Canada or any province thereof. L. Fair Market Value. "Fair Market Value" shall mean the last reported sale price of the Company's common stock on the date of grant, as quoted on by the New York Stock Exchange. If the Company's common stock ceases to be listed for...

  • Page 106
    Exhibit 10.4 Best Buy Co., Inc. Third Amended and Restated Deferred Compensation Plan Master Plan Document Effective January 1, 2001 Copyright © 2001 By Compensation Resource Group, Inc. All Rights Reserved

  • Page 107
    ...Federal Income Tax Form Wâˆ'2 for such calendar year, excluding bonuses, commissions, overtime, fringe benefits, stock options, relocation expenses, incentive payments, nonâˆ'monetary awards, directors fees and other fees, automobile and other allowances paid to a Participant for employment services...

  • Page 108
    ... Federal Income Tax Form Wâˆ'2 for such calendar year, payable to a Participant as an Employee under any Employer's bonus and cash incentive plans, excluding stock options. 1.9 "Business Day" shall mean any day other than Saturday, Sunday or any legal holiday observed by the New York Stock Exchange...

  • Page 109
    ..." shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time. 1.29 "401(k) Plan" shall be that certain Best Buy Co., Inc. Retirement Savings Plan dated October 1, 1990 and adopted by the Company, as it may be amended from time to time. 1.30 "Inâˆ'Service...

  • Page 110
    ... Enrollment Requirements. As a condition to participation, each selected Employee or Director shall complete, sign and return (or complete and submit online, to the extent available) to the Committee an Election Form and Plan Agreement and a Beneficiary Designation Form, all within thirty (30) days...

  • Page 111
    ..., including returning all required documents to the Committee within the specified time period, that Employee or Director shall commence participation in the Plan on the first day of the pay period commencing in the Plan Year following the date on which the Employee or Director completes all...

  • Page 112
    ...the Termination Benefit, a Participant's Company Matching Account shall vest on the basis of the Participant's Years of Service at the time the Participant experiences a Termination of Employment, in accordance with the following schedule: Years of Service at Date of Termination of Employment Vested...

  • Page 113
    ...ceased being invested in the Measurement Fund(s), in the percentages applicable to such day, on the Business Day prior to the distribution, at the closing price on such prior Business Day. The Participant's Company Matching Amount shall be credited to his or her Company Matching Account for purposes...

  • Page 114
    ...(rather than the date of a Termination of Employment). Subject to the Deduction Limitation and the other terms and conditions of this Plan, each Inâˆ'Service Distribution elected shall be paid out during a sixty (60) day period commencing immediately after the last day of any Plan Year designated by...

  • Page 115
    ... than sixty (60) days after the last day of the Plan Year in which the Participant Retires. Any payment made shall be subject to the Deduction Limitation. 5.3 Death Prior to Completion of Retirement Benefit. If a Participant dies after Retirement but before the Retirement Benefit is paid in full...

  • Page 116
    ... shall be excused from making deferrals under the 17 Plan until the earlier of the date the shortâˆ'term disability benefits expire or the Participant returns to a paid employment status. Upon such expiration or return, deferrals shall resume for the remaining portion of the Plan Year in which the...

  • Page 117
    ...up to sixty (60) quarters, with amounts credited and debited during the installment period as provided herein. If the Plan is terminated with respect to less than all of the Employees and/or Directors of an Employer, the Company shall be required to pay such benefits in a lump sum. After a Change in...

  • Page 118
    ... investment manager or custodial firm for the Plan or Trust. Upon and after the occurrence of a Change in Control, the Company must: (i) pay all reasonable administrative expenses and fees of the Administrator; and (ii) supply full and timely information to the Administrator or all matters relating...

  • Page 119
    ... with respect to any claim for benefits under this Plan. (b) Mandatory Arbitration. Any controversy or claim arising out of or relating to this Plan shall be resolved by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Arbitration shall be by...

  • Page 120
    ...unsecured promise to pay money in the future. 16.3 Employer Liability. The Company's liability for the payment of benefits, and the obligation of any Employer, shall be defined only by the Plan and the Election Form and Plan Agreements, as entered into between the Company, the Employer (if different...

  • Page 121
    .... Any notice or filing required or permitted to be given to the Committee under this Plan shall be sufficient if in writing and handâˆ'delivered, or sent by registered or certified mail, to the address below: Best Buy Co., Inc. Office of the General Counsel 7075 Flying Cloud Drive Eden Prairie, MN...

  • Page 122
    ... immediately available funds in an amount equal to the taxable portion of his or her benefit (which amount shall not exceed a Participant's unpaid Account Balance under the Plan). If the petition is granted, the tax liability distribution shall be made within ninety (90) days of the date when...

  • Page 123
    ... of Election Form and Plan Agreement 3.4 Withholding of Annual Deferral Amounts 3.5 Company Contribution Amount 3.6 Company Matching Amount 3.7 Investment of Trust Assets 3.8 Vesting 3.9 Crediting/Debiting of Account Balances 3.10 FICA and Other Taxes 3.11 Distributions ARTICLE 4 4.1 4.2 4.3 ARTICLE...

  • Page 124
    ... 16.5 Not a Contract of Employment 16.6 Furnishing Information 16.7 Terms 16.8 Captions 16.9 Governing Law 16.10 Notice 16.11 Successors 16.12 Spouse's Interest 16.13 Validity 16.14 Incompetence 16.15 Court Order 16.16 Distribution in the Event of Taxation 16.17 Insurance 16.18 Legal Fees To Enforce...

  • Page 125
    ... (1) year anniversary of the payment of the Withdrawal Amount. The payment of any such Withdrawal Amount shall not be subject to the Deduction Limitation. IN WITNESS WHEREOF, the Company has signed this First Amendment effective as of January 1, 2003. Best Buy Co., Inc., a Minnesota corporation By...

  • Page 126
    ..., the corporation adopts the Best Buy Shortâˆ'Term Incentive Plan (the "Plan") containing the specifications set forth in Exhibit A. FURTHER RESOLVED, that commencing with fiscal year 2004, senior officers of the corporation, excluding the Chief Executive Officer and Chief Operating Officer, will...

  • Page 127
    ... = Bonus Multiplier [max.2.00] Features of Proposed Plan Applicable to Officers (Vice Presidents and Above) • 3 elements for 3 performance levels - Enterprise (or Business Unit), Team, and Individual - each weighted equally • The product of the performance "scores" for each element is...

  • Page 128
    Exhibit 10.7 BEST BUY CO., INC. 2000 RESTRICTED STOCK AWARD PLAN 2001 Amendment and Restatement

  • Page 129
    ... 4. Shares Available for Issuance (a) Maximum Number of Shares Available (b) Accounting for Restricted Stock Awards Section 5. Participation Section 6. (a) (b) (c) (d) (e) (f) (g) (h) Restricted Stock Awards Grant Vesting of Restricted Stock Awards Rights as a Shareholder Dividends and Distributions...

  • Page 130
    ...of the Best Buy Co., Inc. 2000 Restricted Stock Award Plan (the "Plan") is to advance the interests of Best Buy Co., Inc. (the "Company") and its shareholders by enabling the Company and its Affiliates to attract and retain persons of ability to perform services for the Company and its Affiliates by...

  • Page 131
    ... outstanding Restricted Stock Award in any manner, including, without limitation, the authority to modify the number of shares or other terms and 2 conditions of a Restricted Stock Award or accelerate the vesting or otherwise terminate any restrictions relating to a Restricted Stock Award; provided...

  • Page 132
    ... anniversary of the date of grant of the Restricted Stock Award, if the Participant has remained in the continuous employ or service of the Company or one of its Affiliates; The Committee may impose such restrictions or conditions, not inconsistent with the provisions of the Plan, to the vesting...

  • Page 133
    ... terms or conditions governing the Restricted Stock Award evidenced thereby. Section 8. Effect of Termination of Employment or Other Service. (a) Termination Due to Death, Disability or Retirement. Except as provided in any agreement evidencing an Restricted Stock Award, in the event a Participant...

  • Page 134
    ...amend the Plan from time to time in such respects as the Board may deem advisable in order that Restricted Stock Awards under the Plan will conform to any change in applicable laws or regulations or in any other respect the Board may deem to be in the best interests of the Company; provided, however...

  • Page 135
    ... the Company's securities are listed. No termination, suspension or amendment of the Plan may adversely affect any outstanding Restricted Stock Award without the consent of the affected Participant. Section 14. Shareholder Approval. Any Restricted Stock Award granted under the Plan prior to the date...

  • Page 136
    ...of tax Change in accounting principles, net of tax Income tax expense Earnings from continuing operations before income tax expense Fixed Charges: Interest portion of rental expense Interest expense Total fixed charges Less: Capitalized interest Fixed charges in earnings Earnings available for fixed...

  • Page 137
    ... income rate Yearâˆ'End Data Working capital(6) Total assets(6) Longâˆ'term debt, including current portion(6) Convertible preferred securities Shareholders' equity Number of stores U.S. Best Buy stores Magnolia Hiâˆ'Fi stores Musicland stores International stores Total retail square footage (000s...

  • Page 138
    ... income rate Yearâˆ'End Data Working capital(6) Total assets(6) Longâˆ'term debt, including current portion(6) Convertible preferred securities Shareholders' equity Number of stores U.S. Best Buy stores Magnolia Hiâˆ'Fi stores Musicland stores International stores Total retail square footage (000s...

  • Page 139
    ... our stores offer consumers meaningful advantages in terms of environment, product value, selection and service, all of which advance our objective of gaining market share. The Future Shop and Magnolia Hiâˆ'Fi acquisitions provide us with access to new distribution channels and new customers. During...

  • Page 140
    ... our existing investments and continually managing our expense structure to ensure it meets the current and future needs of our business. Win the Home with Service This strategy focuses on creating a marketâˆ'leadership position in delivering lifestyleâˆ'based solutions for our customers, including...

  • Page 141
    ..., partially offset by a higher SG&A rate. • Revenue increased 13% in fiscal 2003 to $20.9 billion, compared with $18.5 billion in the prior fiscal year. The increase was primarily due to the opening of 67 new U.S. Best Buy stores and 17 new stores in our International segment, as well as a 2.4%

  • Page 142
    ... of revenue in the prior fiscal year. The increase was primarily due to increased expenses in our International segment related to the launch of Canadian Best Buy stores and to improving the future efficiency and profitability of our International segment. The SG&A rate in the Domestic segment was...

  • Page 143
    ...over the prior fiscal year's rate. The increase in the SG&A rate was primarily due to increased expenses in our International segment to support strategic initiatives, including the launch of Best Buy stores in Canada and investments intended to improve the future efficiency and profitability of our...

  • Page 144
    ... store sales increase; increased depreciation expense related to technology investments; and investments in personnel and outside consultants to support strategic initiatives and business growth. In addition, the SG&A rate was impacted by lease termination and asset impairment charges associated...

  • Page 145
    ...The comparable store sales gain was driven by increased revenue from entertainment software and consumer electronics products, which includes rapidly expanding revenue from digital products. The International gross profit rate was 25.0% of revenue in fiscal 2003, unchanged from the prior fiscal year...

  • Page 146
    ... year. The SG&A rate increase was primarily due to expenses associated with launching Canadian Best Buy stores and strategic investments intended to improve the future efficiency and profitability of International operations. The SG&A rate increase was partially offset by expense leverage due to new...

  • Page 147
    ...music, a reduction in the number of customers visiting shopping malls and increased competition from discount stores and bigâˆ'box retailers. The gross profit rate...lower yields on shortâˆ'term investments and a full year of interest expense associated with convertible debentures issued during fiscal ...

  • Page 148
    ...our new corporate campus. The primary purposes of the cash investment activity were to support our expansion plans, to improve our operational efficiency and to enhance shareholder value. In fiscal 2002, we used cash for investments in property, plant and equipment and the acquisition of Future Shop...

  • Page 149
    facility related to International operations scheduled to mature in September 2003. At March 1, 2003, $15 million was available under this credit facility. Our current plans are to renew the $37 million unsecured credit facility during fiscal 2004. We offer our customers extended financing through a...

  • Page 150
    ... those sites developed using working capital, we often sell and lease back those properties under longâˆ'term lease agreements. Through the end of fiscal 2003, $59 million in leases related to new stores had been financed under the master lease program. The master lease program is now complete and...

  • Page 151
    ... cash flow and market multiple analyses. These types of analyses require us to make certain assumptions and estimates regarding industry economic factors and the profitability of future business strategies. It is our policy to conduct impairment testing based on our most current business strategy...

  • Page 152
    ... acquired Future Shop in the third quarter of fiscal 2002. The remaining term of these extended service contracts vary by product and extend up to four years. Liabilities have been established for the selfâˆ'insured extended service contracts based on a number of factors, including historical trends...

  • Page 153
    ... expenditure plans include opening 11 to 13 new Canadian Best Buy stores and four Future Shop stores, as well as relocating four Future Shop stores. Capital expenditures in fiscal 2004 also will include approximately $130 million in technology investments intended to improve our customer service...

  • Page 154
    ...Fiscal 2003 as previously reported Revenue Comparable store sales change(3) Gross profit Operating income Net earnings Diluted earnings per share $ $ 4,586 $ 5.7% 1,065 $ 115 70 0.22 5,008 $ 2.0% 1,129 $ 103 62 0.19 5,505 (0.4)% 1,187 139 85 0.26 Note: Certain totals may not add due to rounding...

  • Page 155
    ... Our common stock is traded on the New York Stock Exchange under the ticker symbol BBY. As of March 31, 2003, there were 2,345 holders of record of Best Buy common stock. We have not historically paid, and have no current plans to pay, cash dividends on our common stock. The stock prices above have...

  • Page 156
    ... other things, general economic conditions, acquisitions and development of new businesses, product availability, sales volumes, profit margins, weather, foreign currency fluctuation, availability of suitable real estate locations, and the impact of labor markets and new product introductions on our...

  • Page 157
    ...âˆ'term debt Current liabilities of discontinued operations Total current liabilities Longâˆ'Term Liabilities Longâˆ'Term Debt Noncurrent Liabilities of Discontinued Operations Shareholders' Equity Preferred stock, $1.00 par value: Authorized-400,000 shares; Issued and outstanding-none Common stock...

  • Page 158
    ... in operating assets and liabilities, net of acquired assets and liabilities: Receivables Merchandise inventories Other assets Accounts payable Other liabilities Accrued income taxes Total cash provided by operating activities from continuing operations Investing Activities $ 99 441 82 622 310 (37...

  • Page 159
    ... debt Longâˆ'term debt payments Issuance of common stock Total cash provided by financing activities from continuing operations Net Cash Used in Discontinued Operations Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents at Beginning of Year Cash and Cash Equivalents at End...

  • Page 160
    ... Best Buy stores offer a wide variety of consumer electronics, homeâˆ'office equipment, entertainment software and appliances, operating 548 stores in 48 states at the end of fiscal 2003. Magnolia Hiâˆ'Fi is a highâˆ'end retailer of audio and video products with 19 stores in Washington, Oregon and...

  • Page 161
    ...: Life (in years) Asset Buildings Leasehold improvements Fixtures and equipment Property under capital lease 47 30âˆ'40 10âˆ'25 3âˆ'15 5âˆ'35 $ in millions, except per share amounts Impairment of Longâˆ'Lived Assets and Costs Associated with Exit Activities In March 2002 we adopted Statement of...

  • Page 162
    ... environment and the uncertainty associated with future trends in prerecorded music products. We based Magnolia Hiâˆ'Fi's fair value on the thenâˆ'current expectations for the business in light of recent sales trends and the thenâˆ'existing business environment, including an economic slowdown in the...

  • Page 163
    ... obligor on the contract at the time of sale, commissions are recognized in revenue ratably over the term of the service contract. Sales Incentives We periodically offer sales incentives that entitle our customers to receive a reduction in the price of a product or service. For sales incentives in...

  • Page 164
    ... Issued to Employees, and related Interpretations in accounting for these plans. Accordingly, no compensation expense has been recognized for stock option plans, as the exercise price equals the stock price on the date of grant. 50 $ in millions, except per share amounts The table below illustrates...

  • Page 165
    .... We based fair values on the thenâˆ'current expectations for the business in light of the thenâˆ'existing retail environment and the uncertainty associated with future trends in prerecorded music products. 52 $ in millions, except per share amounts The financial results of Musicland included in...

  • Page 166
    ... operations Net property and equipment Other assets Noncurrent assets of discontinued operations Accounts payable Accrued compensation and related expenses Accrued liabilities Current liabilities of discontinued operations Longâˆ'term liabilities Longâˆ'term debt Noncurrent liabilities of...

  • Page 167
    ... were to assign value to the Future Shop trade name as a result of our decisions to operate stores in Canada under both the Best Buy and Future Shop trade names, and to adjust the extended service contract liability assumed as of the date of acquisition based on additional information. The final...

  • Page 168
    ... financed under the master lease program. The master lease program is now complete, and there will be no further new store development under this program. The program is set to expire on January 1, 2006, and is renewable for one year, subject to lenders' consent. The lease is guaranteed by Best Buy...

  • Page 169
    ... employee plan vest over a fourâˆ'year period. Options issued pursuant to the 1997 directors' plan vest immediately upon grant. At March 1, 2003, a total of 23.1 million shares were available for future grants under all plans. In connection with the Musicland acquisition, certain outstanding stock...

  • Page 170
    ... over a vesting period of at least three years, during which no more than 25% may vest at the time of award, and no more than 25% may vest on each anniversary date thereafter. All shares still subject to restrictions are forfeited and returned to the plan if the plan participant's relationship with...

  • Page 171
    ... leased locations. The terms of the lease agreements generally range from one to 20 years. The leases require payment of real estate taxes, insurance and common area maintenance in addition to rent. Most of the leases contain renewal options and escalation clauses, and certain store leases require...

  • Page 172
    ... Fiscal Year 2004 2005 2006 2007 2008 Thereafter $ 413 395 363 347 340 2,576 $ 92 89 68 54 44 147 59 $ in millions, except per share amounts 8. Benefit Plans We sponsor retirement savings plans for employees meeting certain age and service requirements. The plans provide for Company...

  • Page 173
    ...segment includes U.S. Best Buy and Magnolia Hiâˆ'Fi stores. The International segment is comprised of Future Shop and Canadian Best Buy stores. As described in note 2, we have classified the results of operations of Musicland as discontinued operations. The Musicland business was previously included...

  • Page 174
    ...established for the acquired extended service contracts based on historical trends in product failure rates and the expected material and labor costs necessary to provide the services. The remaining term of these extended service contracts varies by product and extend up to four years. The estimated...

  • Page 175
    ... accompanying consolidated balance sheets of Best Buy Co., Inc. and subsidiaries as of March 1, 2003, and March 2, 2002, and the related consolidated statements of earnings, changes in shareholders' equity, and cash flows for each of the three years in the period ended March 1, 2003. These financial...

  • Page 176
    ...of Operations and Financial Condition Consolidated Balance Sheets Consolidated Statements of Earnings Consolidated Statements of Cash Flows Consolidated Statements of Changes in Shareholders' Equity Notes to Consolidated Financial Statements Report of Best Buy Management Independent Auditor's Report

  • Page 177
    ... Co. Best Buy Stores, L.P. Best Buy Purchasing LLC Nichols Distribution, LLC BestBuy.com, LLC Geek Squad, Inc. Best Buy Concepts, Inc. BBCAN Finance Company One, ULC BBCAN Financial Services, L.P. BBCAN Finance Company Two, ULC BBCAN Financial Services, L.P. Future Shop Acquisition Inc. 656956...

  • Page 178
    .... Redline Entertainment, Inc. vpr Matrix, Inc. vpr Matrix (Hong Kong) Limited vpr Matrix (Canada) Company vpr Matrix BV BBY Holdings International, Inc. vpr Matrix (Hong Kong) Limited vpr Matrix (Canada) Company vpr Matrix BV CP Gal Ritchfield, LLC Best Buy Enterprise Services, Inc. Best Buy Finance...

  • Page 179
    ... of Best Buy Co., Inc. of our report dated April 1, 2003, included in the 2003 Annual Report to Shareholders of Best Buy Co., Inc. Our audit also included the financial statement schedule of Best Buy Co., Inc. listed in Item 15(a). This schedule is the responsibility of the Company's management. Our...

  • Page 180
    Exhibit 99.1 CERTIFICATION PURSUANT TO 18

  • Page 181
    ...Vice Chairman and Chief Executive Officer of Best Buy Co., Inc. (the "Company"), hereby certify that the Annual Report on Form 10âˆ'K of the Company for the fiscal year ended March 1, 2003 (the "Report") fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of...

  • Page 182
    Exhibit 99.2 CERTIFICATION PURSUANT TO 18

  • Page 183
    ... President - Finance and Chief Financial Officer of Best Buy Co., Inc. (the "Company"), hereby certify that the Annual Report on Form 10âˆ'K of the Company for the fiscal year ended March 1, 2003 (the "Report") fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange...