Best Buy 2005 Annual Report Download - page 53

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In the fourth quarter of fiscal 2005, we reviewed the Our liquidity is affected by restricted cash balances that
classification of our auction-rate debt securities. Based on are pledged as collateral or restricted to use for general
this review, we reclassified these securities from cash and liability insurance, workers’ compensation insurance and
cash equivalents to short-term investments or long-term warranty programs. Restricted cash balances, which are
investments, as appropriate. Prior-year amounts have included in other current assets, totaled $158 million and
been reclassified to conform to the current-year $27 million as of February 26, 2005, and February 28,
presentation. The reclassification had no effect on 2004, respectively.
previously reported total assets or net earnings.
Cash Flows
The following table summarizes our cash flows from operating, investing and financing activities for each of the past
three fiscal years ($ in millions):
Fiscal Year 2005 2004 2003
Total cash provided by (used in):
Operating activities $ 1,841 $ 1,369 $ 778
Investing activities (1,166) (1,358) (910)
Financing activities (459) (87) 30
Effect of exchange rate changes on cash 9 1 —
Discontinued operations (net) — (53) (79)
Increase (decrease) in cash and cash equivalents $ 225 $ (128) $ (181)
Note: See consolidated statements of cash flows included in Item 8, Financial Statements and Supplementary Data, of this Annual Report
on Form 10-K for additional information.
Operating Activities well as a reduction in tax benefits realized in fiscal 2005,
as compared to fiscal 2004, related to the sale of our
Cash provided by operating activities was $1.8 billion for former Musicland subsidiary. The increase in other
fiscal 2005, compared with $1.4 billion for fiscal 2004 liabilities resulted primarily from growth in our business,
and $778 million for fiscal 2003. The improvement in including increases in gift card liabilities and deferred
operating cash flows for fiscal 2005, compared with the revenue. Merchandise inventories increased in fiscal
prior fiscal year, was due primarily to an increase in cash 2005, due primarily to the addition of new stores and
provided from changes in operating assets and liabilities, changes in product mix, including expanded assortments
as well as increased earnings from continuing operations. of digital imaging, home theater and computing products.
Earnings from continuing operations increased to The increased inventory levels also reflected our efforts to
$934 million for fiscal 2005, compared with $800 million improve in-stock positions in product groups that have
for fiscal 2004. The changes in operating assets and been driving our revenue growth. The increase in other
liabilities were due primarily to increases in accounts assets was due primarily to an increase in workers’
payable, accrued income taxes and other liabilities, which compensation deposits, as well as an increase in deposits
were partially offset by increased merchandise inventories with Canadian tax authorities.
and other assets. The increase in accounts payable Investing Activities
resulted primarily from higher business volumes and the
timing of vendor payments. The increase in accounts Cash used in investing activities was $1.2 billion for fiscal
payable was consistent with the increase in merchandise 2005, compared with $1.4 billion and $910 million for
inventories. Accrued income taxes increased due primarily fiscal 2004 and fiscal 2003, respectively. The change for
to the increase in earnings from continuing operations, as fiscal 2005 was due primarily to decreased net purchases
37