01—Abstract
Summary
Summary of the 10-K filed May 24, 2000. Cited figures are marked; the original filing is the authoritative source.
Best Buy Co., Inc. reported record fiscal 2000 results for the year ended February 26, 2000.
Revenues rose 24.1% to $12.49 billiona from $10.06 billion, driven by an 11.1% comparable store sales increase, and net earnings increased 60% to $347.1 million, or $1.63 per diluted share, compared with $216.3 million ($1.03 per share) in fiscal 1999. Gross profit margin improved to 19.2% of revenues from 18.0%, and operating income rose to 4.3% of revenues from 3.5%. The company operated 357 stores in 39 states at year-end and opened 47 new stores during the year.
Management is investing in growth and strategic initiatives. The company plans to open about 60 stores in fiscal 2001 and expects capital expenditures of approximately $600 millionb that year. It formed BestBuy.com, Inc., a wholly-owned subsidiary, to launch an expanded e-commerce business in June 2000, and it finalized a strategic alliance with Microsoft after year-end, under which Microsoft purchased 3.9 million Best Buy shares for $200 million.
The company repurchased nearly $400 millionc of its common stock during fiscal 2000 and ended the year with cash and cash equivalents of $750.7 million and shareholders' equity of $1.10 billion. Cash flow from operations increased $98 million to $760 million.
Debt was reduced by $30 milliond, and the company said it expects its funds from operations and available cash to be sufficient for its anticipated expansion plans for the next year. The company does not pay cash dividends and has no current plans to do so.
02—Key points
Key Highlights
- Revenues increased 24.1% to $12.49 billion, with comparable store sales up 11.1%
- Net earnings rose 60% to $347.1 million; diluted EPS was $1.63 versus $1.03 in fiscal 1999
- Gross profit margin improved to 19.2% from 18.0%; operating income margin rose to 4.3% from 3.5%
- Cash flow from operations increased $98 million to $760 million
- Microsoft alliance after year-end: Microsoft bought 3.9 million shares for $200 million
- Repurchased nearly $400 million of common stock; Board authorized an additional $400 million program in February 2000
- Plans to open approximately 60 stores in fiscal 2001 and spend about $600 million in capital expenditures
03—Questions
Frequently Asked Questions
How did Best Buy perform financially in fiscal 2000?
Best Buy reported record revenues of $12.49 billion, up 24.1%, and record net earnings of $347.1 million, up 60%. Diluted earnings per share were $1.63, compared with $1.03 in fiscal 1999.
What drove the sales growth?
The filing attributes the growth to an 11.1% comparable store sales increase, the net addition of 46 stores, strong consumer spending, and rapid consumer adoption of digital products such as DVD players. Sales of personal computers were stimulated by Internet service provider rebate offers.
What is the company's strategy for e-commerce and partnerships?
The company created BestBuy.com, Inc. as a wholly-owned subsidiary and expects to launch it to the public in June 2000. It also finalized a comprehensive alliance with Microsoft after year-end, covering co-marketing and prominent placement on Microsoft properties. The filing describes e-commerce as not yet a significant portion of the business.
Does Best Buy pay dividends and what did it do with its shares?
Best Buy has not historically paid and has no current plans to pay cash dividends on its common stock. In fiscal 2000 it repurchased nearly $400 million of common stock, and in February 2000 its Board authorized an additional $400 million repurchase program.
What are the company's expansion and capital plans for fiscal 2001?
The company expects to open approximately 60 stores in fiscal 2001, including about 12 small-market stores, and to remodel or relocate about 10 stores. Capital expenditures are expected to approximate $600 million, including construction of a 650,000-square-foot distribution center in Dublin, Georgia.
04—Continue