Best Buy 2001 Annual Report Download - page 30

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Best Buy Co., Inc.
31
Musicland Acquisition
The following table shows unaudited pro forma combined results of operations of Best Buy and Musicland for fiscal 2001 as though
that acquisition had been completed as of the beginning of the fiscal year:
($ in thousands, except per share amounts)
Pro Forma Results Reported Results
Revenues $17,078,464 $15,326,552
Gross profit 3,7 10,328 3,0 59,093
Selling, general and administrative costs 3,0 23,200 2,4 54,785
O perating income 687,128 604,308
N et interest income (expense) (2,024) 37,171
Earnings before income tax expense 685,104 641,479
Income tax expense 267,875 245,640
N et earnings 417,229 395,839
Earnings per share - diluted $1.96 $1.86
Components of operating income:
Gross profit 21.7% 20.0%
Selling, general and administrative expense 17.7% 16.0%
O perating income 4.0 % 3.9 %
The information presented above does not necessarily represent what actual results would have been, had the acquisition taken
place at the beginning of the fiscal year. Expenses associated with post-acquisition integration and store transformation activities
are not included in the pro forma results. Additionally, anticipated changes to operations, including the impact of changes in product
assortment at Musicland stores and expected expense savings and synergies, are not reflected.
The pro forma gross profit margin ratio of 21.7% as compared to the reported 20.0% reflects the impact of M usicland’s higher
margin sales mix.
The pro forma SG&A ratio of 1 7.7%, compared with a reported SG&A ratio of 16.0%, reflects the higher cost structure of Musicland’s
operations. In addition, the amortization of goodwill resulting from the acquisition is included in the pro forma SG&A and
contributes $15.9 million in SG&A or approximately 0.1% of revenues.
MD&A