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Best Buy Annual Report, Year Ended Mar 1, 2003

Filing Date
Filed May 30, 2003
Period End
March 1, 2003
Security
BBY
In the record · 2016–202610-K1110-Q328-K109

BBY filed 11 annual reports (10-K), 32 quarterly reports (10-Q) and 109 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Jun ’16Jun ’16
  2. Leadership change8-K · Apr ’19Apr ’19
  3. Material agreement8-K · May ’21May ’21
  4. Leadership change8-K · Sep ’25Sep ’25

01—Abstract

Summary

Summary of the 10-K filed May 30, 2003. Cited figures are marked; the original filing is the authoritative source.

Best Buy Co., Inc. (NYSE: BBY) reported fiscal 2003 (ended March 1, 2003) revenue from continuing operations of $20.9 billiona, up 13% from fiscal 2002.

Earnings from continuing operations rose 10% to $622 millionb, or $1.91 per diluted share. Operating income from continuing operations was $1.01 billion, a 4.8% operating income rate. Comparable store sales increased 2.4%, and the company opened 90 new stores during the year, including 67 U.S. Best Buy stores.

Net earnings fell sharply to $99 millionc, or $0.30 per diluted share, because of a $441 million loss from discontinued operations and $82 million of cumulative-effect accounting charges. The discontinued operations relate to Musicland, which the company committed in the fourth quarter to sell after it did not meet financial objectives. The loss includes non-cash charges of $418 million after tax, including a $308 million goodwill write-off and a $102 million after-tax asset impairment.

The company has not yet determined the final financial impact of the planned sale. The company ended the year with $1.9 billiond in cash, working capital of $1.1 billion, and a long-term debt-to-capitalization ratio of 23%. Management projects fiscal 2004 revenue from continuing operations of approximately $23.5 billion and diluted EPS from continuing operations of $2.17 to $2.22, with capital expenditures of about $700 million.

02—Key points

Key Highlights

  1. Fiscal 2003 revenue from continuing operations reached $20.9 billion, up 13% from $18.5 billion as adjusted in fiscal 2002, driven by 90 new stores and a 2.4% comparable store sales gain.
  2. Earnings from continuing operations increased 10% to $622 million, or $1.91 per diluted share, versus $564 million ($1.75) as adjusted in fiscal 2002.
  3. Net earnings declined to $99 million ($0.30 per diluted share) from $570 million, due to a $441 million loss from discontinued Musicland operations and $82 million in cumulative-effect accounting charges.
  4. Management committed to selling Musicland after it failed to meet financial objectives; the company wrote off $308 million of Musicland goodwill and recorded a $166 million pre-tax asset impairment charge.
  5. Gross profit rate rose slightly to 25.0% of revenue, while the SG&A rate increased to 20.2%, mainly due to International expansion and the launch of Canadian Best Buy stores.
  6. Cash and cash equivalents were $1.9 billion at year-end, and working capital increased to $1.1 billion; the long-term debt-to-capitalization ratio declined to 23%.
  7. Fiscal 2004 outlook projects revenue of approximately $23.5 billion, earnings growth of 14% to 16% from continuing operations, and capital expenditures of about $700 million.

03—Questions

Frequently Asked Questions

  1. Why did net earnings fall so sharply in fiscal 2003 when continuing operations grew?

    Net earnings were $99 million, compared with $570 million in fiscal 2002. The decline came from a $441 million loss from discontinued operations, mainly Musicland, and $82 million in after-tax cumulative-effect charges for goodwill and vendor allowance accounting changes. Earnings from continuing operations rose to $622 million.

  2. What is happening with Musicland?

    In the fourth quarter of fiscal 2003, the company committed to a plan to sell its interest in Musicland because the business did not meet its financial objectives. Musicland is reported as discontinued operations, and the company has retained an investment banking firm to manage the sale. The filing states that the final financial impact depends on negotiations with the ultimate buyer.

  3. How is the company expanding internationally?

    The International segment, established with the November 2001 acquisition of Future Shop, ended fiscal 2003 with 104 Future Shop stores and eight Canadian Best Buy stores. The company launched its Best Buy brand in Canada and put major acquisitions and expansion beyond North America on hold to focus on its core business.

  4. What does management expect for fiscal 2004?

    Management expects revenue from continuing operations of approximately $23.5 billion, an 11% to 13% increase, and earnings growth of 14% to 16%, with diluted EPS of approximately $2.17 to $2.22. The outlook excludes discontinued operations, and it expects capital expenditures of about $700 million to support roughly 60 new U.S. Best Buy stores.

04—Continue

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