Enterprise Comparable Sales Increased
1.1%
GAAP Diluted EPS Increased 36% to
$0.98
Non-GAAP Diluted EPS Increased 24% to
$1.02
Best Buy Co., Inc. (NYSE: BBY) today announced results for the
13-week first quarter ended May 4, 2019 (“Q1 FY20”), as compared to
the 13-week first quarter ended May 5, 2018 (“Q1 FY19”).
Q1 FY20 Q1 FY19 Revenue ($ in
millions)
Enterprise $ 9,142 $ 9,109
Domestic segment $ 8,481 $ 8,412
International segment $ 661 $ 697
Enterprise comparable sales % change1 1.1 %
7.1 %
Domestic comparable sales % change1
1.3 % 7.1 %
Domestic comparable online sales %
change1
14.5 % 12.0 %
International comparable sales %
change1
(1.2) % 6.4 %
Operating Income
GAAP
operating income as a % of revenue 3.7 %
2.9 % Non-GAAP operating income as a % of revenue
3.8 % 3.3 %
Diluted Earnings per Share
("EPS")
GAAP diluted EPS $ 0.98 $ 0.72 Non-GAAP
diluted EPS $ 1.02 $ 0.82
For GAAP to non-GAAP reconciliations of the measures referred to
in the above table, please refer to the attached supporting
schedule Reconciliation of Non-GAAP Financial Measures.
“Q1 was a strong quarter and a good start to the year,” said
Hubert Joly, Best Buy chairman and CEO. “We reported comparable
sales growth at the high end of our guidance and delivered
better-than-expected profitability. In addition to these strong
financial results, we continued to make significant progress
implementing our Best Buy 2020 strategy to enrich lives through
technology and further develop our competitive
differentiation.”
Joly continued, “As you know, we made an exciting announcement
last month. On June 11, 2019, Corie Barry will become the fifth CEO
in Best Buy’s 53-year history. At that time, I will transition to
the newly created role of executive chairman of the board. I am
very proud of the seamless transition we have decided to implement,
as it reflects positively on our momentum as well as our focus on
executive development and succession planning.”
Best Buy’s CFO and Strategic Transformation Officer Corie Barry
commented, “I am deeply grateful to Hubert and the rest of the
board of directors for their confidence in me and their clear
belief that this leadership evolution is in the best interests of
Best Buy and all its stakeholders. As I think about my new role, I
could not be more fortunate to have Mike Mohan at my side as our
new president and COO. Our strategy is the right one and is
resonating with customers. I am so excited to work with the entire
leadership team in this next chapter as we continue to implement
the strategy that we helped build together.”
Barry continued, “We are pleased with our Q1 performance. As we
look to the full year, we are reiterating the guidance we provided
at the beginning of the year. This outlook balances our
better-than-expected Q1 earnings, the fact that it is early in the
year and our best estimate of the impact associated with the recent
increase in tariffs on goods imported from China. Specifically, I
am referring to the increase in tariffs from 10% to 25% on the
products on the $200 billion List 3 that originally went into
effect last September.”
FY20 Financial Guidance
Best Buy is providing the following Q2 FY20 financial
outlook:
- Enterprise revenue of $9.5 billion to
$9.6 billion
- Enterprise comparable sales growth of
1.5% to 2.5%
- Non-GAAP effective income tax rate of
approximately 24.5%2
- Diluted weighted average share count of
approximately 269 million
- Non-GAAP diluted EPS of $0.95 to
$1.002
Best Buy is reiterating the following full-year FY20 financial
outlook provided on February 27, 2019:
- Enterprise revenue of $42.9 billion to
$43.9 billion
- Enterprise comparable sales growth of
0.5% to 2.5%
- Enterprise non-GAAP operating income
rate of approximately 4.6%2, which is flat to FY19
- Non-GAAP effective income tax rate of
approximately 24.5%2
- Non-GAAP diluted EPS of $5.45 to
$5.652
Domestic Segment Q1 FY20
Results
Domestic RevenueDomestic revenue of $8.48 billion
increased 0.8% versus last year. The increase was driven by
comparable sales growth of 1.3% and revenue from GreatCall, Inc.
(“GreatCall”), which was acquired in Q3 FY19, partially offset by
the loss of revenue from 105 Best Buy Mobile and 12 large-format
store closures in the past year.
From a merchandising perspective, the largest comparable sales
growth drivers were appliances, wearables and tablets. These
drivers were partially offset by declines in the entertainment
category.
Domestic online revenue of $1.31 billion increased 14.5% on a
comparable basis primarily due to higher average order values and
increased traffic. As a percentage of total Domestic revenue,
online revenue increased approximately 180 basis points to 15.4%
versus 13.6% last year.
Domestic Gross Profit RateDomestic gross profit rate was
23.7% versus 23.3% last year. The gross profit rate increase of
approximately 40 basis points was primarily driven by the impact of
GreatCall’s higher gross profit rate and improved product margin
rates, which include the benefit of gross profit optimization
initiatives. These favorable items were partially offset by higher
supply chain costs.
Domestic Selling, General and Administrative Expenses
(“SG&A”)Domestic GAAP SG&A was $1.68 billion, or 19.8%
of revenue, versus $1.67 billion, or 19.8% of revenue, last year.
On a non-GAAP basis, SG&A was $1.66 billion, or 19.6% of
revenue, versus $1.66 billion, or 19.7% of revenue, last year. Both
GAAP and non-GAAP SG&A increased primarily due to GreatCall
operating expenses, which were partially offset by lower incentive
compensation expense. Additionally, GAAP SG&A in Q1 FY20
included an additional $17 million of intangible asset amortization
related to GreatCall.
International Segment Q1 FY20
Results
International RevenueInternational revenue of $661
million decreased 5.2% versus last year. This decline was primarily
driven by the impact of approximately 390 basis points of negative
foreign currency exchange rates and a comparable sales decline of
1.2%, which was driven by Canada.
International Gross Profit RateInternational gross profit
rate was 24.2% versus 23.4% last year. The gross profit rate
increase of approximately 80 basis points was primarily due to
Canada, which delivered improved gross profit rates in several
product categories and increased revenue in the higher margin rate
services category.
International SG&AInternational GAAP SG&A was
$158 million, or 23.9% of revenue, versus $165 million, or 23.7% of
revenue, last year. On a non-GAAP basis, SG&A was $158 million,
or 23.9% of revenue, versus $164 million, or 23.5% of revenue, last
year. Both GAAP and non-GAAP SG&A decreased due to the
favorable impact of foreign exchange rates.
Dividends and Share
RepurchasesIn Q1 FY20, the company returned a total of
$232 million to shareholders through share repurchases of $98
million and dividends of $134 million. On February 27, 2019, the
company announced the intent to spend between $750 million and $1
billion on share repurchases in FY20.
Adoption of New Lease Accounting
StandardEffective at the beginning of Q1 FY20, the
company adopted Accounting Standards Update 2016-02, Leases,
using the “Comparatives Under 840 Option” approach to transition.
Under this method, financial information related to periods prior
to adoption will be as originally reported under the previous
standard - Accounting Standards Codification ("ASC") 840, Leases.
The effects of adopting the new standard (ASC 842, Leases) were
recognized as a cumulative net of tax adjustment that decreased
opening retained earnings by $19 million. The most significant
impact of adoption was the recognition of operating lease assets
and operating lease liabilities of $2.7 billion and $2.8 billion,
respectively. The company expects the impact of adoption to be
immaterial to its consolidated statements of earnings and
consolidated statements of cash flows on an ongoing basis.
Conference Call
Best Buy is scheduled to conduct an earnings conference call at
8:00 a.m. Eastern Time (7:00 a.m. Central Time) on May 23, 2019. A
webcast of the call is expected to be available at www.investors.bestbuy.com, both live and
after the call.
Notes:(1) In Q1 FY20, the company refined its methodology
for calculating comparable sales. It now reflects certain revenue
streams previously excluded from the comparable sales calculation,
such as credit card revenue, gift card breakage, commercial sales
and sales of merchandise to wholesalers and dealers, as applicable.
The impact of adopting these changes is immaterial to all periods
presented, and therefore prior-period comparable sales disclosures
have not been restated.
On March 1, 2018, the company announced its intent to close all
of the remaining 257 Best Buy Mobile stand-alone stores in the U.S.
As a result, all revenue related to these stores has been excluded
from the comparable sales calculation beginning in March 2018.
(2) A reconciliation of the projected non-GAAP operating income,
non-GAAP effective income tax rate and non-GAAP diluted EPS, which
are forward-looking non-GAAP financial measures, to the most
directly comparable GAAP financial measures, is not provided
because the company is unable to provide such reconciliation
without unreasonable effort. The inability to provide a
reconciliation is due to the uncertainty and inherent difficulty
predicting the occurrence, the financial impact and the periods in
which the non-GAAP adjustments may be recognized. These GAAP
measures may include the impact of such items as restructuring
charges; litigation settlements; goodwill impairments; gains and
losses on investments; certain acquisition-related costs; and the
tax effect of all such items. Historically, the company has
excluded these items from non-GAAP financial measures. The company
currently expects to continue to exclude these items in future
disclosures of non-GAAP financial measures and may also exclude
other items that may arise (collectively, “non-GAAP adjustments”).
The decisions and events that typically lead to the recognition of
non-GAAP adjustments, such as a decision to exit part of the
business or reaching settlement of a legal dispute, are inherently
unpredictable as to if or when they may occur. For the same
reasons, the company is unable to address the probable significance
of the unavailable information, which could be material to future
results.
Forward-Looking and Cautionary Statements:This earnings
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, operational investments,
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,” “assume,”
“estimate,” “expect,” “intend,” “foresee,” “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: competition (including from multi-channel
retailers, e-commerce business, technology service providers,
traditional store-based retailers, vendors and mobile network
carriers), our expansion strategies, our focus on services as a
strategic priority, our reliance on key vendors and mobile network
carriers, our ability to attract and retain qualified employees,
changes in market compensation rates, risks arising from statutory,
regulatory and legal developments, macroeconomic pressures in the
markets in which we operate, failure to effectively manage our
costs, our reliance on our information technology systems, our
ability to prevent or effectively respond to a privacy or security
breach, our ability to effectively manage strategic ventures,
alliances or acquisitions, our dependence on cash flows and net
earnings generated during the fourth fiscal quarter, susceptibility
of our products to technological advancements, product life cycle
preferences and changes in consumer preferences, economic or
regulatory developments that might affect our ability to provide
attractive promotional financing, interruptions and other supply
chain issues, catastrophic events, our ability to maintain positive
brand perception and recognition, product safety and quality
concerns, changes to labor or employment laws or regulations, our
ability to effectively manage our real estate portfolio,
constraints in the capital markets or our vendor credit terms,
changes in our credit ratings, any material disruption in our
relationship with or the services of third-party vendors, risks
related to our exclusive brand products and risks associated with
vendors that source products outside of the U.S., including trade
restrictions or changes in the costs of imports (including existing
or new tariffs or duties and changes in the amount of any such
tariffs or duties) and risks arising from our international
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 and Exchange
Commission (“SEC”), including, but not limited to, Best Buy’s
Annual Report on Form 10-K filed with the SEC on March 28, 2019.
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.
BEST BUY CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF
EARNINGS
($ and shares in millions, except per
share amounts)
(Unaudited and subject to
reclassification)
Three Months Ended May 4, 2019 May
5, 2018 Revenue $ 9,142 $ 9,109 Cost of goods sold 6,973
6,984 Gross profit 2,169 2,125 Gross profit %
23.7 % 23.3 % Selling, general and administrative expenses 1,835
1,830 SG&A % 20.1 % 20.1 % Restructuring charges -
30 Operating income 334 265 Operating income %
3.7 % 2.9 % Other income (expense): Investment income and other 14
11 Interest expense (18) (19) Earnings
before income tax expense 330 257 Income tax expense 65 49
Effective tax rate 19.8 % 19.2 % Net earnings $ 265
$ 208 Basic earnings per share $ 0.99 $ 0.74
Diluted earnings per share $ 0.98 $ 0.72 Weighted-average
common shares outstanding Basic 267.6 282.6 Diluted 271.5 288.3
BEST BUY CO., INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
($ in millions)
(Unaudited and subject to
reclassification)
May 4, 2019 May 5, 2018 Assets
Current assets Cash and cash equivalents $ 1,561 $ 1,848 Short-term
investments - 785 Receivables, net 833 860 Merchandise inventories
5,195 4,964 Other current assets 425 473 Total
current assets 8,014 8,930 Property and equipment, net 2,334 2,385
Operating lease assets 2,708 - Goodwill 915 425 Other assets
579 342
Total assets $ 14,550 $ 12,082
Liabilities and equity Current liabilities Accounts payable
$ 4,718 $ 4,619 Unredeemed gift card liabilities 265 285 Deferred
revenue 409 371 Accrued compensation and related expenses 275 296
Accrued liabilities 851 934 Current portion of operating lease
liabilities 639 - Current portion of long-term debt 14
550 Total current liabilities 7,171 7,055 Long-term
operating lease liabilities 2,173 - Long-term liabilities 659 815
Long-term debt 1,193 792 Equity 3,354 3,420
Total
liabilities and equity $ 14,550 $ 12,082
BEST BUY CO., INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
($ in millions)
(Unaudited and subject to
reclassification)
Three Months Ended May 4, 2019 May
5, 2018 Operating activities Net earnings $ 265 $ 208
Adjustments to reconcile net earnings to total cash provided by
operating activities: Depreciation and amortization 200 176
Restructuring charges - 30 Stock-based compensation 36 32 Deferred
income taxes 13 9 Other, net 1 (2 ) Changes in operating assets and
liabilities, net of acquired assets and liabilities: Receivables
182 189 Merchandise inventories 207 243 Other assets (14 ) (13 )
Accounts payable (519 ) (214 ) Other liabilities (379 ) (506 )
Income taxes 10 52 Total cash
provided by operating activities 2 204
Investing
activities Additions to property and equipment (193 ) (181 )
Sales of investments - 1,245 Other, net 1
9 Total cash provided by (used in) investing
activities (192 ) 1,073
Financing activities Repurchase of common stock (98 ) (400 )
Issuance of common stock 11 24 Dividends paid (134 ) (128 )
Repayments of debt (4 ) (11 ) Other, net (1 )
(1 ) Total cash used in financing activities (226 ) (516 )
Effect of exchange rate changes on cash (1 )
(12 )
Increase (decrease) in cash, cash equivalents and
restricted cash (417 ) 749
Cash, cash equivalents and
restricted cash at beginning of period 2,184
1,300
Cash, cash equivalents and restricted
cash at end of period $ 1,767 $ 2,049
BEST BUY CO., INC.
SEGMENT INFORMATION
($ in millions)
(Unaudited and subject to
reclassification)
Three Months Ended Domestic Segment
Results May 4, 2019 May 5, 2018 Revenue $ 8,481 $
8,412 Comparable sales % change 1.3 % 7.1 % Comparable online sales
% change 14.5 % 12.0 % Gross profit $ 2,009 $ 1,962 Gross profit as
a % of revenue 23.7 % 23.3 % SG&A $ 1,677 $ 1,665 SG&A as a
% of revenue 19.8 % 19.8 % Operating income $ 332 $ 267 Operating
income as a % of revenue 3.9 % 3.2 %
Domestic Segment
Non-GAAP Results1 Gross profit $ 2,009 $ 1,962 Gross
profit as a % of revenue 23.7 % 23.3 % SG&A $ 1,660 $ 1,659
SG&A as a % of revenue 19.6 % 19.7 % Operating income $ 349 $
303 Operating income as a % of revenue 4.1 % 3.6 %
Three
Months Ended International Segment Results May 4,
2019 May 5, 2018 Revenue $ 661 $ 697 Comparable sales %
change (1.2 ) % 6.4 % Gross profit $ 160 $ 163 Gross profit as a %
of revenue 24.2 % 23.4 % SG&A $ 158 $ 165 SG&A as a % of
revenue 23.9 % 23.7 % Operating income (loss) $ 2 $ (2 ) Operating
income (loss) as a % of revenue 0.3 % (0.3 ) %
International Segment Non-GAAP Results1 Gross profit
$ 160 $ 163 Gross profit as a % of revenue 24.2 % 23.4 % SG&A $
158 $ 164 SG&A as a % of revenue 23.9 % 23.5 % Operating income
(loss) $ 2 $ (1 ) Operating income (loss) as a % of revenue 0.3 %
(0.1 ) % (1) For GAAP to non-GAAP reconciliations,
please refer to the attached supporting schedule titled
Reconciliation of Non-GAAP Financial Measures.
BEST BUY CO., INC.
REVENUE CATEGORY SUMMARY
(Unaudited and subject to
reclassification)
Revenue Mix Summary
Comparable Sales Three Months Ended Three Months
Ended Domestic Segment May 4, 2019 May 5,
2018 May 4, 2019 May 5, 2018 Computing and Mobile
Phones 46 % 46 % 1.0 % 10.2 % Consumer Electronics 31 % 32 % 0.9 %
2.9 % Entertainment 6 % 7 % (12.7 ) % (0.8 ) % Appliances 11 % 10 %
10.5 % 13.0 % Services 6 % 5 % 6.8 % 7.3 % Other - % - % N/A N/A
Total 100 % 100 % 1.3 % 7.1 %
Revenue Mix Summary
Comparable Sales Three Months Ended Three Months
Ended International Segment May 4, 2019 May 5,
2018 May 4, 2019 May 5, 2018 Computing and Mobile
Phones 46 % 47 % (4.0 ) % 4.4 % Consumer Electronics 31 % 30 % 2.5
% 9.4 % Entertainment 5 % 6 % (14.0 ) % (8.3 ) % Appliances 9 % 9 %
(2.0 ) % 37.7 % Services 7 % 6 % 13.4 % (6.1 ) % Other 2 % 2 % 15.3
% (1.9 ) % Total 100 % 100 % (1.2 ) % 6.4 %
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 the most
comparable financial measures presented in accordance with
accounting principles generally accepted in the U.S. (GAAP
financial measures) to presented non-GAAP financial measures. The
company believes that non-GAAP financial measures, when reviewed in
conjunction with GAAP financial measures, can provide more
information to assist investors in evaluating current period
performance and in assessing future performance. For these reasons,
internal management reporting also includes non-GAAP measures.
Generally, presented non-GAAP measures include adjustments for
items such as restructuring charges, goodwill impairments, gains
and losses on investments, certain acquisition-related costs and
the tax effect of all such items. In addition, certain other items
may be excluded from non-GAAP financial measures when the company
believes this provides greater clarity to management and investors.
These non-GAAP financial measures should be considered in addition
to, and not superior to or as a substitute for, the GAAP financial
measures presented in this earnings release and the company’s
financial statements and other publicly filed reports. Non-GAAP
measures as presented herein may not be comparable to similarly
titled measures used by other companies.
Three Months Ended
Three Months Ended May 4, 2019 May 5, 2018
Domestic International Consolidated
Domestic International Consolidated SG&A $
1,677 $ 158 $ 1,835 $ 1,665 $ 165 $ 1,830 % of revenue 19.8
%
23.9
%
20.1
%
19.8
%
23.7
%
20.1
%
Intangible asset amortization1 (17 ) - (17 ) - - - Tax
reform-related item - employee bonus2 - -
- (6 ) (1 ) (7 ) Non-GAAP
SG&A $ 1,660 $ 158 $ 1,818 $ 1,659
$ 164 $ 1,823 % of revenue 19.6
%
23.9
%
19.9
%
19.7
%
23.5
%
20.0
%
Operating income (loss) $ 332 $ 2 $ 334 $ 267 $ (2 ) $ 265 %
of revenue 3.9
%
0.3
%
3.7
%
3.2
%
(0.3 )% 2.9
%
Intangible asset amortization1 17 - 17 - - - Restructuring charges3
- - - 30 - 30 Tax reform-related item - employee bonus2 -
- - 6 1
7 Non-GAAP operating income (loss) $ 349
$ 2 $ 351 $ 303 $ (1 ) $ 302 %
of revenue 4.1
%
0.3
%
3.8
%
3.6
%
(0.1 )% 3.3
%
Effective tax rate 19.8
%
19.2
%
Intangible asset amortization1 0.3
%
-
%
Restructuring charges3 -
%
0.7
%
Tax reform-related item - employee bonus2 -
%
0.1
%
Non-GAAP effective tax rate 20.1
%
20.0
%
Three Months Ended Three Months Ended May
4, 2019 May 5, 2018 Pretax Earnings Net of
Tax4 Per Share Pretax Earnings Net of
Tax4 Per Share GAAP diluted EPS $ 0.98 $ 0.72
Intangible asset amortization1 $ 17 $ 13 0.04 $ - $ - -
Restructuring charges3 - - - 30 22 0.08 Tax reform-related item -
employee bonus2 - - - 7 5 0.02 Non-GAAP
diluted EPS $ 1.02 $ 0.82 (1) Represents the
non-cash amortization of definite-lived intangible assets
associated with the acquisition of GreatCall, Inc., including
customer relationships, tradenames and technology. (2)
Represents final adjustments for amounts paid and associated taxes
related to a one-time bonus for certain employees announced in
response to future tax savings created by the Tax Cuts and Jobs Act
enacted into law in Q4 FY18. (3) Represents charges
associated with the closure of Best Buy Mobile stand-alone stores
in the U.S. (4) The non-GAAP adjustments relate primarily to
adjustments in the U.S. As such, the income tax charge is
calculated using the statutory tax rate for the U.S. (24.5% for the
periods ended May 4, 2019, and May 5, 2018).
Return on Assets and
Non-GAAP Return on Invested Capital
The following table includes a reconciliation to the calculation
of return on assets ("ROA") (GAAP financial measure), along with
the calculation of non-GAAP return on invested capital (“ROIC”) for
total operations, which includes both continuing and discontinued
operations (non-GAAP financial measure) for the periods
presented.
The company defines non-GAAP ROIC as non-GAAP net operating
profit after tax divided by average invested capital using the
trailing four-quarter average. The company believes non-GAAP ROIC
is a useful financial measure for investors in evaluating the
efficiency and effectiveness of the use of capital and believes
non-GAAP ROIC is an important component of shareholders' return
over the long term. Effective at the beginning of Q1 FY20, the
company adopted new lease accounting guidance that resulted in the
recognition of operating lease assets and operating lease
liabilities on the balance sheet. Certain changes have been made as
described within the footnotes to the calculation as a result of
this adoption. This method of determining non-GAAP ROIC may differ
from other companies' methods and therefore may not be comparable
to those used by other companies.
Calculation of Return on Assets ("ROA") May
4, 20191 May 5, 20181 Net earnings $ 1,521
$ 1,020 Total assets 13,611 13,340
ROA 11.2 %
7.6 % Calculation of Non-GAAP Return
on Invested Capital ("ROIC") May 4, 20191 May
5, 20181
Net Operating
Profit After Taxes (NOPAT)
Operating income - continuing operations $ 1,969 $ 1,808 Operating
income - discontinued operations - 1
Total operating income 1,969 1,809 Add: Operating
lease interest2 113 117 Add: Non-GAAP operating income adjustments3
68 148 Add: Investment income 52 55 Less: Income taxes4 (542
) (740 )
Non-GAAP NOPAT $
1,660 $ 1,389
Average Invested
Capital
Total assets $ 13,611 $ 13,340 Less: Excess cash5 (1,365 ) (2,722 )
Add: Capitalized operating lease assets6 2,272 3,126 Total
liabilities (10,397 ) (9,457 ) Exclude: Debt7 1,895
1,345
Average invested capital
$ 6,016 $ 5,632 Non-GAAP
ROIC 27.6 % 24.7
% (1) Income statement accounts
represent the activity for the trailing 12 months ended as of each
of the balance sheet dates. Balance sheet accounts represent the
average account balances for the four quarters ended as of each of
the balance sheet dates. (2) Operating lease interest
represents the add-back to operating income to approximate the
total interest expense that the company would incur if its
operating leases were owned and financed by debt. Historically, the
company used an add-back multiple of 30% of annual rent expense;
however, as a result of the adoption of new lease accounting
guidance, the multiple was recalculated and prior periods have been
updated to reflect this change. For periods prior to FY20, the
add-back is approximated by multiplying the trailing 12-month total
rent expense by 15%. For periods beginning on or after FY20, the
add-back is now approximated by multiplying average operating lease
assets by 4%, which approximates the interest rate on the company’s
operating lease liabilities. (3) Includes adjustments for
tax reform-related items, restructuring charges and
acquisition-related costs. Additional details regarding these
adjustments are included in the Reconciliation of Non-GAAP
Financial Measures schedule within the company’s quarterly earnings
releases. (4) Income taxes are calculated using a blended
statutory rate at the Enterprise level based on statutory rates
from the countries in which the company does business, which
primarily consists of the U.S. (with a statutory rate ranging from
24.5% to 38.0% for the periods presented) and Canada (with a
statutory rate ranging from 26.6% to 26.9% for the periods
presented). (5) 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 the company’s
calculation of average invested capital to show their exclusion
from total assets. (6) Capitalized operating lease assets
represent the estimated net assets that the company would record if
the company's operating leases were owned. Historically, the
company used a multiple of five times annual rent expense; however,
as a result of the adoption of new lease accounting guidance, the
multiple was recalculated and prior periods have been updated to
reflect this change. For periods prior to FY20, the asset is
approximated by multiplying the trailing 12-month total rent
expense by the multiple of four. For periods beginning on or after
FY20, capitalized operating lease assets are now included within
total assets on the balance sheet. (7) Debt includes
short-term debt, current portion of operating lease liabilities,
current portion of long-term debt, long-term operating lease
liabilities and long-term debt and is added back to the company’s
calculation of average invested capital to show its exclusion from
total liabilities.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190523005137/en/
Investor Contact:Mollie O'Brien(612) 291-7735 or
mollie.obrien@bestbuy.com
Media Contact:Jeff Shelman(612) 291-6114 or
jeffrey.shelman@bestbuy.com
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