How did Best Buy perform financially in fiscal 2001?

Net earnings rose to $395.8 million, or $1.86 per diluted share, from $347.1 million, or $1.63, in fiscal 2000. Revenues increased 23% to $15.3 billion, and operating income reached $604.3 million, or 3.9% of revenues. Fiscal 2001 contained 53 weeks, and the 53rd week added about $280 million to revenues.

What acquisitions did Best Buy complete in fiscal 2001?

In the fourth quarter, Best Buy acquired Musicland Stores Corporation, a mall-based retailer of pre-recorded music and movies operating about 1,300 stores, and Magnolia Hi-Fi, Inc., a high-end audio and video retailer with 13 stores. The company paid $513 million in total, or $326 million net of cash acquired, and assumed $260 million of Musicland debt. The filing states the acquisitions reduced fiscal 2001 earnings by about 4 cents per share.

What did Best Buy say about its outlook for fiscal 2002?

Best Buy expects net earnings growth in fiscal 2002, with sales of $19.0 billion to $19.5 billion and comparable store sales in the low single digits. The company expects Musicland to weigh on results in the first three quarters, with fourth-quarter profits expected to offset those losses. Net interest income is expected to decline, and the effective tax rate is expected to rise because Musicland goodwill is not deductible.

Does Best Buy pay dividends, and how many holders of record does it have?

Best Buy has not historically paid cash dividends and has no current plans to pay them. As of March 30, 2001, there were 1,970 holders of record of its common stock, which trades on the New York Stock Exchange under the symbol BBY.

What risks or pressures did Best Buy identify in its results?

The company cited higher SG&A from its e-commerce launch and New York market start-up, a $15 million write-off of e-commerce investments, and lower-than-expected video game sales. Appliance comparable store sales declined, and desktop computer sales slowed in the second half of the year. The filing also notes that supplier disruption from five major suppliers, representing about 33% of purchases, could materially affect sales.

BBY 10-K FY2001 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed June 1, 2001. Cited figures are marked; the original filing is the authoritative source.

Best Buy Co., Inc. reported record earnings for the fourth consecutive year for the fiscal year ended March 3, 2001 (a 53-week year).

Net earnings were $395.8 million^a, or $1.86 per diluted share, up from $347.1 million ($1.63) in fiscal 2000 and $216.3 million ($1.03) in fiscal 1999. Revenues rose 23% to $15.3 billion, driven by 62 new Best Buy stores, a 4.9% comparable store sales increase, and roughly $160 million in revenue from Musicland and Magnolia Hi-Fi after their acquisition dates. Gross profit margin improved to 20.0% from 19.2%, while SG&A rose to 16.0% of revenues from 14.8%, reflecting investments in BestBuy.com, the New York market, and Musicland integration.

Operating income was $604.3 million^b, or 3.9% of revenues. The fourth quarter of fiscal 2001 included the acquisitions of Musicland Stores Corporation, a mall-based retailer of pre-recorded music and movies with about 1,300 stores, and Magnolia Hi-Fi, a high-end audio and video retailer with 13 stores. Total cash paid for the acquisitions was $513 million ($326 million net of cash acquired), and Best Buy assumed $260 million of Musicland debt.

Microsoft Corporation invested $200 million^c in Best Buy common stock as part of a strategic alliance. Shareholders' equity rose to $1.82 billion and year-end cash was $747 million, with total debt of $295.9 million. For fiscal 2002, management expects net earnings growth, sales of $19.0 billion to $19.5 billion, and capital expenditures of $700 million to $750 million, with about 60 new Best Buy stores planned.

Management expects the Musicland integration to weigh on the first three quarters of fiscal 2002, and it anticipates lower net interest income and a higher effective tax rate because Musicland goodwill is not deductible. The company has never paid cash dividends and has no current plans to do so.

02—Key points

Key Highlights

Net earnings of $395.8 million, or $1.86 per diluted share, versus $347.1 million ($1.63) in fiscal 2000, marking the fourth consecutive year of record earnings
Revenues increased 23% to $15.3 billion, with 62 new Best Buy stores opened and comparable store sales up 4.9%
Gross profit margin improved to 20.0% of revenues from 19.2%, aided by digital product sales mix and improved inventory turns of 7.6 versus 7.2
SG&A rose to 16.0% of revenues from 14.8%, driven by BestBuy.com launch costs, New York market start-up, and Musicland integration
Acquired Musicland Stores Corporation and Magnolia Hi-Fi in the fourth quarter for $513 million in cash ($326 million net of cash acquired), and assumed $260 million of Musicland debt
Microsoft Corporation invested $200 million in Best Buy common stock as part of a strategic alliance; shareholders' equity reached $1.82 billion
Fiscal 2002 guidance calls for sales of $19.0 billion to $19.5 billion, capital expenditures of $700 million to $750 million, and about 60 new Best Buy stores

03—Questions

Frequently Asked Questions

How did Best Buy perform financially in fiscal 2001?
Net earnings rose to $395.8 million, or $1.86 per diluted share, from $347.1 million, or $1.63, in fiscal 2000. Revenues increased 23% to $15.3 billion, and operating income reached $604.3 million, or 3.9% of revenues. Fiscal 2001 contained 53 weeks, and the 53rd week added about $280 million to revenues.
What acquisitions did Best Buy complete in fiscal 2001?
In the fourth quarter, Best Buy acquired Musicland Stores Corporation, a mall-based retailer of pre-recorded music and movies operating about 1,300 stores, and Magnolia Hi-Fi, Inc., a high-end audio and video retailer with 13 stores. The company paid $513 million in total, or $326 million net of cash acquired, and assumed $260 million of Musicland debt. The filing states the acquisitions reduced fiscal 2001 earnings by about 4 cents per share.
What did Best Buy say about its outlook for fiscal 2002?
Best Buy expects net earnings growth in fiscal 2002, with sales of $19.0 billion to $19.5 billion and comparable store sales in the low single digits. The company expects Musicland to weigh on results in the first three quarters, with fourth-quarter profits expected to offset those losses. Net interest income is expected to decline, and the effective tax rate is expected to rise because Musicland goodwill is not deductible.
Does Best Buy pay dividends, and how many holders of record does it have?
Best Buy has not historically paid cash dividends and has no current plans to pay them. As of March 30, 2001, there were 1,970 holders of record of its common stock, which trades on the New York Stock Exchange under the symbol BBY.
What risks or pressures did Best Buy identify in its results?
The company cited higher SG&A from its e-commerce launch and New York market start-up, a $15 million write-off of e-commerce investments, and lower-than-expected video game sales. Appliance comparable store sales declined, and desktop computer sales slowed in the second half of the year. The filing also notes that supplier disruption from five major suppliers, representing about 33% of purchases, could materially affect sales.

04—Continue

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