Best Buy 2007 Annual Report Download - page 94

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$ in millions, except per share amounts
79
PART II
Earnings per Share
Our basic earnings per share calculation is computed
based on theweighted-average number of common shares
outstanding. Our diluted earnings per share calculationis
computedbased on theweighted-average number of
common shares outstandingadjusted by thenumber of
additional shares that would havebeen outstanding had the
potentially dilutive common shares been issued.Potentially
dilutive shares of common stock includestock options,
nonvested share awards and shares issuable under our
ESPP, as well as common shares thatwould have resulted
from the assumedconversion of our convertible debentures
(see Note 5, Debt). Since the potentiallydilutive shares
related to the convertible debentures areincluded in the
calculation, the related interest expense, net of tax, is added
back to earnings from continuing operations, as the interest
wouldnot have been paid if the convertible debentures had
been converted to common stock. Nonvestedmarket-based
shareawards andnonvested performance-based share
awards are includedin the average diluted shares
outstandingeachperiod if established market or
performancecriteriahavebeen met at the end of the
respective periods.
At March 3, 2007, stock options to purchase 28.4 million sharesof common stockwere outstanding as follows (shares in
millions):
Exercisable Unexercisable Total
Shares %
Weighted-
Average
Price
per Share Shares %
Weighted-
Average
Price
per Share Shares %
Weighted-
Average
Price
per Share
In-the-money 18.2 100 $ 28.875.756 $ 42.4923.9 84 $ 32.14
Out-of-the-money— — NA 4.544 55.314.5 16 55.31
Total 18.2 100 $28.8710.2100 $48.1228.4 100 $35.81
The computationof dilutiveshares outstandingexcludes the
out-of-the-money stock options because such outstanding
options’ exercise prices were greater than the average
market price of our common shares and, therefore,the
effect would be antidilutive(i.e.,including such options
would result in higher earnings per share).
The following table presents areconciliation of the numerators and denominators of basic anddiluted earnings per share
from continuing operations in fiscal 2007, 2006 and2005:
2007 2006 2005
Numerator:
Earnings from continuingoperations, basic $1,377 $1,140 $934
Adjustment for assumeddilution:
Interest on convertible debenturesdue in 2022, net of tax 7 77
Earnings from continuing operations, diluted$1,384 $ 1,147 $941
Denominator (in millions):
Weighted-average common shares outstanding 482.1 490.3 488.9
Effect of potentiallydilutive securities:
Shares from assumed conversion of convertibledebentures8.8 8.8 8.8
Stock options and other 5.3 5.7 7.3
Weighted-average common shares outstanding, assuming dilution 496.2 504.8 505.0
Basic earnings per share — continuing operations $ 2.86 $ 2.33 $1.91
Diluted earnings per share —continuing operations $ 2.79 $ 2.27 $1.86