EX-99.1 2 exhibit9918212012.htm EX-99.1 Exhibit 99.1 (8.21.2012)
Exhibit 99.1

Best Buy Reports Fiscal Second Quarter 2013 Results
Hubert Joly named Best Buy Chief Executive Officer
Improved sequential sales trends and stable Domestic market share
GAAP diluted EPS of $0.04; adjusted (non-GAAP) diluted EPS of $0.20
Company expects annual free cash flow of $1.25 billion to $1.5 billion and suspends earnings guidance

FISCAL SECOND QUARTER PERFORMANCE SUMMARY(1)
 
 
(U.S. dollars and square footage in millions, except per share and per square foot amounts)
 
 
 
Three Months Ended
 
 
 
Aug 4, 2012
 
July 30, 2011
 
Change
Revenue
$
10,547

 
$
10,856

 
(3
)%
Comparable store sales % change(1)
(3.2
)%
 
(3.8
)%
 
60bps

Gross profit as % of revenue
24.3
 %
 
25.4
 %
 
(110bps)

SG&A as % of revenue
23.1
 %
 
23.0
 %
 
10bps

Restructuring charges
$
91

 
$

 
N/A

Operating income
$
33

 
$
260

 
(87
)%
Operating income as a % of revenue
0.3
 %
 
2.4
 %
 
(210bps)

Diluted EPS from continuing operations
$
0.04

 
$
0.39

 
(90
)%
 
 
 
 
 
 
Adjusted (non-GAAP) Results(2)
 
 
 
 
 
Operating income
$
124

 
$
260

 
(52
)%
Operating income as a % of revenue
1.2
 %
 
2.4
 %
 
(120bps)

Diluted EPS from continuing operations
$
0.20

 
$
0.39

 
(49
)%
 
 
 
 
 
 
Key Metrics(3)
 
 
 
 
 
Total U.S. big box retail square feet
41.0

 
42.6

 
(4
)%
Revenue per square foot (Domestic segment)
$
857

 
$
846

 
1
 %
Adjusted operating income per square foot (Domestic segment)
$
41

 
$
45

 
(9
)%
Adjusted return on invested capital(4)
11.1
 %
 
10.7
 %
 
40bps

 
Fiscal Second Quarter 2013 Highlights
Domestic comp store sales decline of 1.6 percent improved compared to fiscal first quarter decline of percent
Domestic estimated market share maintained year-over-year
U.S. big box square footage reduced by 4 percent year-over-year; Domestic revenue per square foot up 1 percent year-over-year
Similar to the first quarter of fiscal 2013, International segment year-over-year operating income decline driven primarily by lower revenue in China, Canada and increased competitive conditions in Europe
Domestic segment total Services category revenue increased approximately 6 percent
Momentum grows in Domestic services with key partnerships announced recently: AARP, Verizon and Target
Domestic segment online revenue growth of 14 percent
Domestic segment connections growth of 11 percent
Domestic segment mobile phones comparable store sales growth of 35 percent
Domestic segment comparable store sales growth in tablets, mobile phones, appliances and eReaders more than offset by declines in gaming, digital imaging, televisions and notebooks
Adjusted (non-GAAP) Domestic segment year-over-year operating income decline driven primarily by lower gross margins in computing, mobile phones and televisions




Exhibit 99.1

MINNEAPOLIS, August 21, 2012 -- Best Buy Co., Inc. (NYSE: BBY) today announced GAAP net earnings from continuing operations were $12 million, or $0.04 per diluted share, for the three months ended August 4, 2012 compared to net earnings from continuing operations of $150 million, or $0.39 per diluted share for the prior-year period. Excluding previously announced restructuring charges, adjusted (non-GAAP) net earnings from continuing operations for the second quarter of fiscal 2013 were $68 million, or $0.20 per diluted share.

On August 20, 2012, the company's Board of Directors appointed Hubert Joly, a leading global CEO with expertise in turnaround and growth across the media, technology and service sectors, as Best Buy's President and Chief Executive Officer and a member of its Board of Directors. He is expected to begin his new role in early September.

Revenue
 
Three Months ended Aug. 4, 2012
 
Prior-Year Period

($millions)
Revenue

 
Change YOY

 
Comp. Store Sales

 
Comp. Store Sales

Domestic
$
7,803

 
(2.2
)%
 
(1.6
)%
 
(4.1
)%
International
2,744

 
(4.7
)%
 
(8.2
)%
 
(2.8
)%
Total
$
10,547

 
(2.8
)%
 
(3.2
)%
 
(3.8
)%

The Domestic segment comparable store sales decline of 1.6 percent was driven by declines in gaming within the Entertainment revenue category, digital imaging and televisions within the Consumer Electronics revenue category and notebooks within the Computing and Mobile Phones revenue category. These declines were partially offset by comparable store sales growth in tablets and mobile phones within the Computing & Mobile Phones revenue category, the Appliances revenue category, and eReaders within the Consumer Electronics revenue category. The Domestic segment online channel revenue grew 14 percent compared to the prior-year period.

The International segment comparable store sales decline of 8.2 percent was driven by the lower growth in consumer spending in China and the continued impact from the expiration of government sponsored programs, which negatively impacted sales in Five Star. Market softness in notebooks, digital imaging and home theater in Canada also contributed to the International comparable store sales decline.

Gross Profit
 
Three Months ended Aug. 4, 2012
($millions)
Gross Profit

 
Change YOY

 
% of Revenue

Domestic
$
1,896

 
(6
)%
 
24.3
%
International
668

 
(9
)%
 
24.3
%
Total
$
2,564

 
(7
)%
 
24.3
%

Domestic segment gross profit decreased 6 percent, reflecting a rate decline of 110 basis points compared to the prior-year period. The Domestic segment rate decline was primarily due to three factors. In mobile phones, connection growth and a mix into higher price point smart phones resulted in strong comp sales and gross profit dollar growth, although at a lower overall rate. Second, industry softness in computing resulted in increased promotional activity in the quarter to stimulate consumer demand ahead of the second half of fiscal 2013, which will include the Windows 8 launch. Finally, there was less favorable product mix within the television category.

International segment gross profit declined 9 percent, reflecting a rate decline of 130 basis points compared to the prior-year period. This rate decline was driven by Best Buy Europe and due primarily to increased mix of lower margin wholesale sales and promotional activity within a price competitive environment for mobile phones.
 
Selling, General and Administrative Expenses (“SG&A”)
 
Three Months ended Aug. 4, 2012
($millions)
SG&A

 
Change YOY

 
% of Revenue

Domestic
$
1,722

 
(4
)%
 
22.1
%
International
718

 
 %
 
26.2
%
Total
$
2,440

 
(2
)%
 
23.1
%




Exhibit 99.1

Total SG&A spending declined 2 percent compared to the prior-year period as the company executed on previously announced actions to reduce costs through changes in its corporate and field operating models, adjusting labor to match demand and from store closures. As a reminder, year-over-year SG&A comparisons for both Domestic and International segments were impacted by the absence of the Best Buy Mobile profit share payment in fiscal 2013 as a result of the purchase of Carphone Warehouse Group plc's (“CPW”) share of the Best Buy Mobile profit share agreement in the fourth quarter of fiscal 2012. These intercompany profit share payments previously increased Domestic segment SG&A expense while lowering International segment SG&A and had no impact on the company's consolidated operating income.

Operating Income
 
Three Months ended Aug. 4, 2012
($millions)
Operating Income

 
Change YOY

 
% of Revenue

Domestic
$
83

 
(65
)%
 
1.1
 %
International
(50
)
 
n/a

 
(1.8
)%
Total
$
33

 
(87
)%
 
0.3
 %
 
 
 
 
 
 
Adjusted operating income - Domestic
$
174

 
(27
)%
 
2.2
 %
Adjusted operating income - International
(50
)
 
n/a

 
(1.8
)%
Adjusted operating income(2)
$
124

 
(52
)%
 
1.2
 %

Operating income of $33 million included $91 million of restructuring charges primarily related to store closure costs. Excluding these charges, adjusted operating income for the quarter declined 52 percent to $124 million.

Please see the table titled “Reconciliation of Non-GAAP Financial Measures” attached to this release for more detail.

Share Repurchases and Dividends
The company repurchased $122 million, or 6.3 million shares, of its common stock at an average price of $19.28 per share during the fiscal second quarter. The company has suspended its share repurchases for fiscal 2013 as it goes through the transition to a new CEO. On July 3, 2012, the company paid a quarterly dividend of $0.16 per common share outstanding, or $54 million in the aggregate.

Fiscal 2013 Financial Guidance
Based on the normal seasonality of the business, the majority of the company's annual earnings occur in the second half of the year. Due to lowered expectations for industry wide sales and the uncertainty associated with several key product launches expected in the second half of fiscal 2013, the company has reduced its annual earnings expectations. In addition, the company has just announced a new CEO who will start in early September. Given these factors, the company does not intend to further provide or update earnings guidance for fiscal 2013. The company will continue to provide forward looking commentary on business trends. The company continues to expect to achieve its domestic market share goals for the fiscal year and expects to generate free cash flow(5) in the range of $1.25 billion to $1.5 billion for fiscal 2013.

Conference Call
Best Buy is scheduled to conduct an earnings conference call at 9:00 a.m. Eastern Time (8:00 a.m. Central Time) on August 21, 2012. A webcast of the call is expected to be available on its Web site at www.investors.bestbuy.com both live and after the call. A telephone replay is also available starting at approximately 12:30 pm Eastern Time (11:30 a.m. Central Time) on August 21 through August 28. The dial-in number for the replay is 800-406-7325 (domestic) or 303-590-3030 (international), and the access code is 4559359.

(1) Best Buy's comparable store sales is comprised of revenue at stores, call centers, and websites operating for at least 14 full months as well as revenue related to other comparable sales channels. Relocated stores, as well as remodeled, expanded, and downsized stores closed more than 14 days, are excluded from the comparable store sales calculation until at least 14 full months after reopening. Acquired stores are included in the comparable store sales calculation beginning with the first full quarter following the first anniversary of the date of the acquisition. The portion of the calculation of the comparable store sales percentage change attributable to the International segment excludes the effect of fluctuations in foreign currency exchange rates. The method of calculating comparable store sales varies across the retail industry. As a result, Best Buy's method of calculating comparable store sales may not be the same as other retailers' methods.




Exhibit 99.1

(2) The company defines adjusted operating income for the periods presented as its reported operating income for those periods calculated in accordance with accounting principles generally accepted in the U.S. (“GAAP”) adjusted to exclude the effects of restructuring charges. In addition, the company defines adjusted net earnings and adjusted diluted earnings per share for the periods presented as its reported net earnings and diluted earnings per share calculated in accordance with GAAP adjusted to exclude the effects of restructuring charges.

These non-GAAP financial measures provide investors with an understanding of the company's operating income, net earnings, and diluted earnings per share adjusted to exclude the effect of the items described above. These non-GAAP financial measures assist investors in making a ready comparison of the company's operating income, net earnings, and diluted earnings per share for its fiscal quarter ended August 4, 2012, against the company's results for the respective prior-year periods and against third party estimates of the company's diluted earnings per share for those periods that may not have included the effect of such items. Additionally, management uses these non-GAAP financial measures as an internal measure to analyze trends, allocate resources, and analyze underlying operating performance. Please see “Reconciliation of Non-GAAP Financial Measures” attached to this release for more detail.

(3) Total U.S. big box retail square feet is equal to the total retail square footage of our U.S. Best Buy big box stores at fiscal quarter end. Revenue per square foot is equal to the sum of Domestic segment trailing twelve months revenue divided by the average quarterly retail square footage for all U.S. stores, over the same period. Adjusted operating income per square foot is equal to the sum of Domestic segment trailing twelve months adjusted operating income divided by the average quarterly retail square footage for all U.S. stores, over the same period.

(4) The company defines adjusted return on invested capital ("ROIC") as adjusted net operating profit after taxes divided by average invested capital for the periods presented (including both continuing and discontinued operations). Adjusted net operating profit after taxes is defined as our operating income for the periods presented calculated in accordance with GAAP adjusted to exclude the effects of: (i) operating lease interest; (ii) investment income; (iii) net earnings attributable to noncontrolling interests; (iv) income taxes; (v) all restructuring charges in costs of goods sold and operating expenses, goodwill and tradename impairments, and costs related to the purchase of CPW's share of the Best Buy Mobile profit share agreement ("Best Buy Europe transaction costs"); and (vi) the noncontrolling interest impact of the restructuring charges, Best Buy Europe transaction costs and the purchase of CPW's share of the Best Buy Mobile profit share agreement. Average invested capital is defined as the average of our total assets for the trailing four quarters in relation to the periods presented adjusted to: (i) exclude excess cash and cash equivalent and short-term investments; (ii) include capitalized operating lease obligations calculated using a multiple of eight times rental expenses; (iii) exclude our total liabilities, less our outstanding debt; and (iv) exclude equity of noncontrolling interests

This non-GAAP financial measure provides investors with a supplemental measure to evaluate how effectively the company is investing its capital and deploying its assets. Management uses this non-GAAP financial measure to assist in allocating resources, and trends in the measure may fluctuate over time as management balances long-term initiatives with possible short-term impacts. Our ROIC calculation utilizes total operations in order to provide a measure that includes the results of and capital invested in all operations, including those businesses that are no longer continuing operations. Please see “Reconciliation of Non-GAAP Financial Measures” attached to this release for more detail.

(5) Best Buy defines free cash flow as total cash (used in) provided by operating activities less additions to property and equipment. This non-GAAP financial measure assists investors in making a ready comparison of the company's expected free cash flow for the year ended February 2, 2013, against the company's results for the respective prior-year periods and against management's previously provided expectations.

Forward-Looking and Cautionary Statements:
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that reflect management's current views and estimates regarding future market conditions, company performance and financial results, business prospects, new strategies, the competitive environment and other events. You can identify these statements by the fact that they use words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “project,” “guidance,” “plan,” “outlook,” and other words and terms of similar meaning. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from the potential results discussed in the forward-looking statements. Among the factors that could cause actual results and outcomes to differ materially from those contained in such forward-looking statements are the following: general economic conditions, changes in consumer preferences, credit market constraints, acquisitions and development of new businesses, divestitures, product availability, sales volumes, pricing actions and promotional activities of competitors, profit margins, weather, natural or man-made disasters, changes in law or regulations, foreign currency fluctuation, availability of suitable real estate locations, the company's ability to react to a disaster recovery situation, the impact of labor markets and new product introductions on overall profitability, failure to achieve anticipated benefits of announced transactions, integration challenges relating to new ventures and unanticipated costs associated with previously announced or future restructuring activities. A further list and description of these risks, uncertainties and other matters can be found in the company's annual report and other reports filed from time to time with the Securities



Exhibit 99.1

and Exchange Commission, including, but not limited to, Best Buy's Annual Report on Form 10-K filed with the SEC on May 1, 2012. Best Buy cautions that the foregoing list of important factors is not complete, and any forward-looking statements speak only as of the date they are made, and Best Buy assumes no obligation to update any forward-looking statement that it may make.

About Best Buy Co., Inc.
Best Buy Co., Inc. (NYSE: BBY) is a leading multi-channel global retailer and developer of technology products and services. Every day our employees - 167,000 strong - are committed to helping deliver the technology solutions that enable easy access to people, knowledge, ideas and fun. We are keenly aware of our role and impact on the world, and we are committed to developing and implementing business strategies that bring sustainable technology solutions to our consumers and communities. For additional information about Best Buy, visit www.investors.bestbuy.com.

Investor Contacts:
Bill Seymour, Vice President, Investor Relations
(612) 291-6122 or bill.seymour@bestbuy.com

Adam Hauser, Director, Investor Relations
(612) 291-4446 or adam.hauser@bestbuy.com

Mollie O'Brien, Director, Investor Relations
(612) 291-7735 or mollie.obrien@bestbuy.com

Media Contacts:
Matt Furman, Senior Vice President, Communications & Public Affairs
(612) 291-3695 or matt.furman@bestbuy.com

Susan Busch, Senior Director, Public Relations
(612) 291-6114 or susan.busch@bestbuy.com





Exhibit 99.1

BEST BUY CO., INC.
CONSOLIDATED STATEMENTS OF EARNINGS
($ in millions, except per share amounts)
(Unaudited and subject to reclassification)
 
 
Three Months Ended
 
Six Months Ended
 
Aug 4, 2012
 
July 30, 2011
 
Aug 4, 2012
 
July 30, 2011
Revenue
$
10,547

 
$
10,856

 
$
22,157

 
$
22,225

Cost of goods sold
7,983

 
8,094

 
16,686

 
16,542

Gross profit
2,564

 
2,762

 
5,471

 
5,683

Gross profit %
24.3
%
 
25.4
%
 
24.7
%
 
25.6
%
Selling, general and administrative expenses
2,440

 
2,502

 
4,958

 
4,959

SG&A %
23.1
%
 
23.0
%
 
22.4
%
 
22.3
%
Restructuring charges
91

 

 
218

 
4

Operating income
33

 
260

 
295

 
720

Operating income %
0.3
%
 
2.4
%
 
1.3
%
 
3.2
%
Other income (expense):
 

 
 

 
 

 
 

Investment income and other
6

 
8

 
12

 
25

Interest expense
(30
)
 
(33
)
 
(63
)
 
(61
)
Earnings from continuing operations before income tax expense and equity in loss of affiliates
9

 
235

 
244

 
684

Income tax expense
14

 
87

 
86

 
242

Effective tax rate
156.1
%
 
36.8
%
 
35.4
%
 
35.3
%
Equity in loss of affiliates
(2
)
 

 
(4
)
 
(1
)
Net (loss) earnings from continuing operations
(7
)
 
148

 
154

 
441

Loss from discontinued operations, net of tax

 
(37
)
 
(9
)
 
(91
)
Net (loss) earnings including noncontrolling interests
(7
)
 
111

 
145

 
350

Net loss (earnings) from continuing operations attributable to noncontrolling interests
19

 
2

 
19

 
(36
)
Net loss from discontinued operations attributable to noncontrolling interests

 
15

 
6

 
26

Net earnings attributable to Best Buy Co., Inc.
$
12

 
$
128

 
$
170

 
$
340

 
 
 
 
 
 
 
 
Basic earnings (loss) per share attributable to Best Buy Co., Inc.
 
 

 
 

 
 

Continuing operations
$
0.04

 
$
0.40

 
$
0.51

 
$
1.06

Discontinued operations

 
(0.06
)
 
(0.01
)
 
(0.17
)
Basic earnings per share
$
0.04

 
$
0.34

 
$
0.50

 
$
0.89

 
 
 
 
 
 
 
 
Diluted earnings (loss) per share attributable to Best Buy Co., Inc.(1)
 
 
 
 
 
 
Continuing operations
$
0.04

 
$
0.39

 
$
0.51

 
$
1.04

Discontinued operations

 
(0.05
)
 
(0.01
)
 
(0.17
)
Diluted earnings per share
$
0.04

 
$
0.34

 
$
0.50

 
$
0.87

 
 
 
 
 
 
 
 
Dividends declared per Best Buy Co., Inc. common share
$
0.16

 
$
0.15

 
$
0.32

 
$
0.30

 
 
 
 
 
 
 
 
Weighted average Best Buy Co., Inc. common shares outstanding (in millions)
Basic
338.2

 
376.0

 
340.3

 
383.6

Diluted
338.6

 
385.6

 
341.0

 
393.3

 
(1) The calculation of diluted earnings per share assumes the conversion of the company's previously outstanding convertible debentures due in 2022 into 8.8 million shares common stock in the three and six months ended July 30, 2011, and adds back the related after-tax interest expense of $1.4 million and $ 2.8 million for the three and six months ended July 30, 2011, respectively.





Exhibit 99.1

BEST BUY CO., INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
(Unaudited and subject to reclassification)
 
 
Aug 4, 2012
 
July 30, 2012
ASSETS
 

 
 

Current assets
 

 
 

Cash and cash equivalents
$
680

 
$
2,079

Short-term investments

 
80

Receivables
2,135

 
1,868

Merchandise inventories
6,299

 
6,784

Other current assets
1,070

 
1,080

Total current assets
10,184

 
11,891

Net property & equipment
3,407

 
3,781

Goodwill
1,342

 
2,507

Tradenames
130

 
136

Customer relationships
221

 
179

Equity and other investments
91

 
316

Other assets
474

 
486

TOTAL ASSETS
$
15,849

 
$
19,296

 
 
 
 
LIABILITIES & EQUITY
 

 
 

Current liabilities
 

 
 

Accounts payable
$
6,055

 
$
6,178

Accrued liabilities
2,332

 
2,526

Short-term debt
519

 
392

Current portion of long-term debt
542

 
444

Total current liabilities
9,448

 
9,540

Long-term liabilities
1,125

 
1,168

Long-term debt
1,165

 
1,701

Equity
4,111

 
6,887

TOTAL LIABILITIES & EQUITY
$
15,849

 
$
19,296






Exhibit 99.1

BEST BUY CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in millions)
(Unaudited and subject to reclassification)
 
 
Six Months Ended
 
Aug 4, 2012
 
July 30, 2011
OPERATING ACTIVITIES
 

 
 

Net earnings including noncontrolling interests
$
145

 
$
350

Adjustments to reconcile net earnings to total cash (used in) provided by operating activities:
 

 
 

Depreciation and amortization of definite-lived intangible assets  
465

 
478

Other, net  
220

 
50

Changes in operating assets and liabilities, net of acquired assets and liabilities:
 

 
 

Receivables
300

 
476

Merchandise inventories
512

 
659

Accounts payable
(834
)
 
(501
)
Other assets and liabilities  
(1,030
)
 
(343
)
Total cash (used in) provided by operating activities
(222
)
 
1,169

 
 
 
 
INVESTING ACTIVITIES
 

 
 

Additions to property and equipment
(316
)
 
(377
)
Other, net  
121

 
(65
)
Total cash used in investing activities
(195
)
 
(442
)
 
 
 
 
FINANCING ACTIVITIES
 

 
 

Repurchase of common stock
(255
)
 
(737
)
Borrowings of debt, net  
23

 
809

Other, net  
(102
)
 
(76
)
Total cash used in financing activities
(334
)
 
(4
)
 
 
 
 
EFFECT OF EXCHANGE RATE CHANGES ON CASH
30

 
18

ADJUSTMENT FOR CHANGE IN FISCAL YEAR
202

 
235

 
 
 
 
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(519
)
 
976

 
 
 
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
1,199

 
1,103

 
 
 
 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
680

 
$
2,079





Exhibit 99.1

BEST BUY CO., INC.
SEGMENT INFORMATION
($ in millions)
(Unaudited and subject to reclassification)
 
Domestic Segment Performance Summary
 
Three Months Ended
 
 
 
Aug 4, 2012
 
July 30, 2011
 
Change
Revenue
$
7,803

 
$
7,977

 
(2
)%
Gross profit
$
1,896

 
$
2,026

 
(6
)%
SG&A
$
1,722

 
$
1,787

 
(4
)%
Restructuring charges
$
91

 
$

 
N/A

Operating income
$
83

 
$
239

 
(65
)%
Key Metrics:
 

 
 

 
 

Comparable store sales % change(1)
(1.6
)%
 
(4.1
)%
 
250bps

Gross profit as % of revenue
24.3
 %
 
25.4
 %
 
(110bps)

SG&A as % of revenue
22.1
 %
 
22.4
 %
 
(30bps)

Operating income as % of revenue
1.1
 %
 
3.0
 %
 
(190bps)

 Adjusted (non-GAAP) Results(2)
 
 
 
 
 
Operating income
$
174

 
$
239

 
(27
)%
Operating income % of revenue
2.2
 %
 
3.0
 %
 
(80bps)

 
International Segment Performance Summary
 
Three Months Ended
 
 
 
Aug 4, 2012
 
July 30, 2011
 
Change
Revenue
$
2,744

 
$
2,879

 
(5
)%
Gross profit
$
668

 
$
736

 
(9
)%
SG&A
$
718

 
$
715

 
 %
Restructuring charges
$

 
$

 
N/A

Operating (loss) income
$
(50
)
 
$
21

 
N/A

Key Metrics:
 
 
 
 
 
Comparable store sales % change(1)
(8.2
)%
 
(2.8
)%
 
(540bps)

Gross profit as % of revenue
24.3
 %
 
25.6
 %
 
(130bps)

SG&A as % of revenue
26.2
 %
 
24.8
 %
 
140bps

Operating (loss) income as % of revenue
(1.8
)%
 
0.7
 %
 
N/A

 Adjusted (non-GAAP) Results(2)
 
 
 
 
 
Operating (loss) income
$
(50
)
 
$
21

 
N/A

Operating (loss) income % of revenue
(1.8
)%
 
0.7
 %
 
N/A

 
(1) Best Buy's comparable store sales is comprised of revenue at stores, call centers, and Web sites operating for at least 14 full months as well as revenue related to other comparable sales channels. Relocated, remodeled and expanded stores are excluded from the comparable store sales calculation until at least 14 full months after reopening. Acquired stores are included in the comparable store sales calculation beginning with the first full quarter following the first anniversary of the date of the acquisition. The portion of the calculation of the comparable store sales percentage change attributable to the International segment excludes the effect of fluctuations in foreign currency exchange rates. The method of calculating comparable store sales varies across the retail industry. As a result, Best Buy's method of calculating comparable store sales may not be the same as other retailers' methods. The calculation of comparable store sales excludes the impact of the extra week of revenue in the first quarter of fiscal 2013.

(2) Excludes the impact of previously announced restructuring charges. Please see table titled “Reconciliation of Non-GAAP Financial Measures” at the back of this release.





Exhibit 99.1

BEST BUY CO., INC.
REVENUE CATEGORY SUMMARY
(Unaudited and subject to reclassification)
 
Domestic Segment Summary
 
 
Revenue Mix Summary
 
Comparable Store Sales
 
 
Three Months Ended
 
Three Months Ended
 
 
Aug 4, 2012
 
July 30, 2011
 
Aug 4, 2012
 
July 30, 2011
Consumer Electronics
 
33
%
 
36
%
 
(9.6
)%
 
(8.6
)%
Computing and Mobile Phones
 
44
%
 
40
%
 
8.2
 %
 
2.2
 %
Entertainment
 
8
%
 
10
%
 
(22.1
)%
 
(18.2
)%
Appliances
 
7
%
 
6
%
 
9.0
 %
 
5.4
 %
Services(1)
 
7
%
 
7
%
 
1.2
 %
 
3.4
 %
Other
 
1
%
 
1
%
 
n/a

 
n/a

Total
 
100
%
 
100
%
 
(1.6
)%
 
(4.1
)%
 
International Segment Summary
 
 
Revenue Mix Summary
 
Comparable Store Sales
 
 
Three Months Ended
 
Three Months Ended
 
 
Aug 4, 2012
 
July 30, 2011
 
Aug 4, 2012
 
July 30, 2011
Consumer Electronics
 
17
%
 
19
%
 
(14.3
)%
 
(11.3
)%
Computing and Mobile Phones
 
59
%
 
54
%
 
(0.8
)%
 
(0.2
)%
Entertainment
 
3
%
 
4
%
 
(13.3
)%
 
(18.5
)%
Appliances
 
13
%
 
14
%
 
(19.0
)%
 
7.7
 %
Services(1)
 
8
%
 
9
%
 
(14.4
)%
 
(3.7
)%
Other
 
<1%

 
<1%

 
n/a

 
n/a

Total
 
100
%
 
100
%
 
(8.2
)%
 
(2.8
)%
 
(1) The “Services” revenue category consists primarily of service contracts, extended warranties, computer related services, product repair and delivery and installation for home theater, mobile audio and appliances.






Exhibit 99.1

BEST BUY CO., INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
($ in millions, except per share amounts)
(Unaudited and subject to reclassification)

The following information provides reconciliations of non-GAAP financial measures from continuing operations to the most comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”). The company has provided non-GAAP financial measures, which are not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in the accompanying news release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented in the news release. The non-GAAP financial measures in the accompanying news release may differ from similar measures used by other companies.

The following tables reconcile operating income, net earnings and diluted earnings per share for the periods presented for continuing operations (GAAP financial measures) to adjusted operating income, adjusted net earnings and adjusted diluted earnings per share for continuing operations (non-GAAP financial measures) for the periods presented.
 
Three Months Ended
 
Three Months Ended
 
Aug 4, 2012
 
July 30, 2011
 
$
 
% of Rev.
 
$
 
% of Rev.
Domestic - Continuing Operations
 
 
 
 
 
 
 
Operating income
$
83

 
1.1
 %
 
$
239

 
3.0
%
Restructuring charges
91

 
1.2
 %
 

 
n/a

Adjusted operating income
$
174

 
2.2
 %
 
$
239

 
3.0
%
 
 
 
 
 
 
 
 
Consolidated - Continuing Operations
 
 
 
 
 
 
 
Operating income
$
33

 
0.3
 %
 
$
260

 
2.4
%
Restructuring charges
91

 
0.9
 %
 

 
n/a

Adjusted operating income
$
124

 
1.2
 %
 
$
260

 
2.4
%
 
 
 
 
 
 
 
 
Net earnings
$
12

 
 
 
$
150

 
 
After-tax impact of restructuring charges
56

 
 
 

 
 
Adjusted net earnings
$
68

 
 
 
$
150

 
 
 
 
 
 
 
 
 
 
Diluted EPS
$
0.04

 
 
 
$
0.39

 
 
Per share impact of restructuring charges
0.16

 
 
 

 
 
Adjusted diluted EPS
$
0.20

 
 
 
$
0.39

 
 
 
 
 
 
 
 
 
 
 
Six Months Ended
 
Six Months Ended
 
Aug 4, 2012
 
July 30, 2011
 
$
 
% of Rev.
 
$
 
% of Rev.
Domestic - Continuing Operations
 
 
 
 
 
 
 
Operating income
$
378

 
2.3
 %
 
$
605

 
3.7
%
Restructuring charges
218

 
1.3
 %
 
5

 
%
Adjusted operating income
$
596

 
3.6
 %
 
$
610

 
3.7
%
 
 
 
 
 
 
 
 
International - Continuing Operations
 
 
 
 
 
 
 
Operating (loss) income
$
(83
)
 
(1.5
)%
 
$
115

 
2.0
%
Restructuring charges

 
n/a

 
(1
)
 
%
Adjusted operating (loss) income
$
(83
)
 
(1.5
)%
 
$
114

 
1.9
%
 
 
 
 
 
 
 
 
Consolidated - Continuing Operations
 
 
 
 
 
 
 
Operating income
$
295

 
1.3
 %
 
$
720

 
3.2
%
Restructuring charges
218

 
1.0
 %
 
4

 
%
Adjusted operating income
$
513

 
2.3
 %
 
$
724

 
3.3
%
 
 
 
 
 
 
 
 
Net Earnings
$
173

 
 
 
$
405

 
 
After-tax impact of restructuring charges
141

 
 
 
3

 
 
Adjusted net earnings
$
314

 
 
 
$
408

 
 
 
 
 
 
 
 
 
 
Diluted EPS
$
0.51

 
 
 
$
1.04

 
 
Per share impact of restructuring charges
0.41

 
 
 

 
 
Adjusted diluted EPS
$
0.92

 
 
 
$
1.04

 
 



Exhibit 99.1

BEST BUY CO., INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
($ in millions)
(Unaudited and subject to reclassification)

The following information provides a reconciliation of a non-GAAP financial measure to the most comparable financial measure calculated and presented in accordance with GAAP. The company has provided the non-GAAP financial measure, which is not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measure that is calculated and presented in accordance with GAAP. Such non-GAAP financial measure should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the GAAP financial measure. The non-GAAP financial measure in the accompanying news release may differ from similar measures used by other companies.

The following table includes the calculation of Adjusted ROIC for total operations, which includes both continuing and discontinued operations (non-GAAP financial measures), along with a reconciliation to the calculation of return on total assets ("ROA") (GAAP financial measure) for the periods presented.
Calculation of Return on Invested Capital(1)
 
Aug 4, 2012(2)
 
July 30, 2011(2)
Net Operating Profit After Taxes (NOPAT)
 
 
 
Operating income - continuing operations
$
555

 
$
2,274

Operating income - discontinued operations
(312
)
 
(276
)
Total operating income
243

 
1,998

Add: Operating lease interest(3)
597

 
596

Add: Investment income
33

 
55

Less: Net earnings attributable to noncontrolling interest (NCI)
(1,219
)
 
(71
)
Less: Income taxes(4)
(940
)
 
(1,026
)
NOPAT
$
(1,286
)
 
$
1,552

Add: Restructuring charges and impairments(5)
1,752

 
225

Add: NCI impact of BBYM profit share buyout and restructuring charges
1,202

 

Adjusted NOPAT
$
1,668

 
$
1,777

 
 
 
 
Average Invested Capital
 
 
 
Total assets
$
17,308

 
$
19,426

Less: Excess Cash(6)
(889
)
 
(1,261
)
Add: Capitalized operating lease obligations(7)
9,547

 
9,530

Total liabilities
(12,502
)
 
(12,465
)
Exclude: Debt(8)
2,190

 
2,027

Less: Noncontrolling interests
(639
)
 
(703
)
Average invested capital
$
15,015

 
$
16,554

 
 

 
 

Adjusted Return on invested capital (ROIC)
11.1
 %
 
10.7
%
Calculation of Return on Assets(1)
 
Aug 4, 2012(2)
 
July 30, 2011(2)
Net earnings including noncontrolling interests(9)
$
(274
)
 
$
1,298

Total assets
17,308

 
19,426

Return on assets (ROA)
(1.6
)%
 
6.7
%

(1) The calculations of Return on Invested Capital and Return on Assets use total operations, which includes both continuing and discontinued operations.
(2) Income statement accounts represent the activity for the 12 months ended as of each of the balance sheet dates. Balance sheet accounts represent the average account balances for the 4 quarters ended as of each of the balance sheet dates.
(3) Operating lease interest represents the add-back to operating income driven by our capitalized lease obligations and represents fifty percent of our annual rental expense which is the multiple used for the retail sector by one of the nationally recognized credit rating agencies that rates our creditworthiness, and we consider it to be an appropriate multiple for our lease portfolio.
(4) Income taxes are calculated using a blended statutory rate at the enterprise level based on statutory rates from the countries we do business in.
(5) Includes all restructuring charges in costs of goods sold and operating expenses, goodwill and tradename impairments, and the Best Buy Europe transaction costs.
(6) Cash and cash equivalents and short term investments are capped at the greater of 1% of revenue or actual amounts on hand. The cash and cash equivalents and short term investments in excess of the cap are subtracted from our calculation of average invested capital to show their exclusion from total assets.
(7) The multiple of eight times annual rental expense in the calculation of our capitalized operating lease obligations is the multiple used for the retail sector by one of the nationally recognized credit rating agencies that rates our creditworthiness, and we consider it to be an appropriate multiple for our lease portfolio.
(8) Debt includes short-term debt, current portion of long-term debt and long-term debt and is added back to our calculation of average invested capital to show its exclusion from total liabilities.
(9) Net earnings including noncontrolling interests for the twelve months ended August 4, 2012 include the $1.3 billion purchase of CPW's share of the Best Buy Mobile profit share agreement, a $1.2 billion non-cash impairment charge to reflect the write-off of Best Buy Europe goodwill and $499 million in restructuring charges.