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A WORLD OF OPPORTUNITY
A WORLD OF OPPORTUNITY
Fiscal 2007 Annual Report

Table of contents

  • Page 1
    A WORLD OF OPPORTUNITY Fiscal 2007 Annual Report

  • Page 2
    BUILDING REL ATIONSHIPS great employees, great customers We are focused on solving customer needs and desires - not just selling products. Our employees bring this focus to life and are the reason we see a world of opportunity. Bradbury H. Anderson Vice Chairman and CEO

  • Page 3
    ...at-panel TVs, notebook computers and video game hardware. + The acquisitions of two retailers who help us reach new customers. In the first quarter, we completed the purchase of Pacific Sales Kitchen and Bath Centers, which sells high-end home-improvement products through 14 locations in southern...

  • Page 4
    ...200 Magnolia Home Theater locations inside U.S. Best Buy stores. When we acquired Magnolia Audio Video five years ago, we marveled at the award-winning customer experience and management team, yet struggled to increase customer traffic. By placing smaller Magnolia locations within our U.S. Best Buy...

  • Page 5
    ...growing Reward Zone memberships to 18 million + Acquired two successful retailers with unique customers: Pacific Sales and Five Star + Opened our first Best Buy store in China We view ourselves as a network of assets, including not only our strong balance sheet, but also our 140,000 employees and...

  • Page 6
    ... as operating profit rate expansion of approximately 30 basis points. We expect to improve on our fiscal 2007 results based on the opening of new stores, increased loyalty from customers, and strong consumer demand for ï¬,at-panel TVs, notebook computers, video gaming products and services. Bottom...

  • Page 7
    ... Debt-to-capitalization ratio (3) Cash dividends per share declared and paid Value of common shares repurchased Total retail square footage (in thousands) (4) Revenue per retail square foot (5) Number of stores: at period end Best Buy- U.S. Magnolia Audio Video Pacific Sales Future Shop Best Buy...

  • Page 8
    ... our loyalty program, Reward Zone, to 18 million members and launched the Reward Zone MasterCard. These offerings enable us to provide tailored products and services. By serving the unique needs of our customers, we believe we will continue to build loyalty, grow market share and identify new growth...

  • Page 9
    ... customer access on their terms, and to make it easy and fun. Consider a customer who starts the day by researching on www.BestBuy.com, later visits and makes a purchase at a Best Buy store, has the products delivered and installed in her home, and finishes the day with a call to our support center...

  • Page 10
    ... repair services for our customers and to improve our ability to make complicated repairs. We also benefited from investments in routing and scheduling systems to shorten customer wait times and boost productivity. At year end we employed 10,000 Geek Squad agents, 3,000 home theater installers...

  • Page 11
    Added capabilities driving growth Our commitment to offering customers full solutions paid off. Our High-Definition Advantage program coupled with our well-trained home theater installers enabled us to grow ï¬,at-panel market share and improve key customer satisfaction metrics. Likewise, Geek Squad...

  • Page 12
    ... growth in new markets Global learning strengthens our core business While controlled international growth is an important part of our long-term growth vision, a large opportunity continues to be growing our core business engine in North America. In fact, we believe that the successful companies of...

  • Page 13
    ... (square feet in millions) International expansion for long-term growth We began our international expansion in fiscal 2002 with the acquisition of the Canadian market leader, Future Shop. Subsequently, we have launched the Best Buy brand in Canada and successfully grown the combined market share...

  • Page 14
    ... properties (2) Tax expense calculated using effective tax rates for FY 2005 (35.3%), FY 2006 (33.7%) and FY 2007 (35.3%) (3) Long-term debt plus current portion of convertible debt, as applicable (4) Capitalized operating leases, net of cash and cash equivalents in excess of $300 million | 12

  • Page 15
    ... Buy International Ryan D. Robinson Senior Vice President and Chief Financial Officer - New Growth Platforms Susan S. Grafton Vice President , Controller and Chief Accounting Officer Non-management Director Audit Compensation and Human Resources Nominating, Corporate Governance and Public Policy...

  • Page 16
    ... $12.0 billion, computed by reference to the price of $45.57 per share, the price at which the common equity was last sold on such date as reported on the New York Stock Exchange-Composite Index. (For purposes of this calculation all of the registrant's directors and executive officers are deemed...

  • Page 17
    ... Statement dated May 16, 2007 (to be filed pursuant to Regulation 14A within 120 days after the Registrant's fiscal year-end of March 3, 2007), for the regular meeting of shareholders to be held on June 27, 2007 ("Proxy Statement"), are incorporated by reference into Part III. CAUTIONARY STATEMENT...

  • Page 18
    ... Statements and Supplementary Data. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. Controls and Procedures. Other Information. 23 26 28 52 53 96 96 96 PART II PART III Directors, Executive Officers and Corporate Governance. Executive Compensation. Security...

  • Page 19
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  • Page 20
    ... home-office products, entertainment software, appliances and related services. Geek Squad provides residential and commercial computer repair, support and installation services. Magnolia Audio Video stores offer high-end audio and video products and related services. Pacific Sales stores offer high...

  • Page 21
    ... allows us to retain Future Shop's brand equity and attract more customers by offering a choice of store experiences. As we expand the presence of Best Buy stores in Canada, we expect to gain continued operating efficiencies by leveraging our capital investments, supply chain management, advertising...

  • Page 22
    ... product security personnel employed at each store to control physical inventory losses. Advertising, merchandise purchasing and pricing, as well as inventory policies, are centrally controlled. U.S. Best Buy stores are generally open 80 hours per week, seven days a week, with extended holiday hours...

  • Page 23
    ...-time and part-time sales associates. Advertising, merchandise purchasing and pricing, and inventory policies for our China Best Buy store are centrally controlled by corporate management. Meetings involving store management and corporate management are held on a regular basis to review operating...

  • Page 24
    ...-screen televisions are shipped to satellite warehouses in each major market. U.S. Best Buy stores are dependent upon the distribution centers for inventory storage and shipment of most merchandise. However, in order to meet release dates for selected products and to improve inventory management...

  • Page 25
    ... and distributors. Our China store typically receives product shipments three to four times per week, with accelerated shipments during periods of high sales volume. Suppliers Our strategy depends, in part, upon our ability to offer customers a broad selection of name-brand products and, therefore...

  • Page 26
    ... closed six Canada Geek Squad stores and four Five Star stores. The following table reconciles U.S. Best Buy stores open at the beginning and end of each of the last five fiscal years: Total Stores at End of Fiscal Year The following table reconciles Future Shop stores open at the beginning and end...

  • Page 27
    ... aggressively advertising and emphasizing a complete product and service solution, value pricing and financing alternatives. In addition, our trained and knowledgeable sales and service staffs allow us to tailor the offerings to meet the needs of our customers. Seasonality Our revenue and earnings...

  • Page 28
    ... Web site at www.BestBuy.com - select the "For Our Investors" link and then the "SEC Filings" link. We also make available, free of charge on our Web site, the charters of the Audit Committee, the Compensation and Human Resources Committee, and the Nominating, Corporate Governance and Public Policy...

  • Page 29
    ... revenue and/or higher operating costs, which could materially adversely affect our results of operations. Our growth strategy includes expanding our business, both in existing markets and by opening stores in new markets. Our future growth is dependent, in part, on our ability to build or lease new...

  • Page 30
    ... our information technology and human resources operations. We rely heavily on our management information systems for inventory management, distribution and other functions. We also rely heavily on human resources support to attract, develop and retain a sufficient number of qualified employees. Any...

  • Page 31
    ... reporting in connection with the integration of an acquired company. In addition, the integration of any acquired company, and its financial results, into ours may have a material adverse effect on our operating results. We are highly dependent on the cash flows and net earnings we generate...

  • Page 32
    ...the geographic location of our Domestic segment stores at the end of fiscal 2007: U.S. Best Buy Stores U.S. Geek Squad Stores Magnolia Audio Video Stores Pacific Sales Stores PART I Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii...

  • Page 33
    At the end of fiscal 2007, we operated 822 U.S. Best Buy stores, 20 Magnolia Audio Video stores, 14 Pacific Sales stores and 12 Geek Squad stores, totaling approximately 34.0 million retail square feet. The operations of the Domestic segment are serviced by the following major distribution centers: ...

  • Page 34
    At the end of fiscal 2007, we operated 121 Future Shop stores, 47 Canada Best Buy stores, 135 Five Star stores and one China Best Buy store, totaling approximately 7.9 million retail square feet. Our International segment leases approximately 1.1 million square feet of distribution center space in ...

  • Page 35
    ... P.L.C., a British department store chain, and has held executive positions at F.W. Woolworth & Co., a department store chain, as well as several other retailers in the United Kingdom. Kevin T. Layden was named President and Chief Operating Officer - Best Buy Canada (formerly Future Shop Ltd.) in...

  • Page 36
    ... 17 years with Circuit City Stores, Inc., a retailer of consumer electronics, serving in positions of increasing responsibility, including most recently as assistant vice president and general manager for New York. Shari L. Ballard was named Executive Vice President - Human Resources and...

  • Page 37
    (This page intentionally left blank) 22

  • Page 38
    ... stock in the open market pursuant to programs approved by our Board. We may repurchase our common stock for a variety of reasons, such as acquiring shares to offset dilution related to equity-based incentives, including stock options and our employee stock purchase plan, and optimizing our capital...

  • Page 39
    ... Equity Compensation Plans The following table provides information about Best Buy Common Stock that may be issued under our equity compensation plans as of March 3, 2007. Weighted Securities Securities to Be Issued Average Available for Upon Exercise of Outstanding Exercise Price Future per Share...

  • Page 40
    ... Stock Exchange and NASDAQ, and includes high-capitalization stocks representing the retail sector of the S&P 500. The graph assumes an investment of $100 at the close of trading on March 1, 2002, the last trading day of fiscal 2002, in Best Buy common stock, the S&P 500 and the S&P Retailing Group...

  • Page 41
    ... Common stock price: High Low Operating Statistics Comparable store sales gain(6) Gross profit rate Selling, general and administrative expenses rate Operating income rate Year-End Data Current ratio(7)(8) Total assets(7) Debt, including current portion(7) Total shareholders' equity Number of stores...

  • Page 42
    ...fiscal 2003 financial results as a cumulative effect of a change in accounting principle. (4) PART II (5) Earnings per share is presented on a diluted basis and reflects three-for-two stock splits effected in August 2005 and May 2002. Comprised of revenue at stores and Web sites operating for at...

  • Page 43
    ... 2007. Geek Squad offers residential and commercial computer repair, support and installation services in all U.S. Best Buy stores and 12 stand-alone stores at the end of fiscal 2007. Magnolia Audio Video stores offer high-end audio and video products and related services from 20 stores located in...

  • Page 44
    ..., we expect to expand the number of stores in order to capitalize on the expanding high-end segment of the U.S. appliance market. At March 3, 2007, Pacific Sales operated 14 showrooms in Southern California and contributed revenue of $296 million to our consolidated financial results in fiscal 2007...

  • Page 45
    ... our dual brand strategy in Canada, our Magnolia Home Theater store-within-a-store, our Geek Squad services business, our acquisition of Pacific Sales, and our entry into China last year with the Five Star acquisition and the opening of our first Best Buy store in Shanghai. support growth areas...

  • Page 46
    ... new Best Buy and Future Shop stores during fiscal 2007, a full year of revenue from stores added in fiscal 2006, a 5.0% comparable store sales increase, and the acquisitions of Five Star and Pacific Sales. The remainder of the increase was due primarily to the inclusion of an extra week of business...

  • Page 47
    ... of an extra week of business in fiscal 2007, the favorable effect of fluctuations in foreign currency exchange rates and income related to our additional recognition of gift card breakage. The addition of new Best Buy and Future Shop stores during the past two fiscal years accounted for nearly...

  • Page 48
    ... flat-panel televisions, notebook computers, video gaming and MP3 players and accessories. An increase in online purchases also contributed to the fiscal 2007 comparable store sales gain, as we continued to add features and capabilities to our Web sites. Revenue from our online operations increased...

  • Page 49
    ...-based incentive compensation resulting from our strong financial performance; a growing number of stores operating under the higher-cost, customer-centric labor model; costs associated with supporting our services business and the absence of favorable settlements with two credit card companies as...

  • Page 50
    ...closure costs. PART II The following table reconciles Domestic stores open at the beginning and end of fiscal 2007: Total Stores at End of Fiscal 2006 Total Stores at End of Fiscal 2007 Stores Opened Stores Acquired Stores Closed U.S. Best Buy Magnolia Audio Video Pacific Sales U.S. Geek Squad...

  • Page 51
    ...inclusion of an extra week of business in fiscal 2007 accounted for the remainder of the revenue increase. We believe the comparable store sales increase reflected market share gains and was driven by increased sales of flat-panel televisions, video gaming and notebook computers, partially offset by...

  • Page 52
    ... China Best Buy store in Shanghai. The following table reconciles International stores open at the beginning and end of fiscal 2006: Total Stores at End of Fiscal 2005 Total Stores at End of Fiscal 2006 PART II Stores Opened Stores Acquired Stores Closed Future Shop Canada Best Buy Canada Geek...

  • Page 53
    ...long-term debt and an increase in other current assets, driven by restricted cash assumed in connection with the acquisition of Five Star. Five Star's restricted cash represents bank deposits pledged as security for certain vendor payables. Cash equivalents consist primarily of money market accounts...

  • Page 54
    ... to review by June 30, 2007. $20 million in borrowings were outstanding under this facility as of the balance sheet date. Borrowings under this facility are secured by a guarantee of Best Buy Co., Inc. and bear interest at rates specified in the agreement. Our ability to access our credit facilities...

  • Page 55
    ... opening 96 new stores, adding Magnolia Home Theater rooms inside nearly 200 new and existing U.S. Best Buy stores, relocating 20 stores and upgrading our information technology systems. Capital expenditures are funded through cash provided by operating activities, as well as available cash and cash...

  • Page 56
    ... stock in the open market pursuant to programs approved by our Board. We may repurchase our common stock for a variety of reasons, such as acquiring shares to offset dilution related to equity-based incentives, including stock options and our employee stock purchase plan, and optimizing our capital...

  • Page 57
    ... additional information about our ability to service our long-term debt and other fixed obligations, and to fund our future growth. In addition, we believe our adjusted debt-to-capitalization ratio, including capitalized operating lease obligations, is relevant because it enables investors to...

  • Page 58
    ...legally binding agreements, we included open purchase orders in the table above. Substantially all open purchase orders are fulfilled within 30 days. Included in other long-term liabilities on our consolidated balance sheet at March 3, 2007, was a $75 million obligation for deferred compensation. As...

  • Page 59
    ... the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, management reviews the accounting policies...

  • Page 60
    ... change in the estimates or assumptions we use to calculate long-lived asset impairment losses. However, if actual results are not consistent with our estimates and assumptions used in estimating future cash flows and asset fair values, we may be exposed to losses that could be material. PART...

  • Page 61
    ... impairment annually and whenever events or changes in circumstances indicate the carrying value of the goodwill or other intangible assets may not be recoverable. We complete our impairment evaluation by performing internal valuation analyses, considering other publicly available market information...

  • Page 62
    ... credit card. Points earned enable members to receive a certificate that may be redeemed on future purchases at U.S. Best Buy stores. The value of points earned by our loyalty program members is included in accrued liabilities and recorded as a reduction in revenue at the time the points are earned...

  • Page 63
    ...and nonvested share awards, and an employee stock purchase plan. See Note 1, Summary of Significant Accounting Policies, and Note 6, Shareholders' Equity, to the Notes to Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form...

  • Page 64
    ... and business strategies. During the last three fiscal years, we completed two significant acquisitions. On March 7, 2006, we acquired Pacific Sales for $411 million including transaction costs. On June 8, 2006, we acquired a 75% interest in Five Star for $184 million, including a working capital...

  • Page 65
    ... above. In September 2006, the U.S. Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin ("SAB") No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, which provides interpretive guidance on the...

  • Page 66
    ... of adding Magnolia Home Theater rooms to additional U.S. Best Buy stores. Specifically, the capital expenditures are expected to support the opening of approximately 90 new U.S. Best Buy stores; up to five Pacific Sales stores; three to five Canada Best Buy stores; seven to nine Future Shop stores...

  • Page 67
    ...point higher, our annual interest expense would increase by approximately $4 million. We do not manage our debt interest-rate volatility risk through the use of derivative instruments. We have market risk arising from changes in foreign currency exchange rates related to our International operations...

  • Page 68
    ... at Pacific Sales Kitchen and Bath Centers, which was acquired on March 7, 2006, and whose financial statements reflect total assets and total revenues constituting 3% and 1%, respectively, of the consolidated financial statement amounts as of and for the year ended March 3, 2007. Management has...

  • Page 69
    ... (the "Company") as of March 3, 2007 and February 25, 2006, and the related consolidated statements of earnings, changes in shareholders' equity, and cash flows for each of the years ended March 3, 2007 and February 25, 2006. Our audit also included the financial statement schedule listed in the...

  • Page 70
    ... Treadway Commission. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended March 3, 2007, of the Company and our report dated April...

  • Page 71
    ...and Board of Directors Best Buy Co., Inc. We have audited the accompanying consolidated statements of earnings, changes in shareholders' equity, and cash flows for the year ended February 26, 2005 of Best Buy Co., Inc. and subsidiaries. Our audit also included the financial statement schedule listed...

  • Page 72
    ... billion shares; Issued and outstanding - 480,655,000 and 485,098,000 shares, respectively Additional paid-in capital Retained earnings Accumulated other comprehensive income Total shareholders' equity Total Liabilities and Shareholders' Equity See Notes to Consolidated Financial Statements. $ 3,934...

  • Page 73
    ... Diluted earnings per share: Continuing operations Gain on disposal of discontinued operations Diluted earnings per share Basic weighted-average common shares outstanding (in millions) Diluted weighted-average common shares outstanding (in millions) See Notes to Consolidated Financial Statements...

  • Page 74
    ...-sale securities Sales of available-for-sale securities Acquisitions of businesses, net of cash acquired Proceeds from disposition of investments Change in restricted assets Other, net Total cash used in investing activities from continuing operations Financing Activities Repurchase of common stock...

  • Page 75
    ... Tax benefit from stock options exercised and employee stock purchase plan Issuance of common stock under employee stock purchase plan Stock-based compensation Common stock dividends, $0.36 per share Repurchase of common stock Balances at March 3, 2007 See Notes to Consolidated Financial Statements...

  • Page 76
    .... Pacific Sales stores offer high-end homeimprovement products, appliances and related services through 14 stores at the end of fiscal 2007. The International segment is comprised of all Canada store and online operations, including Best Buy, Future Shop and Geek Squad, as well as all China store...

  • Page 77
    ... tax benefits from operating activities to financing activities, as presented in the statement of cash flows. See Stock-Based Compensation below, for further details. These reclassifications had no effect on previously reported operating income, net earnings or shareholders' equity. This change in...

  • Page 78
    ... statement of earnings. Repairs and maintenance costs are charged directly to expense as incurred. Major renewals or replacements that substantially extend the useful life of an asset are capitalized and depreciated. Costs associated with the acquisition or development of software for internal...

  • Page 79
    ... on quoted market prices or other valuation techniques. The present value of costs associated with location closings, primarily future lease costs (net of expected sublease income), are charged to earnings when a location is vacated. Pre-tax asset impairment charges recorded in selling, general and...

  • Page 80
    ... financial information is prepared and regularly reviewed by segment management. Tradenames We have an indefinite-lived intangible asset related to our Pacific Sales tradename which is included in the Domestic segment. We also have indefinite-lived intangible assets related to our Future Shop...

  • Page 81
    ... in marketable equity securities and classify them as available-for-sale. Investments in marketable equity securities are included in other assets in our consolidated balance sheets. Investments in marketable equity securities are reported at fair value, based on quoted market prices when available...

  • Page 82
    ... reserves and advances received under vendor alliance programs. Foreign Currency Foreign currency denominated assets and liabilities are translated into U.S. dollars using the exchange rates in effect at our consolidated balance sheet date. Results of operations and cash flows are translated using...

  • Page 83
    ... credit card bearing the Best Buy brand. Cardholders earn points for qualifying purchases, including purchases made at Best Buy. Points earned enable cardholders to receive certificates that may be redeemed on future purchases at U.S. Best Buy stores. The Bank is the sole owner of the accounts...

  • Page 84
    ... a vendor's products; • Charitable contributions; • Outside service fees; • Long-lived asset impairment charges; and • Other administrative costs, such as credit card service fees, supplies, and travel and lodging. PART II Vendor Allowances We receive vendor allowances for various programs...

  • Page 85
    ... compensation expense for market-based share awards based on the current stock price, the number of In accordance with SFAS No. 154, Accounting Changes and Error Corrections, this change in accounting principle has been applied retrospectively to our fiscal 2006 consolidated statement of cash flows...

  • Page 86
    ... above. In September 2006, the U.S. Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin ("SAB") No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, which provides interpretive guidance on the...

  • Page 87
    ... the number of stores in order to capitalize on the expanding high-end segment of the U.S. appliance market. The acquisition was accounted for using the purchase method in accordance with SFAS No. 141, Business Combinations. Accordingly, we recorded the net assets at their estimated fair values, and...

  • Page 88
    ... the date of acquisition. We allocated the purchase price on a preliminary basis using information currently available. The allocation of the purchase price to the assets and liabilities acquired will be finalized no later than the second quarter of PART II The minority owners' proportionate share...

  • Page 89
    ...cash, without interest. In connection with the merger, we sold our 1,276,001 shares of Golf Galaxy common stock and recognized a $20 gain on the sale in fiscal 2007, which was included in gain on investments in our consolidated statement of earnings. Marketable Equity Securities The carrying values...

  • Page 90
    ... are secured by a guarantee of Best Buy Co., Inc. and bear interest at rates specified in the agreement. The agreement for this facility contains certain reporting and operating covenants. We were in compliance with all such covenants at the balance sheet date. PART II Other The fair value of debt...

  • Page 91
    ... employment ("time-based"). Outstanding share awards that are not time-based vest at the end of a three-year incentive period based either upon our total shareholder return ("TSR") compared with the TSR of companies that comprise the S&P 500 or growth in our common stock price ("market-based...

  • Page 92
    ... on our stock. We estimate the expected life of stock options based upon historical experience. (4) Market-Based Share Awards The fair value of market-based share awards is determined based on generally accepted valuation techniques and the closing market price of our stock on the date of grant...

  • Page 93
    ... the closing market price of our stock on the date of grant. A summary of the status of our performance-based nonvested share awards at March 3, 2007, and changes during fiscal 2007, is as follows: WeightedAverage Fair Value per Share Performance-Based Share Awards Shares Outstanding at February...

  • Page 94
    ..., the related interest expense, net of tax, is added back to earnings from continuing operations, as the interest would not have been paid if the convertible debentures had been converted to common stock. Nonvested market-based share awards and nonvested performance-based share awards are included...

  • Page 95
    ... April 2005 share repurchase program. At March 3, 2007, $1,233 remains available for future purchases under the June 2006 share repurchase program. Comprehensive Income Comprehensive income is computed as net earnings plus certain other items that are recorded directly to shareholders' equity. In...

  • Page 96
    ...Center for Public Company Audit Firms. In the letter, the SEC expressed its views regarding operating lease accounting matters and the related interpretation/application of these matters under existing GAAP. Following our review, we recorded a cumulative fourth-quarter charge of $36 pre-tax ($23 net...

  • Page 97
    ... per share amounts in current portion of long-term debt and long-term debt, as appropriate. These adjustments had no effect on our historical or future cash flows, or the timing of our lease payments. 10. Income Taxes The following is a reconciliation of the federal statutory income tax rate to...

  • Page 98
    ... Best Buy, Geek Squad, Magnolia Audio Video and Pacific Sales. The International segment is comprised of all Canada store and online operations, including Best Buy, Future Shop and Geek Squad, as well as our Five Star and Best Buy retail and online operations in China. Pacific Sales was acquired...

  • Page 99
    ... our business segment information for continuing operations in fiscal 2007, 2006 and 2005: 2007 2006 2005 Revenue Domestic International Total revenue Percentage of Revenue, by Product Group Domestic: Consumer electronics Home office Entertainment software Appliances Total International: Consumer...

  • Page 100
    $ in millions, except per share amounts Geographic Information The following tables present our geographic information in fiscal 2007, 2006 and 2005: 2007 2006 2005 Net sales to customers U.S. Canada China Total revenue Long-lived assets U.S. Canada China Total long-lived assets $ 2,487 333 118 $ ...

  • Page 101
    .... Accordingly, the net assets will be recorded at their estimated fair values, and operating results will be included in our financial statements from the date of acquisition. The purchase price will be allocated on a preliminary basis using information currently available. Goodwill is projected...

  • Page 102
    ... statements of earnings and cash flows for the fiscal years ended March 3, 2007; February 25, 2006; and February 26, 2005: Condensed Consolidating Balance Sheets As of March 3, 2007 Best Buy Co., Inc. Guarantor Subsidiary Non-Guarantor Subsidiaries Eliminations Consolidated Assets Current Assets...

  • Page 103
    ... share amounts Condensed Consolidating Balance Sheets As of February 25, 2006 Best Buy Co., Inc. Guarantor Subsidiary Non-Guarantor Subsidiaries Eliminations Consolidated Assets Current Assets Cash and cash equivalents Short-term investments Receivables Merchandise inventories Other current assets...

  • Page 104
    ...share amounts Condensed Consolidating Statements of Earnings Fiscal Year Ended March 3, 2007 Best Buy Co., Inc. Guarantor Subsidiary Non-Guarantor Subsidiaries Eliminations Consolidated Revenue Cost of goods sold Gross profit Selling, general and administrative expenses Operating (loss) income Net...

  • Page 105
    ... per share amounts Condensed Consolidating Statements of Earnings Fiscal Year Ended February 25, 2006 Best Buy Co., Inc. Guarantor Subsidiary Non-Guarantor Subsidiaries Eliminations Consolidated Revenue Cost of goods sold Gross profit Selling, general and administrative expenses Operating (loss...

  • Page 106
    ... per share amounts Condensed Consolidating Statements of Earnings Fiscal Year Ended February 26, 2005 Best Buy Co., Inc. Guarantor Subsidiary Non-Guarantor Subsidiaries Eliminations Consolidated Revenue Cost of goods sold Gross profit Selling, general and administrative expenses Operating (loss...

  • Page 107
    ... of available-for-sale securities Acquisitions of businesses, net of cash acquired Proceeds from disposition of investments Other, net Total cash provided by (used in) investing activities Financing Activities Repurchase of common stock Issuance of common stock under employee stock purchase plan and...

  • Page 108
    ... Purchases of available-for-sale securities Sales of available-for-sale securities Change in restricted assets Other, net Total cash used in investing activities Financing Activities Repurchase of common stock Issuance of common stock under employee stock purchase plan and for the exercise of stock...

  • Page 109
    ... Purchases of available-for-sale securities Sales of available-for-sale securities Change in restricted assets Other, net Total cash used in investing activities from continuing operations Financing Activities Repurchase of common stock Issuance of common stock under employee stock purchase plan...

  • Page 110
    ... 2006 gift card breakage recognition. In addition, net earnings in the fourth quarter of fiscal 2007 included income of $20 ($13 net of tax, or $0.03 per diluted share) related to the gain from the sale of our investment in Golf Galaxy, Inc. Comprised of revenue at stores and Web sites operating for...

  • Page 111
    ... Listed Company Manual, our Chief Executive Officer has certified to the New York Stock Exchange that he is not aware of any violation by us of the NYSE's Corporate Governance listing standards. Item 9B. Other Information. There was no information required to be disclosed in a Current Report...

  • Page 112
    ... to our directors and all of our employees, including our Chief Executive Officer, our Chief Financial Officer and our Chief Accounting Officer. Our Code of Business Ethics is available on our Web site, www.BestBuy.com - select the "For Our Investors" link and then the "Corporate Governance" link...

  • Page 113
    ... and Related Party Transactions" in the Proxy Statement is incorporated herein by reference. Item 14. Principal Accounting Fees and Services. The information provided under the caption "Ratification of Appointment of our Independent Registered Public Accounting Firm - Principal Accountant Fees...

  • Page 114
    ... Stock and Incentive Plan 2007 Long-Term Incentive Program Award Agreement, as approved by the Board of Directors on October 23, 2006 Best Buy Fourth Amended and Restated Deferred Compensation Plan, as amended 2007 Executive Officer Short-Term Incentive Program Statements re: Computation of Ratios...

  • Page 115
    ... to the Form 10-Q of Best Buy Co., Inc., and is incorporated herein by reference and made a part hereof. Exhibit so marked was filed with the SEC on February 23, 2001, as an exhibit to the Registration Statement on Form S-8 (Registration No. 333-56146) of Best Buy Co., Inc., and is incorporated...

  • Page 116
    ..., thereunto duly authorized. Best Buy Co., Inc. (Registrant) By: /s/ Bradbury H. Anderson Bradbury H. Anderson Vice Chairman and Chief Executive Officer and Director Date: May 2, 2007 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the...

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    ... releases, SEC filings, upcoming events and other significant postings. You also may visit our Web site to obtain product information, company background information, current news, financial information and our corporate responsibility report. Or, contact: Best Buy Co., Inc.- Investor Relations...

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    ... brands of Best Buy Best Buy operates a global portfolio of brands with a commitment to growth and innovation. Our employees strive to provide customers around the world with superior experiences by responding to their unique needs and aspirations. We sell consumer electronics, home-office products...