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Best Buy Annual Report, Year Ended Feb 28, 2004

Filing Date
Filed April 29, 2004
Period End
February 28, 2004
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 April 29, 2004. Cited figures are marked; the original filing is the authoritative source.

Best Buy Co., Inc. (BBY) reported fiscal 2004 (year ended February 28, 2004) revenue from continuing operations of $24.5 billiona, up 17% from $20.9 billion in fiscal 2003, with earnings from continuing operations of $800 million, or $2.44 per diluted share, up 29% from $622 million, or $1.91 per diluted share.

The increase was driven by a 7.1% comparable store sales gain, an improved gross profit rate of 25.2% of revenue, and an SG&A rate that declined to 19.9% of revenue. Operating income rose to $1.30 billionb, or 5.3% of revenue. Net earnings were $705 million after a $95 million loss from discontinued operations, which included a $66 million after-tax loss on the June 2003 sale of the Musicland business to an affiliate of Sun Capital Partners.

The company operated 608 U.S. Best Buy stores, 22 Magnolia Audio Video stores, 108 Future Shop stores and 19 Canadian Best Buy stores at year end, and opened 78 new stores during the year. It also initiated its first-ever cash dividends, paying a $0.30c special dividend and a $0.10 regular quarterly dividend, and repurchased $100 million of stock. Management projects fiscal 2005 earnings from continuing operations of $2.80 to $2.93 per diluted share and revenue of approximately $27.5 billion.

The filing also discloses four federal securities class action lawsuits and a shareholder derivative action, which management believes are without merit. Cash rose to $2.6 billiond, and the debt-to-capitalization ratio improved to 20% from 23%.

02—Key points

Key Highlights

  1. Revenue from continuing operations rose 17% to $24.5 billion, driven by a 7.1% comparable store sales gain and 78 new stores opened during the year.
  2. Earnings from continuing operations increased 29% to $800 million, or $2.44 per diluted share, versus $1.91 in fiscal 2003.
  3. Net earnings were $705 million, or $2.15 per diluted share, after a $66 million after-tax loss on the sale of Musicland and a $95 million total loss from discontinued operations.
  4. Operating income rate improved to 5.3% of revenue from 4.8%, with gross profit rate rising to 25.2% and SG&A rate falling to 19.9%.
  5. The company declared its first-ever cash dividends in October 2003, including a $0.30 special dividend and a $0.10 regular quarterly dividend, and set a goal of paying $0.40 per share annually.
  6. Cash and cash equivalents increased to $2.6 billion from $1.9 billion, and the debt-to-capitalization ratio improved to 20% from 23%.
  7. Fiscal 2005 outlook projects earnings from continuing operations of $2.80 to $2.93 per diluted share on revenue of approximately $27.5 billion.

03—Questions

Frequently Asked Questions

  1. How did Best Buy perform in fiscal 2004?

    Revenue from continuing operations increased 17% to $24.5 billion, and earnings from continuing operations rose 29% to $800 million, or $2.44 per diluted share. The gains came from a 7.1% comparable store sales increase, a higher gross profit rate and lower SG&A as a percentage of revenue.

  2. What was the impact of the Musicland sale?

    On June 16, 2003, Best Buy sold its interest in Musicland to an affiliate of Sun Capital Partners for no cash consideration. The sale resulted in an after-tax loss on disposal of $66 million, and Musicland's results are reported as discontinued operations for all periods presented.

  3. What is Best Buy's dividend policy?

    The company paid its first-ever cash dividends in fiscal 2004, a $0.30 per share special dividend and a $0.10 per share regular quarterly dividend, totaling about $130 million. Management intends to pay $0.40 per common share each fiscal year, subject to legal and contractual restrictions.

  4. What are the main legal risks disclosed?

    Four purported class action lawsuits were filed in U.S. District Court for the District of Minnesota in late 2003 on behalf of purchasers of Best Buy stock between January 9, 2002, and August 7, 2002, naming the company, its Chairman and its CEO. A shareholder derivative action is also pending in Hennepin County, Minnesota. Management believes the allegations are without merit and will defend the actions vigorously.

  5. What does management expect for fiscal 2005?

    Management projects earnings from continuing operations of $2.80 to $2.93 per diluted share, an increase of 15% to 20%, on revenue of approximately $27.5 billion. The outlook assumes a 4% to 6% comparable store sales increase and about 73 new store openings, with capital expenditures of approximately $700 million.

04—Continue

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