Best Buy 2005 Annual Report Download - page 44

compensation, expense leverage (as revenue increased • During fiscal 2005, we purchased and retired
at a faster rate than operating expenses) from the 4.3% 3.8 million shares at a cost of $200 million pursuant to
comparable store sales gain and the addition of new our share repurchase programs.
stores, and the realization of cost savings from our • Also in June 2004, we redeemed all of our convertible
efficient enterprise initiative. debentures due in 2021 for $355 million. No gain or
• Effective with the cash dividend paid in the third loss was incurred.
quarter of fiscal 2005, we increased our quarterly cash • During 2004, we entered into agreements with
dividend by 10% to $0.11 per common share. During Accenture for consulting, as well as support and
fiscal 2005, we made four dividend payments totaling development services in the human resources and
$0.42 per common share, or $137 million in the information technology areas, to further enable our
aggregate. anticipated transformation to a more efficient, customer-
centric business model.
Consolidated Results
The following table presents selected consolidated financial data for each of the past three fiscal years ($ in millions,
except per share amounts):
Consolidated Performance Summary 2005 2004(1) 2003(1)
Revenue $27,433 $24,548 $20,943
Comparable stores sales % gain(2) 4.3% 7.1% 2.4%
Gross profit as % of revenue 23.7% 23.9% 23.6%
SG&A as % of revenue 18.4% 18.6% 18.8%
Operating income $ 1,442 $ 1,304 $ 1,010
Operating income as % of revenue 5.3% 5.3% 4.8%
Earnings from continuing operations $ 934 $ 800 $ 622
Gain (loss) from discontinued operations, net of tax 50 (95) (441)
Cumulative effect of change in accounting principles, net of tax — — (82)
Net earnings 984 705 99
Diluted earnings per share — continuing operations(3) $ 2.79 $ 2.41 $ 1.90
Diluted earnings per share(3) $ 2.94 $ 2.13 $ 0.31
Note: All periods presented reflect the classification of Musicland’s financial results as discontinued operations.
(1) Certain amounts have been reclassified to conform to the current presentation. These reclassifications had no effect on operating
income, net earnings, financial position or cash flows. During fiscal 2005, we reclassified from SG&A into cost of goods sold
certain expenses related to operating our distribution network, consisting primarily of handling and transportation costs related to
moving merchandise from our distribution centers to our stores. We believe that the revised presentation provides greater
consistency for investors by aligning the classification of our distribution costs with the practices of many other retailers.
(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 impact of fluctuations in foreign currency exchange rates.
During fiscal 2004, we refined our methodology for calculating our comparable store sales percentage gain to reflect the impact of
non-point-of-sale (non-POS) revenue transactions. We refined our comparable store sales calculation methodology in light of
changes in our business. Previously, our comparable store sales calculation was based on store POS revenue. The comparable store
sales percentage gains for fiscal 2005 and fiscal 2004 have been computed based on the refined methodology. The comparable
store sales percentage gain for fiscal 2003 has not been computed using the refined methodology. Refining the methodology for
calculating our comparable store sales percentage gain did not impact previously reported revenue, net earnings or cash flows.
(3) Diluted earnings per share for fiscal 2004 and fiscal 2003 have been restated to reflect the adoption of EITF Issue No. 04-08.
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